Big Data and Millennials dominate regional Hotel Events

Autumn is convention and exhibition time in Asia which of course also includes a smattering of hospitality related events. I attended two: the China Hospitality Technology Alliance Conference (CHTA) in Beijing and the HotelManagement and Technology conference in Jakarta. The CHTA is the China equivalent of HTNG and has managed, in its sophomore year, to stage a slick event that pulled in a lot of big names to lend it some heft.

Standout topics for me were how to manage your OTA relationship (answer: they're here to stay so you better get your strategy right and if you rely 80% on them you are doing something wrong), whether the days of charging for things in the hotel room are over (a resounding yes) and how does big data impact hotels (in every way!).

Big Topic: Big Data

After the session on the latter, the instant WeChat poll of the audience on what info was most important to glean from big data clearly pointed to hotel guests' behaviour during their stay. And rightly so: from improving service to streamlining operations, data on guest behaviour is key for hotels moving forward. The airline industry, as always, is a few steps ahead when it comes to this topic. In a recent report by the FT, Wifi speeds, flexible screen based technology and in-flight entertainment systems featured were named as the key areas where airlines focus their efforts to innovate. "Expect personalised in-flight entertainment experiences, whereby a seat knows who you are before you sit down and what you watched last time," the article quoted one industry specialist. To a degree, it is possible to implement something similar in hotels today as well - provided guests use the same loyalty number to check in the same hotel brand. From building your own TV channel list and saving it for next time, to preferences for in-room dining, big data can facilitate a much more personalised experience which will help with differentiation and brand loyalty. But, as I said before, both airlines and hotels need to carefully manage their guest/passenger data in order to not appear too Big Brotherish which will be a turnoff for many people.  

How will Millennials impact Hotel Brands?

The Jakarta event in November was equally well organised and attended. What caught my attention during the conference was what appears to be a bit of an identity crisis between the plush established 5-star brands and the new, three star kids on the block, such as Tune Hotels.

While the latter promoted its 'cheekier' image explicitly to attract Millennials, Tune's COO Frank Trampert was quick to point out that his hotel chain was aiming at a much broader audience. Similarly, when asked what they would do to attract the Millennial travelers, the representatives of Mandarin Oriental, Fairmont and the like gave rather disappointing answers, mainly praising how their marketing team have embraced social networking techniques.

This very much looked like to me as if currently the hotels at either end of the spectrum expect Millennials to go through a transition from the Tune-style cheekiness to the traditional 5-star hotel brand - pretty much how things have progressed mostly for the past decades as travelers transition from cheap backpacking as students to sophisticated travel as they become established and affluent. While this may still happen, something tells me that this new generation of connected travelers are more likely to shake up this expectation which may have radical consequences on hotels' positioning and design. Watch this space.

The Hotel Whinge List

The travel season is just coming to an end, which is probably why over the past weeks so many travel industry commentators have felt the need to part with their personal gripe lists when it comes to hotels. High time then that I add my two fifth to it.

Don't worry, payable wifi is not on my list. Those hotels still charging for it are few and so far between here in Asia that we can focus on some other areas. 

Mould

I cannot believe that I actually have to mention this, but mould in the bathroom is so widespread in this region that it is high time somebody brings it up. No matter whether it's a five, four or less star, the mould issue seems to be endemic throughout the whole industry. Maybe hotels here in Asia are particularly susceptible because of our steamy climate, but that is no excuse. Is it really so hard to train the cleaner to spritz a little bleach (or preferably something more environmentally friendly) on the tiles so that your guests won't be greeted by some green outgrowth when they step into the shower?

Room Control

Few topics divide people into love/hate camps like automated room controls. There are stories abound of power outages leaving people traipsing around in the dark, unable to open their fully automated black out curtains. I'm sure you've heard them before.

