On this episode of Shiji Buzz, three hospitality industry professionals from different backgrounds discuss the challenges and opportunities hotels face in their digital transformation journey. Presenting their views on topics such as digital touchpoints in the guest journey, how open APIs and digital marketplaces behave, the metaverse, and blockchain are Sihil Piyasiri, Head of Hotel Solutions & Deployment, EMEAA East at IHG Hotels & Resorts; Ted Horner, an experienced independent technology and services consultant, elected to the HITEC Hall of Fame in 2004; and Nikkie Singh, Senior Vice President, Asia Pacific and Middle East at Shiji Group. Here is a summary of their discussions.
- Before starting, consider the WHY of moving to the cloud. Each hotel will have different goals, needs, timelines, and budgets
- Moving to the cloud ends up saving a lot of time in the long run
- Our modern technological experience as consumers (using Google, Netflix, Instagram, et cetera) means hotel guests have high expectations for the personalization of their stay
- Consider whether self-service kiosks or your guests’ own devices make the most sense for delivering a certain digital experience
Benefits and considerations when moving from legacy systems to the cloud
Sihil kicks off the conversation by listing a very obvious but major benefit of moving to the cloud, which is not only having less cumbersome infrastructure and equipment to deal with but also eliminating the need to backup data and continuously patch servers. “We often don’t realize how long it takes IT managers to carry out all these tasks, but it probably amounts to 40% of their work. By moving infrastructure to the cloud, I see it as a big benefit for the hotel.” A second benefit Sihil notes is how it allows IT managers to become business partners of the Hotel Manager, and understand the business and its challenges to bring in the technology that will solve them.
Ted mentions the financial benefit of moving on from CAPEX expenses to SaaS monthly fees with off-premise software, as well as the incredible ease of keeping up with newer versions of software on the cloud. Finally, he also agrees with Sihil’s point of how beneficial to owners and operators it is to free up the time of IT staff, so they may perform more significant work.
Nikkie reflects on the considerations hotels should have when making the move, and how it is a critical step towards a larger goal of infrastructure cost/benefit or of digital transformation. She opines that the first consideration should be to clearly understand the purpose of the cloud migration and that this should be underpinned with business objectives – be it making internal processes easier, making guest experience better, or any other reasons behind the change. Another critical piece is change management and obtaining buy-in from the entire organization, from management through to operations, and Nikkie suggests that IT managers can function as evangelists for the change. Yet another consideration she mentions is choosing the right applications, as not everything can go into the cloud, and doing a thorough analysis of the architecture, security, and complexity of the migration. Lastly, she stresses how important it is to choose the right partner for the new cloud strategy. “The right partner for your strategy may be the one that has open platforms, or scalable platforms, or is someone who can be with your hotel for the next five to ten years’ strategy. As I said, the move is the first step towards a larger goal, so having the right partner to support you is important.”
The first step for a hotel when starting their digital transformation
In response to this question, Sihil reiterates Nikkie’s point of having a clear understanding of the transformation’s purpose and goals. Subsequently, an audit of the current partners and their capabilities should be conducted, and only then move on with a plan to shift systems to the cloud. “One can’t just say they’ll move everything within twelve months if the partners they work with don’t have the capability. It is necessary to know your purpose so that the plan can be built with the end goal in mind. Granted, the end goal will keep changing because that’s what happens with technology, but at least there are goals to work towards and continue reaching for the next ones that will come up during the process.” Sihil points out that the need for transformation is primarily triggered by looking at the guest experience, especially when the solution is guest-facing. It is not just having technology purely for technology’s sake, it is usually a guest-driven decision.
Is it important for small hotel operators to have a digital strategy? What about timeline?
Ted recounts an anecdote from a hotel in Australia he is working with and how important it was to audit their tech stack, replacing 16-year-old legacy technology. He advises, “Every hotel, large or small, depending on what their budget is, should be moving towards some form of digital strategy and they should be starting now in order to keep up. Everyone today wants to do things on their mobile phone, and a hotel without the right capabilities for mobile booking inquiries and so on will have a hard time.” He goes on to mention how users are accustomed to hyper-personalization, such as seen by suggested products on Amazon or titles on Netflix, and that hotels can take advantage of digital solutions to offer hyper-personalized offers as well. Ted further notes that it is unlikely that the next wave of technological advancement will happen in another 16 years, as cloud software is more nimble in terms of gradual improvements and represents a less significant upfront cost of upgrading.
Nikkie believes that the core value of digital transformation is innovation. While technology, in general, is constantly evolving and it can be difficult to keep up with the pace, especially when speaking of emerging technologies such as AI, blockchain, the metaverse, or NFTs, she advocates for the importance of being committed to the digital transformation and echoes Ted’s statement that every business should consider it, adding that it should be a long term commitment with short term deliverables as a strategy, due to ever-evolving business needs and consumer expectations.
On available guest-facing tech solutions and high-touch service
There are two main ways of using current technology to provide guest-facing services: self-service kiosks/tablets and making use of the guest’s own mobile devices. The three panelists have their own preferences but are in agreement that a hybrid model is more feasible, as it is unlikely each guest would always have their own devices, and that those will be able to interface with all of the hotel’s systems, the same way it isn’t viable to exclude BYOD (Bring Your Own Device) from the mix as hoteliers increasingly consider offering seamless experiences.
