I am sure by now hoteliers must be tired of hearing people tell them they must change. But they do say if you say something often enough, it will happen sooner rather than later.
And It looks like something fundamental is shifting. It felt palpable at WIT Hospitality which took place in Hong Kong on Tuesday as ideas were shared on stage and companies talked about what they were doing with technology to distribute better, to rebuild customer intimacy in branding and marketing, to facilitate the customer experience, to rethink old models and to automate repetitive processes so that humans can be left to deal with humans.
Here are my eight key takeaways.
- For investors, it’s still about real estate value and cash flow
The truth is it won’t be easy to transform an industry that, we were reminded repeatedly by Suchad Chiaranussati of SC Capital Partners, is driven by real estate value and cash flow. If it doesn’t result in cash flow, “we are not interested”, he said, when asked about blockchain, voice in room and AI.
Suchad: SC Capital Partners has just bought a hotel in Bali whose business is 70% derived from OTAs. “Why do we need sales managers?”
But it’s a big first step to open investors’ eyes to what technology can do to make businesses more efficient (save costs), to distribute and manage revenues better (increase margins and yields) and its influence on a new generation of travellers who demand individualized technology, not information technology (future growth).
Suchad, whose company manages about $3b worth of hotel assets, is particularly interested in distribution. His company has just bought a hotel in Bali which gets 70% of its business from OTAs. “There’s got to be something wrong with that,” he said. “Why do we need sales managers?”
In her presentation on “Trends That Matter”, director research, Phocuswright, Maggie Rauch showed OTA power at their strongest in APAC compared to other regions. 
Suchad’s other pet peeve is check-in. At every hotel he stays in, he clocks the check-in and it’s anything between 4.5 minutes to 10 minutes. He’s been doing this for years and “It hasn’t improved”.
“It’s actually an insult when you are a loyalty member and you check into a hotel brand 1,000 times and you still get asked the same questions.”
This is of course an area OTAs like hotels.com and Agoda are addressing – extending their app to the check-in and room key.
When asked what he would like to learn more about, Suchad said, customer acquisition through digital marketing. And he’s not talking about spending on Google. “We cannot compete with Priceline and Expedia which spend billions on Google, we want to learn from those who’ve done it differently and who can help hotels with direct distribution.”
- To effect change, show them the dollars – “new tech can save money”
Things can change if owner-managed brands take the first steps. Owners tend to have longer horizons on investment and they are driven by motivations other than real estate value (although that’s a key part) and cash flow.
When asked what innovation he had introduced at Rosewood Hotel Group, which is owned by Hong Kong-based New World Development, Symon Bridle, group chief operating officer, said, “Not an app. Until we can figure out what we really want to do with an app, we won’t go there.”
Instead he’s looking at content to do “soft marketing” and engage with customers, and using chatbots that are manned by humans to personalise the customer experience.
Jennifer Cronin, president, Wharf Hospitality recounted a stay at The Niccolo in Chengdu when, during her transfer to the hotel, she was able to have a live video chat with the guest relations officer. Cronin wants to drive change through rethinking talent. The group has introduced a Red Rings Leadership programme which aims to instill a bold and sharp way of thinking among its leadership team.
Ng Yu Lik (left), Republic Polytechnic and Terrry Wan, Wharf Hotels: Robots that boost TripAdvisor ratings and hotel IT is like a fortress.
Wharf has also hired a new IT chief, Terry Wan, who comes from retail and property management. Several months into the job, Wan likened the hotel IT infrastructure to a fortress and how difficult it is to dismantle it. But “new tech can save money”, he said, and his key role is to reimagine technology in operations such as using robotics where relevant and where it can save costs.
Ng Yu Lik of Republic Polytechnic, Singapore, whose Hospitality Solutions Centre is working with hotels to test smart solutions, talked about how having robots serve coffee at M Social was able to improve the hotel’s TripAdvisor ranking.