Shangri-la Sydney: gets the light
controls right (without a control panel)

Given that room automation has been around a fair number of years, it's interesting how little this area has improved. But it's a tricky issue, no doubt. Staying in an older hotel recently I found the familiar room control console next to my bed that allowed me to switch on and off certain lights, change the aircon temperature and switch on the Do Not Disturb sign. What it also had, was a curtain automation, which I totally missed and only realised  must have been there after half ripping off the whole window covering  while trying to close it (no fatal damage was done I hasten to add). And while it is great to switch on the Do Not Disturb sign without even getting up, you’d better make sure it resets itself when you leave the room, or you may find your room in the same messy state after coming back from your morning meetings a few hours later.

But my all-time favourite in this department was at a recent stay at a boutique hotel.  This hotel  had supplied each room with an iPad mini for the sole purpose of controlling the room. Aside from the substantial cost that putting a gadget like that in the room would have incurred - and the fact that whenever I tried to hit the aircon button the whole thing froze and had to be restarted - the room was so small that I could reach the wall controls almost lying down. So…what's the point?

Daylight and Night Light

But the thing that really annoyed me about that room control iPad was that at night it lit up the whole room like a Christmas tree, so I had to actually switch the damn thing off altogether, which renders it even more useless. Which brings me to my next pet hate: my room should be nice and flush with light at daytime, and as dark as possible at night time. If your property doesn't have a window - or just a skylight, like the Scarlet in Singapore - advertise it. Do the same  if your hotel has rooms facing the office next door, which turns your room instantly into a windowless room (unless you are an exhibitionist I suppose). On the other hand, make sure that none of the room technology emits any light, blinking or otherwise, at any given time (that includes the STB behind the TV). And position the night light button that it can be found easily while still being half asleep. One of the better hotels I stayed at recently that got the whole light control thing right was the Shangri-la Sydney. Simple, straight forward, easy to reach and operate - not from a central panel I may add.

The Wish List

Treadmill cam

Ok, now for some things that would excite me if they were offered in a hotel. Being a bit of a sporty spice, this includes anything involving the fitness facilities. It really annoys me coming down to the pool for some laps and finding the pool overrun by a bunch of excited kids doing bombs. It would save a me a great deal of hassle if there was a channel on my TV that showed how busy the pool was. Similarly, if I could get an idea if all treadmills are taken while still in my room, I wouldn't have to waste my time going down to the gym to find out that no equipment was available. 

Yes yes, I know what you are thinking: how about privacy? Couldn't this be exploited by sneaky in-room voyeurs? Well come on. Don't tell me there aren't any security cameras around the pool and gym area anyway. All I need is an overview of how busy the area is, so even a camera at a distance or at knee-high level would be enough to do that and still maintain privacy.

The other one that irks me is the sauna. Unlike in a regular gym, a hotel sauna usually has a timer to save energy. All fair and well, but I would really love to come down to the sauna without having to wait 20 minutes for it to be sufficiently hot to do the job. Again, why not utilise the IPTV for that? A simple input mechanism would allow guests to send an email request to the spa desk to switch on the sauna at a certain time. If the guest doesn't show, staff simply switch it off again.

Not everyone is sporty spice, but these are just examples to illustrate the point. In an age where differentiation is a major factor for hotels to stay competitive, these types of small things would go a very long way to foster loyalty.

Welcome to Modern Airtravel

Flight delays are a pain, no matter how you look at it. But while being annoyed over frequent flight delays used to be synonymous with US airtravel, this has now alarmingly spread across Asia. Or, to be more precise, China and Hong Kong. On a recent 9.20am flight from Chek Lap Kok to JFK, all looked promising with the plane parked at gate 4, which, as the pilot happily announced as we finished boarding, would ensure a quick taxi to the runway. Half an hour later, our pilot, now a little less happy, announced that pushback

would be delayed due to the airport being 'very busy'. When we finally pushed back and headed to the runway, almost an hour after schedule, there were still 13 planes in front of us in the take off queue, which meant another 20 minutes before we were finally airborne. While this type of delay is particularly annoying when you have a 16 hour flight ahead of you, it is even a greater inconvenience when the delay represents almost half the scheduled flying time of a 3 hour intra-regional flight. Unfortunately this type of delay has become a reality for far too many flights in and out of Hong Kong.

