Why 2022 is the year of convergence and reimagining hospitality

Two years ago, the world was buzzing. Then travel stopped and many in the hospitality industry had to turn off the lights in their properties just to survive. We endured constantly evolving market conditions, job losses, and furloughs. But we made it through, surviving the most devastating period in our industry.

Then restrictions began to lift, hotels reopened, and beginning in the U.S., travel started up again, often quicker than we expected, and we began to turn the lights back on. It certainly isn’t the same as it used to be, but here we are. We’ve changed, our work has changed, our businesses have changed, customers have changed and the way we hold meetings has certainly changed. Some of these changes may be temporary and some may last forever.  

One thing we have learned is the unpredictable nature of this pandemic. The new world in which we operate requires a different approach, one that considers greater uncertainty. An approach that calls for more flexibility to cater to changing customer needs. An approach that gives you the confidence and the control in a world that moves faster and faster each passing day.

Future-Proofing Your Business

You can future-proof your business by innovating, connecting and empowering your organization. What does this unprecedented volatility mean to us as revenue and commercial leaders? We have learned how to efficiently close and reopen hotels. Lead times have dramatically shortened while cancellations and changes to travel plans have increased. The length of stay has also increased in many places. 

There are also new competitive pressures. In fact, the competitive set in many markets looks very different today, especially with the rise in alternative accommodations. With leisure segments driving recovery, segmentation in many hotels looks nothing like we have seen in previous years.

At the same time, the return of business travel, meetings and conferences is still uncertain, both in timing and in volume. Is this our new normal? Likely so, at least for some time to come. 

The biggest change is in customer needs and expectations because over the last year our needs have dramatically evolved. We have become accustomed to Zoom meetings and expectations and interactions with technology have also increased. In fact, customers now expect the technology-enabled experience everywhere, including when they travel, eat, entertain and sleep away from home. 

The Convergence of Three Key Drivers

In a recent research study conducted by Skift and Oracle, 75 percent of hospitality executives surveyed agreed the pandemic accelerated their adoption of new technology. In line with this and other studies, we see three significant drivers that are quickly converging: digitization, personalization, and merchandising. 

Digitization drives how we use and interact with technology in our daily lives. 10 years ago, Siri brought the broader Apple ecosystem to the consumer. Android and other mobile device software/hardware manufacturers weren’t far behind in adopting the digitization of their technology. 

Back then, we couldn’t imagine speaking to our phone to tell it to turn on our house lights from anywhere in the world. Today, within seconds, your request travels from the phone to the cloud to a switch that turns on your lights and then back to your phone to let you know your lights are on. All the technology involved to create that experience is incredibly complex and yet we don't even think about it. We just talk into our smart device and expect it to happen. 

This is our new reality, and with all that digitization comes a huge amount of data. Data is being collected in servers around that world, but what does the customer expect us to do with that data? They expect us to make their experiences more effortless.

Of course, there are privacy concerns, and we need to ensure the collected data is absolutely safe. But customers are telling us that as long as the value they receive is significant enough, they are willing to trade privacy (to a degree) for convenience. 

In another recent joint research study conducted by Skift and Sabre, we learned that 81 percent of customers stated they were willing to switch their loyalty for a more personalized experience. However, in the same survey, when asked where people would go to book a combined hotel/tour/car experience, only 27 percent picked hotels versus more than 43 percent that said they would choose OTAs. 

There is opportunity for us in this industry to enable effortless personalized experiences. As we collect more data, we are not only able to use it to personalize the guest experience, we can also use this information to sell more merchandise that is personalized to that guest’s expectations—and we aren’t just talking about rooms. This personalization can include any type of merchandise that fits into those expectations, and at a price that not only considers profitability but makes profitability a key factor.

From these same surveys, we know that 52 percent of consumers are willing to pay more if they can choose products or services which are usually included in room rates. 67 percent of hotel executives strongly agree that non-room revenue will present a growing share of their annual revenue in the next five years.

We've seen many technology providers in the last few months accelerating the development of capabilities to merchandise more effectively. In fact, the focus on add-on and ancillary revenues will continue to grow significantly.