5 Tips to Begin Digital Transformation Strategy:
- Start with
Nikkie’s view is that none is better than the other, but rather, that a hybrid approach is the most common: kiosks or tablets can be used as queue-busting solutions, especially in large operations, however, guests may have already started their journey on the way to the hotel by using their phones to do a mobile check-in, for example. To decide on the right mix, hotels should look at their own brand values, the product and experience they’re trying to sell, the sort of experience the customer is expecting, and their age demographics. As an example, she cites how successful fast food restaurant chains have been at using self-service kiosks for ordering, as it fits with their purpose and target market. A caveat she cautions about, though, is balancing the need for human interaction and the use of self-service technology.
Retracing the history of hotel technology moving from phones, to TVs, to current devices, Ted draws on a recent panel he was a part of to state the perception of how these solutions are used is still aligned with the service level of hotels, with people being more accepting of lower human touch in two- to three-star properties, as opposed to luxury hotels – where a complete replacement of human staff is seen as more unlikely. He also cites how brand values and customer demographics are important factors in deciding what solutions to deploy, and adds that the pandemic played a role in the increased acceptance of some customers towards self-service solutions, be it own device or hotel-provided.
Sihil leans toward mobile solutions as his preference, as he sees guests being more comfortable using their own devices. He argues that using the guest’s own device sidesteps the need for additional investment by hotels in purchasing and maintaining extra equipment. “QR codes are here to stay, everyone knows how to use them now, so it is a very good way to get the digital transformation moving. And it makes it that much easier to actually deploy a system, as there isn’t a need to worry about charging devices, about data, and other considerations one might have with owning the devices.” Additionally, Sihil notes that in places such as Australia where regulation allows it, “a guest can complete the entire check-in experience on their mobile and head straight up to their room, where their phone can be used to open the smart lock on the door. For places like Singapore where this isn’t possible, a self-check-in kiosk or tablet can be an option, so it depends on the whole environment.” Ted chimes in with concerns about low rates of mobile key adoption, but recognizes that payment gateway functionalities are maybe what will make these rates increase, albeit not for the time being.
When looking at whether it is possible for self-service tech and high-touch service to coexist in hotels, the panelists unanimously agree that it is: Sihil recaps the previously discussed tech options for check-in and also mentions how digital in-room controls can add value to the experience. To him, offering guests the flexibility to choose between high- or low-touch service is where the advantage lies; Nikkie links it back to the brand’s values, and the importance of adopting the right mix for each brand and property; while Ted advocates that the choice between high-touch and high-tech is personal, and hotels need to be aware of their guests’ preferences and expectations.
Views on open APIs and virtual marketplaces
Sihil begins by praising the use of open APIs for larger brands or operations, as it expands the pool of options for solutions to be developed and built upon, helping the industry to grow and further its own digital strategy; however, he believes it is still much too expensive for small or independent operations to consume, also because they don’t have the technical skills to do the configuration, setup, and training. “To get the full value of the investment in any system, training is crucial,” he offers.
Ted recounts how he was part of the remote installation of a property’s entire PMS system during the pandemic, and how it wasn’t the best experience as he feels many of the configuration issues encountered during the process might have been resolved had the installation been done in person. Nonetheless, necessity dictated that it be done that way, and the virtual marketplace made it possible. He goes on to say, “the issue with open marketplaces is that certain vendors insist that their product is plug-and-play with third-party programs, but in my experience that is not the case. The reality is that, previously, PMS vendors accepted responsibility for the accuracy and integration of the interface with third parties, and they offered support, whereas now nobody takes that responsibility and safeguards the integration and accuracy of data passing between point A to point B.”
Nikkie highlights that a vendor professing to have open APIs has to think about how simplified their process makes it for third parties to consume those APIs, and vendors should be responsible for testing those in a sandbox and having them certified, agreeing with Ted that the responsibility has to lie somewhere. There must always be awareness of the sensitivity of the data that will be handled and the complexity of integration and data touchpoints. She summarizes, “The API integration process should be simple and cost-effective so as not to dissuade users,”
Metaverse, blockchain, and data sovereignty
When asked if blockchain and metaverse tech research is being undertaken or already put to use by hotels, Sihil postulates that larger chains are looking at how to use the technology, mainly at the above-property level, to add value to the guest experience or even to owners; while for independent operators, again, the costs are still too prohibitive.
“The metaverse will mainly be a tool above-property for hotel chains to add value to the guest experience or even owners. For independent operators the costs are just too prohibitive.” – Sihil Pyasiri
Ted sees most of the interest and upsell opportunities focused on the possibilities the metaverse and virtual reality present, citing how a customer might make a purchase decision based on experiencing the room virtually, despite this use case still being in its infancy. As for blockchain, he maintains there is still some time before vendors can embrace the benefits the technology will bring and come up with real offers.
Nikkie echoes Ted’s point of view that metaverse and blockchain are both very much in the early days of what they may look like for hospitality. She also agrees that virtually experiencing the hotel and its facilities before making the buying decision can be a golden opportunity for hoteliers. However, she points out how this technology currently depends on the hardware necessary for the experience, such as chunky VR goggles, which aren’t necessarily cheap, making it something of a barrier to widespread adoption.
To close the discussion, the panelists share their views on data sovereignty, agreeing that it is a non-negotiable point for hotels to consider, above all as each country and region adopts specific frameworks and regulations on how to deal with customer data. They also briefly discuss what hotels may need to do in the future in order to use guest data, specifically for loyalty programs, and that chains that place high importance on loyalty programs may need to give guests something in return for being allowed to use their data.
View the recording