He also cited an example of a hotel in the US whose robots serve coffee from a Starbucks within the premises and boosted its profitability.
Terence Ronson, managing director of Pertlink, which advises hotels on technology adoption, said the technology he was most excited about was voice in-room. But again, Suchad said “only if it improves cash flow”.
- Lessen the psychic load – hotels should be able to do that really well
Claire Hatton: Three lessons from the world of tech.
Claire Hatton of Full Potential Labs, said exponential developments in technology will significantly disrupt hospitality – science fiction has become science fact – and travel intermediaries have captured the lion’s share of new wealth.
Lesson 1 – focus on the customer and all else will follow, borrowing from Google, the company she used to work for. Use data to better anticipate needs, she said, citing SideWalk Labs & City of Toronto which are building tech-enabled neighbourhoods, and invest in experiences based on real customer insight.
Lesson 2 – lessen the psychic load.
With our senses being overwhelmed by technology, how can we help lessen the psychic load on staff and customers? There’s local warming technology being developed that could personalise room climates, for example.
I can imagine hotels can excel in this area because it’s where we spend our most private moments and where we spend the most time, while on the road.
Lesson 3: In a world of omnipresent technology, it’s humans that will provide a competitive edge
That needs an understand of how jobs will change, she said, citing a study that says 85% of jobs that will exist in 2030 haven’t been invented yet.
- How to innovate within legacy organisations
Fritz Demopoulos: Rethink compensation schemes?
Fritz Demopoulos, CEO of Queen’s Road Capital, fresh from running his Melon: Sci-fi and Beyond conference, is someone who believes sci-fi offers an informed view of the future and learning what scientists are working on helps investors and entrepreneurs with their vision and plans.
Addressing the issue of how innovation can happen in legacy organisations, he wondered if hotels needed to rethink their compensation schemes.
“One thing hotels do very well is consistency in service and operations. But perhaps there needs to be a rethink to allow certain individuals to be rewarded differently – perhaps a separate unit, I don’t wish it to be called an incubator or accelerator – but something independent that can think and innovate.”
He also said that with channel fragmentation, hotels may have to think about hiring a team of specialists.
“No one person can understand it all today, you need someone who totally understands the WeChat platform, someone who gets social media.”
- Every industry is being disrupted, including banking
Caught between the immovable force of real estate and a new generation of customers who expect their hotel experience to be as individual as their smartphone, as well as a new generation of talent who are demanding to be heard, it is clear tectonic shifts have to happen in the middle.
From left, Sean Seah, HSBC; Colman Ho, New Century City; Nelson Aleen, Hotels.com
And it’s already happening with new models such as private accommodation and hostels; new real estate models – co-working spaces; startups in tours & activities which disrupt hotel concierge services; and in China, food delivery apps are said to be delivering 10% of their business to hotels.
Sean Seah, former hotelier, and now head of digital experience, HSBC, said banking is now like “hotels before OTAs”. It faces competition not only from other banks, but also transportation (GrabPay), airlines (AirAsia BigPay), marketplaces (Alipay), AI-driven investment vehicles and fintech startups. “The whole market has changed.”
Along with all that disruption, he said, “We don’t talk anymore”.
“As people, we don’t talk to each other anymore, just messaging, and brands have also lost customer intimacy. It’s time we got back to talking and asking customers what they want.”
With everyone wanting to build their own eco-systems, banks, with their global customer databases, have an advantage not only in scale but also in high frequency of use, said Seah.
- Private accommodation is not a trend, it’s here
Kenichi Shibata: Empty himes on the rise as society ages.
In Japan, last summer, 12% of foreign visitors opted for vacation rentals/private accommodation. The top markets were Singapore, France and Indonesia. The three most popular cities for Airbnb in 2018 are Tokyo, Paris and Osaka, and ryokans are the second most trending topic, after nature lodge.