Offering the Seamless Customer Experience

The pandemic certainly highlighted the technology gaps across the entire industry. Many companies were striving to switch to remote and offer seamless experiences across the customer journey, especially as hotel companies were forced to reduce their staffing and costs. Anyone not having their tech stack in the cloud had it particularly hard. Others took the crisis as an opportunity to push forward.  

Some hotels and resorts pushed ahead with investments and cloud-based infrastructure to roll out technology such as mobile check-in and check-out and more, using the past 12–18 months as an opportunity to innovate.

Those hotels that took this time to innovate were on the right track as higher expectations from consumers continue to push the industry forward. We’ve talked about the accelerated convergence of digitization, personalization and merchandising and to target specific customers with highly relevant offers to convert shoppers into bookers. Within the revenue management industry, we have had to recognize this shift in customer expectations, and there is an increasing focus on building new capabilities to help in this journey.

Elevating revenue management across the industry should be everyone’s mantra. Today, it is more important than ever before that the software should be able to do any number of things. From providing a simple or a sophisticated revenue management approach to solving a simple or complex problem or to managing revenues at the property, regional or central level, revenue management software should provide the right solution to help maximize revenue and profit opportunities for greater commercial success.

Today, convergence is upon us and bringing it all together through innovation that connects and powers the forces will help transform the field of revenue management and hotel hospitality ownership. As we prepare to emerge stronger than ever from industry disruption, now is the time to accelerate the development of all hotels as they emerge and prepare to own the upswing. 

Technology companies should be doubling down in areas of innovation, creative revenue generation and profit optimization. This optimization should be built on a solid foundation of revenue science optimization that uses highly scalable platforms that are also agile and can be customized to specific end-users and personas.

An Era of the Convergence of Technology

Data is the lifeblood that keeps our revenue engines pumping, and while the hospitality industry is interdependent, historically there has been friction and frustration in trying to seamlessly integrate across the technology ecosystem. This is especially true for revenue-management because it is arguably the most data-hungry of all systems in the hotel ecosystem.

It requires using a staggering amount of data to determine the right forecast inventory and pricing decisions, but that inbound data must also be extremely high-quality and accurate. RMS decisions must reflect the true picture of what is going on at the hotel or in the market, and it takes a tremendous amount of time and resources to ensure sure that data is accurate.

Just think about the connections required to ingest data sources such as PMS, rate shopping, reputation, future demand, CRS and others. They must all work in continuous unison to accurately synchronize pricing information. Until now, this has required cumbersome and tedious work to connect each of the providers, certify the quality of the data and ensure integration standards are met. Luckily the winds are changing and over the last few years technology providers have created faster, cheaper and easier integration capabilities.

Some of the largest hospitality software providers are simplifying their approach to integration. The time is coming when instead of having to integrate each of the products individually, one API will provide access to their entire set of data and make that available to their technology partners. Data and technology are great when they communicate with each other, and the last 18 months have proven that machines and people can work together. All software providers need to continue along this path to provide the perfect set of combinations. 

The Evolving Role of the Revenue Leader

It is crucial to critically evaluate what a system is doing and challenge its decisions when appropriate, especially in times of uncertainty. More and more stakeholders, channel managers finance asset managers, and owners are asking for more specific questions and expecting answers to guide their decision-making. Many times, they are turning to the revenue manager as an expert and trusted source to provide those answers. This has resulted in the emergence of true revenue leaders who now have a seat at the executive table in order to provide accurate and timely guidance in decision-making. 

What does that mean to the revenue managers of today? It means that the focus should be on enabling revenue and commercial leaders with not just the right tools for insights, but also the right organizational structure that empowers them to make the right decisions. 

It’s been a wild ride, and the need to converge has never been more evident than in the last year. Technology leaders and their partners have literally stuck together through thick and thin to overcome the most challenging period this industry—and the world—has ever faced. It is only through open and honest communication that we can be the best possible partners to empower the industry to reimagine commercial success, reignite profitability and reinvent the possibilities into 2022 and beyond. 

Klaus Kohlmayr is chief evangelist & development officer at IDeaS Revenue Solutions