Global Disruption - Past and Future: Hospitality/Hotel Industry
Three of the biggest industry changes and/or disruptors in the last five years for the global hospitality/hotel industry have been online aggregators such as Airbnb and Expedia, the rise of the solo traveler, and personalized experiences. Two possible disruptors and/or changes predicted in the coming five years or more, for the global hospitality/hotel industry include Augmented and Virtual Reality, and the Internet of Things.
GLOBAL DISRUPTORS IN THE HOSPITALITY/HOTEL INDUSTRY OVER THE PAST FIVE YEARS
- The hospitality/hotel industry has been transforming due to disruptions over the past two decades. Online aggregators such as Airbnb and Expedia have impacted distribution channels by taking value away from hoteliers. They have built firm relationships with customers which have resulted in hoteliers having to pay to avail access to these travelers.
- Airbnb is considered to be a key disruptor in the hospitality/hotel industry, "making the competitive landscape tougher than ever". Lodging properties that are listed on Airbnb are found to have different rules and regulations as compared to those of traditional hotels.
- Over 84% of consumers claimed that they book through travel packages through bundling sites such as Expedia instead of going directly to a hotel or airline.
- In 2018, it was found that global digital travel sales rose by 10.4%, reaching $694.41 billion. Over 82% of all travel bookings made in 2018 were completed through a mobile app or website, without any human interaction.
RISE OF THE SOLO TRAVELLER
- According to an article published by Solo Traveler World, the number of Google searches for solo travel has increased considerably from January 2015 to December 2017, indicating a 40% increase in searches over this period. It was also found that two out of every three travels mentioned on social media are made by solo travelers.
- Over 58% of millennials across the world tend to travel alone as compared to 47% of older generations. Industry studies have found that 26% of female millennials have already traveled solo, while 27% of them claimed that they would consider traveling alone in the future.
- In a study conducted by Booking.com, over 34% of respondents revealed that solo travel is one of the "top five trips that they have already been on and would like to go on again".
- According to a study conducted by MMGY Global, it has been found that one in every four people claim they will travel solo in the next year.
- The traveler's need for unique and personalized experiences has led to the rise of the independent traveler.
- Artificial intelligence (AI) has helped specifically optimize guests’ digital interactions. By analyzing and tracking customer trends and behavior across multiple hotel properties, based on guest history, conversations, interactions on site, booking preferences, geography, and more, AI and machine learning algorithms have helped develop highly personalized experiences.
- In 2015, American Express Travel reported that over 83% of millennials will allow brands to track their behavior and habits in exchange for a more personalized experience.
- The industry has seen the results of these improved personalization efforts, including an increased likelihood of repeated visits, increased user satisfaction, and a higher booking probability, leading to increased brand loyalty.
- Over 90% of global travelers say they expect a unique and personalized experience every time they book their travel.
- It was also found that over 70% of millennials would rather spend on unique experiences than on tangible products. Studies have shown that 57% of travelers aged 35 and above, feel the same way.
GLOBAL DISRUPTORS IN THE HOSPITALITY/HOTEL INDUSTRY IN THE NEXT FIVE YEARS
AUGMENTED AND VIRTUAL REALITY
- According to Adobe Digital Insights' analysis of social engagements, consumers are craving experiences that adopt virtual reality and augmented reality technologies. The study has shown that social mentions for travel and AR/VR technology-related experiences have increased by 13% year-over-year.
- Using virtual reality technology, travelers can experience new destinations before actually planning the trip to reduce the risk of disappointment. Once travelers arrive at the destination, virtual reality systems can enrich their travel experiences. Hotels can improve their services by displaying appropriate information on the available excursions, facilities, and travel/guide agents such as tour operators.
- Historical sites and museums can adopt virtual reality technology to add information and entertainment to their existing services.
- In some hotels in the United Kingdom, maps of the room interiors can be found to help travelers check their requirements before checking in. Holiday Inn has developed an in-house augmented reality hotel experience which enables guests to direct their smartphones and view virtual depictions of celebrities in the hotel.
INTERNET OF THINGS
- The Internet of Things (IoT) extends internet connectivity to general and everyday devices and appliances. These devices collect data and interact over the internet, transforming "previously unintelligent devices into ‘smart’ devices".
- Internet-enabled thermostats are currently being used in the hospitality market. These smart thermostats are utilized to automatically adjust temperatures at both, check-in and check-out times. They can also be adjusted in response to temperature changes caused by opening the windows or the sun. This concept is also being used for lighting to improve energy efficiency capabilities during daylight hours.
- IoT in hospitality has the potential to help with security or emergency issues. IoT-connected messaging can alert administrators to a power outage or a potential gas leak at their hotels, keeping travelers, guests, and employees safe from danger.
- In the near future, IoT technology will be able to alert the hotel management along with the local law enforcement to attempted theft, break-in, or an unregistered guest present on hotel grounds, thereby, ensuring the safety of guests and employees.
We began by looking for pre-compiled lists of some of the biggest industry changes and/or disruptors in the hospitality/hotel industry in market-specific websites such as HospitalityNet, HotelierMagazine, CMO.com, INC, and HospitalityTech; reports from media websites such as Forbes and HuffingtonPost; and industry research reports from websites such as Markets and Markets. An extensive search through these channels provided us with a broad overview of the ongoing trends rather than disruptors that made an impact on the industry over the past five years. On further search, it was noticed that some of these disruptors have already made a big impact on the industry while others were just emerging and would grow to create a larger impact in the coming years.
First, we noted that most changes and disruptors for this industry are technology-based. The most common theme found in the available lists was that online aggregators like Airbnb and Expedia have had a large impact on the industry. Supporting data was obtained to closely tie the growth of online agents with the need for personalized experiences, thus providing us with two of the largest disruptors in the hospitality industry. Most reports and articles indicated an underlying theme of millennials being extensive travelers, a fact that the hospitality industry is taking full advantage of. Numerous industry studies were made on the subject of "solo traveler", a trend that that has become significant over the past five years.
Two of the biggest changes in the coming five years or more, for the hospitality/hotel industry, has also been found to be technological. The two aspects chosen as the biggest disruptors are augmented/virtual reality and the Internet of Things. These two disruptors were chosen as the "biggest" because hoteliers have already begun implementing applications of these technologies across the world. It is expected that these technologies will significantly evolve in the coming years.