Kenichi Shibata, co-founder, Venture Republic, Japan said the supply will grow, citing that empty homes, now at 15%, will grow to 30% as society ages. New regulations coming in may mean a slight shakeout of the market but the future is inevitable – private accommodation is what Japan needs to address its 40m visitor target by 2020 and is increasingly what travellers want as they aspire to explore beyond Tokyo.
Iris Cheung, territory manager, Hong Kong/Taiwan for Airbnb, said its business in Hong Kong, both inbound and outbound, grew 50% last year and the average age – 30 – and average group size – 2-3.
- OTAs investing in new tech, new segments, B2B
The low frequency purchase of travel remains a challenge for OTAs looking for ways for customers to stay within their app. And you can sense on the OTA panel in which Agoda, Booking, Ctrip and Expedia were represented that all of them are trying to crack that nut. All three achieved strong financial results in 2017 – Booking Holdings recorded $81b worth of transaction value, Expedia Inc $86b worth of gross bookings and Ctrip’s net revenues grew 39% of $4.1b.
Jun Lai, Ctrip: Moving from low to high frequency and investing in B2B partnerships.
Jun Lai, general manager, global hotel chains & international market for Ctrip, said trying to move a low frequency activity to high frequency was what was preoccupying Ctrip’s 7,000 engineers (out of whom 30% are women by the way).
And that future clearly includes payments, an area everyone’s paying attention to, said Wilfred Fan, vice president, partnerships, Agoda. He cited three other trends shaping online travel – mobile-only service delivery, AI in travel and declining loyalty.
Adam Brownstein, regional director, North Asia, Booking.com said an academy had been set up to study AI and machine learning. On-demand curated local experiences, he said, were increasingly being sought after by customers.
Corporate travel is increasingly in their sights. Agoda is going after the unmanaged segment and Booking which didn’t use to track business travel is now doing so and with the bleeding of corporate into leisure travel, that’s clearly an opportunity.
Expedia is having a go at the lucrative MICE market offering solutions to hoteliers to become more efficient at this hitherto manually-driven sector.
With their B2C businesses powering on, it is evident that these giants are now building out their B2B play with Ctrip’s B2B business a significant part of its strategy.
“Help us understand you better and we will help you do better with digital and tech,” said Lai, when asked what advice he wanted to share with hoteliers.
Nelson Allen, general manager Asia of Hotels.com, which has given away 1 billion of free nights globally with its “one free night for 10 room nights booked) programme, said loyalty needed to evolve as well and cited Cathay Pacific’s gamification of its loyalty app as a move in the right direction.
- “What if Facebook were to build a hotel?”
Third generation hotelier from Taiwan, Benjamin Liao, whose grandfather moved from real estate into hospitality to “provide jobs for the community” during the property bubble burst of the 1940s, came into the business 17 years ago.
Benjamin Liao: “We’re looking at a wall.”
Trained as an architect, he took an interest in redeveloping old buildings into innovative budget hotels – he admitted he did face initial resistance from his father Michael Liao – but since then, he’s built up the hostel brand, Orange Hotel, successfully in Taiwan.
Orange was initially started in China and Liao brought it to Taiwan, when he recognized the need for “a fusion of hostel and business hotel with bright and simple design”. Forte Hotel Group, of which he is chairman, now has 17 hotels developed over 35 years. “We look at the role of a hotel and it serves three roles – staff, customers and its neighbourhood”.
Just as his grandfather moved from real estate to hospitality to grow the family business, he now has to evolve from hospitality to technology for the next generation.
Liao said with all the disruption going on, “hotels are looking at a wall and we don’t know how to get to the other side”.
He said the biggest challenge was “letting go” of the past and it was time to ask questions such as “what if Facebook were to build a hotel?” – painting an image of a virtual social network embedded into a physical hotel.
“In Taiwan, we have something called ‘slow living’ and it is only when we are bored that we have time to think and create,” he said.
So slow down, get bored and create your future.