At this year’s HITEC, the key takeaway wasn’t the latest smartphone door lock or mobile concierge app, but the sense that the hotel industry is maturing in its approach to the issues raised by rapidly evolving technology.
“A lot of the themes have revolved around choice and control for hotel guests,” said Josh Weiss, VP of brand and guest technology at Hilton Worldwide. “My first HITEC was four years ago, and in that time, it’s evolved from a hotel providing technology to a guest, to a guest coming with their own technology. I think you’ll continue seeing things develop in the world of mobility.”
Allowing a guest to control content with their mobile device continues to be a major area of improvement. “The user experience around connecting my content and my device is really starting to get a lot better,” said Weiss.
Using guest devices also allows hotels to avoid buying a device of their own, keeping down costs. “One of the realities of our industry is that it isn’t really easy to have something that can scale, so I’m starting to see lighter, less expensive solutions that can really be considered for large numbers of hotels,” Weiss said. “I used to see a lot more regional approaches, and, increasingly, expectations are becoming global.”
With new technology putting more and more guest data in the hands of hotels, security was also a higher focus at the show.
“I think it will rein in some of the exuberance to just connect everything,” said Weiss, when we asked him about the large data breaches at Target and Marriott properties operated by White Lodging. “In hospitality, it may be even more of a burden because guests are trusting us with their physical security as well.”
What can hoteliers do? “One thing focusing on security does is make us rely more professionally on partners,” Weiss said. “Since protecting guest information and security is becoming more important, one reason to use partners is because they are good at that.”
KEYNOTE: CHALLENGES, PITFALLS
Adopting a nuanced approach to security was a running theme through the show since the opening keynote, in which former Google CIO Douglas Merrill argued that hotels needed to balance their security needs with their need to innovate in order to remain competitive.
“People are writing checks based on fear,” Merrill said, citing statistics that showed 80 percent of CEOs believed they had been hacked in the last 12 months, when, in fact, “the real number should be in the single digits.”
In his talk, Merrill argued that the need to protect guest data must be balanced with the potential for using that data to create business innovations. As an example, he cited his time working at record label EMI, at a time when the recording industry felt itself under threat by file-sharing services such as Limewire.
During Merrill’s time at EMI, a lawsuit against an individual music pirate might average a payout of $7,500—at an average cost of $25,000 per lawsuit. But, did the lawsuits deter piracy?
Merrill decided to try an experiment. He went to Limewire, and cross-referenced the top-100 sharers on Limewire with the top-100 music buyers on iTunes. There was significant overlap between the new lists because, as Merrill discovered, users were using Limewire as a means to try out individual tracks before buying.
“Limewire was essentially paying us to be a marketing channel—and we sued them out of existence,” Merrill said.
Collecting user data allowed Merrill to come to a greater understanding about the evolving music business. There are generally two main obstacles to collecting this data, Merrill said: information security people and lawyers. Information security professionals want to minimize the amount of data stored to reduce risk, and lawyers worry about running afoul of privacy regulations.
“When building an information security function, there are two important things to understand,” Merrill said. “It’s important to have a theory of security, but at the same time you have to have the constructive power of pragmatism. You have to care about getting things done.”
THE COLLABORATIVE ECONOMY
The idea that hotels need to keep innovating to survive was not an abstract fear at the show.
In the second keynote, author Rachel Botsman took a look at the rise of the collaborative economy and how sharing startups like Airbnb could challenge the hotel industry.
“I’m a little nervous about this talk because I’m sensitive to the fact that many of the startups in this space are disrupting hospitality hard and fast,” Botsman said. “But I’m not going to say how those startups win—I’m going to explain how these ideas are connected by the collaborative economy.”
The collaborative economy (also called network or sharing economy), Botsman said, uses technology as the glue to build trust between users, allowing entirely new business models to develop, such as those pioneered by Lyft, Uber and the aforementioned Airbnb.
“I met the Airbnb founders in September of 2007,” Botsman said. “They told me the story of the company’s founding—the founders had moved to San Francisco, they had just run out of money and a big design conference had come into town and hotels were completely sold out. They decided to blow up mattresses, put them on the floor and see if anyone would book them. They sold out in 30 minutes.
“My husband said, ‘That’s the worst idea in the world!’” continued Botsman. “But what he was really talking about is, ‘I don’t trust people.’ Moreover, he was judging the idea by what it was then—not what it would become.”
For large organizations like hotel companies, Botsman described the main approaches to a disruptive startup as being an ostrich, fighting and being a pioneer.
“Being an ostrich means saying—please don’t let this happen on my watch,” Botsman said. “This change is still five to 10 years off.”
For fighting, Botsman cited the recent example of a series of protests by taxi drivers in Europe against the black car startup Uber. During the protests, signups for the Uber app increased by 850 percent within 24 hours.
“Once the public decides that there is a new way, and that that new way is better, you can’t reverse the story,” Botsman said. “That’s why the fighting mentality is difficult—the industry innovates around you.”
As for pioneers, Botsman said that even large, established brands can react to disruptions in their industry in three positive ways: investing in the disruptors, forming smart partnerships and investing in innovation of their own.
“In terms of innovation, I really mean true business-model innovation—when you think about your products and services completely differently,” said Botsman. “It’s about judging ideas not for what they are today, but for what they could become.”