The Four Keys to Digital Transformation in the Hotel Industry
The hotel industry is in the middle of a digital transformation: Significant advancements have been made, but there is still a lot of work to be done. And it needs to be done, as users are increasingly more digital, and want their experience to be digital as well.
But the concept of the digital consumer is very broad, and there are a lot of digital consumers with many different profiles. There are consumers who are digital as a matter of demographics, digital natives who are already at the age to make their own bookings and organize their own trips; as well as older groups who have incorporated the Internet into their buying process, whether they use it for finding information on prices, getting the opinions of other travelers, or deciding on their vacation destination.
In this digital world, booking a room cannot be our only objective. Now we need to offer an experience that sets us apart. But this digital transformation can help the hotel industry to increase profits, make internal processes more efficient, and comply with applicable regulations.
1. Big data and smart data
Information is indispensable when it comes to making the right decisions. But not just any information: We have to be aware of what data we need and why we need it.
According to a study conducted by the website Rastreator, 80% of Spaniards search for ideas and prices on the Internet, and 73% take into account the recommendations of other travelers on social media. In this way, digital users have become even more self-reliant, and do not need our advice or that of the direct contact at the destination. But this also provides us with an opportunity, as the users’ online searches and comments leave behind a digital trace and qualitative information that can be very valuable in discovering consumer interests, needs, and trends.
For example, the Meliá chain detected that one in five customers requested free WiFi through comments and ratings on social media. A month after they began offering this service, the negative comments on the Internet went down by 20%.
Weather in the consumer’s destination of origin can also influence bookings. A study from Destinia and DigitalMeteo determined that the likelihood of choosing a sunny beach vacation destination was three times higher when it was raining while the bookings were being made. Do we have more potential in countries with bad weather, or could launching certain campaigns based on weather forecasting get better results?
Big data provides us with information. With this knowledge, we can deeply personalize our customers’ experience and the value proposition we offer them.
Therefore, hyper-segmentation must be based on the criteria of interest and needs, not on sociodemographic criteria. It is no longer valuable to say that our ideal customer is a 45-year-old divorced woman with children, who wants to go to the beach and have a relaxing vacation.
Now we want to know our customers’ names, where they work, if they like sports, if they would want to travel with their pet, what kinds of restaurants and shows they want to go to, their cultural interests, and with which devices they want to receive our messages, their reasons for travelling and their travel concerns, etc. That is to say, we need to build buyer personas for our ideal customer or customers.
We can run into problems, as some of the hyper-segments are incompatible with one another, so we will need to choose or prioritize them. This seems difficult to many businesses who often think “more is better”. But we have to be realistic. Which hyper-segment will be most interested in what we have to offer? Which ones will be most profitable?
What is clear is that we cannot forget to hyper-segment. According to a study by Google and Phocuswright, 57% of people from the United States want brands to personalize information based on their personal preferences or past behavior.
3. Omnichannel approach
An omnichannel approach is a recurring trend in digital transformation, even though with the passage of time, the weight and importance of different channels change. Mobile devices are gaining even more ground on the web with regard to looking up information and making bookings, and social media and digital advertising are becoming more important in the search for recommendations.
But we cannot choose just one channel. Users often look up prices on their mobile devices, read opinions on social media, and make bookings on their PC. It is no longer an option to have different prices online or offline, as our users want total transparency and for all channels to be integrated.
We don’t necessarily want them to use the online channel more when making reservations; rather, we want them to have a good experience, so that they will come back and recommend us to others.
4. New models of digital business
Users are not just looking for accommodation. They want personalized experiences. What effect does this have on the hotel industry? It requires not just a change in marketing messages or initiatives, but an entirely new perspective regarding the company’s focus on their product or service.
A paradigmatic example of this is the rural hotel of the future: It is not longer just a trip to the countryside, with its traditional benefits and inconveniences. The rural home is automated and sustainable, with windows that change color and intensity and an automated gardening system that can be personalized to help us smell the plants that we like most. The rural home also allows guests to request regional dishes or specific food items for athletes or vegans using an app. At the end of the day, it seems that it is less important to be near the countryside; it is the experience as a whole that fascinates customers.
Some businesses have been created to take advantage of new technologies, with disruptive businesses, like Kayak, using big data and analytics to predict the best time to book a flight, or compare the prices of different vacation packages according to the parameters that the user has selected. Traditional hotels can also reinvent their products or services in this way, or use technology to improve them, such as through the technological integration that some of the hotel chains on the SmartTravel app have made.
The path forward is clear. Digital transformation is inevitable if hotel businesses want to stay competitive in the new environment, but there are two crucial steps that must be taken in order for them to do so: All of the business’s personnel need to be trained about and involved in the transformation, and technology needs to be considered an investment and not an expense.