Will a new runway solve the delays?

With close to 60 million in passenger traffic in 2013, Hong Kong's airport is certainly bursting at the  seams, which is the type of evidence usually brought forward by people who are in favour of building a third runway at Chek Lap Kok, something that is hotly debated right now. If only it was so easy. "Hong Kong on a sunny day can just cope," a pilot friend of mine I questioned about the delay situation told me. "A few drops of rain though and the delays start," he said. I asked him whether he thought a third runway would ease the pain but he thinks not. "It's not the lack of runways that's the problem. It's the lack of airspace." So in other words, unless you somehow have a magic wand that enables you to build more airspace to handle the increased plane movements a third runway would bring, the situation will not improve.

Bring on the Big Planes

A much better way of coping with the overstretched airport could be to reduce the flight frequency by forcing airlines to use bigger planes to fly with less frequency. For example, Cathay Pacific currently flies eight non-stop flights a day to Singapore, typically all on 777's or A330's. While this is very convenient for frequent travelers there (like me), the same load could be achieved with flying, say, four times a day with A380s. It's less convenient, sure, but if the pay-off is schedule frequency versus increasingly annoying delays, I think I'd opt for the former - being able to rely on a schedule is far more valuable than being at the mercy of unpredictable delays. There would have to be some sort of regulation that the Airport Authority and (ultimately) the government would have to impose for airlines to comply though. But knowing how difficult it is to get any legislation approved in Hong Kong, I won't hold my breath.

The secret of airtavel in China: Stoicism

Of course, if you are a frequent flier to or within China, this will seem like peanuts to you. Delays within China are frequent and unpredictable, mainly due to the Chinese government (and the PLA) closing airspace on a whim, for anything from VIP flights to military exercises. On a recent trip to Shanghai, my flight got cancelled. My flight back was 30 minutes late and the flight scheduled before mine and after both got

Inner calm: Marcus Aurelius,
famous stoic philosopher

cancelled. So I guess I was lucky. A friend, on a recent flight back to Hong Kong from Wuhan, was not so lucky. His plane had already taxied halfway to the runway when it was suddenly announced that there would be a delay. Of three hours. Thankfully the entertainment system was switched on and the meal service started to pass the time, but I would not have wanted to be on that flight, either as passenger or as crew. According to some reports, airlines flying frequently in and out of China now provide special training to cabin crew to deal with passengers becoming irate because of delays. Perhaps they should also hand out a booklet about the benefits of stoicism to the passengers, at least until Xi Jinping tackles this particular issue. After he so successfully outlawed expensive gift giving and lavish banquets, let's hope the issue of flight delays is also on his agenda.

Dispatches: the blessings of clueless tech companies, foreign labour shortage forces hotels to transform and how not to handle late check-out requests

Get Luckey

Out all night : Palmer Luckey

One of my favourite recent stories in the department of "wacky names" is how yet another 21-year old whiz kid called Palmer Luckey sold his virtual reality business Oculus to Facebook for a handsome US$2bn. Even if it's only a fraction of the $19bn Facebook paid not so long ago for Whats App, it seems like a lucky palm-off indeed. But funny names and big money aside, what was really interesting about this transaction was the discussion it triggered about what the 'next big thing' in tech innovation would be and the dominant tech companies' ability - or rather inability - to predict it.

As Google dabbles in self-driven cars and Glass headsets, Amazon plans to use drones as next generation delivery mechanisms and Facebook now clearly bets on virtual reality transforming our future lives, I tend to agree with GigaOm's Om Malik, who called the current attempt to define the next big thing as "billion dollar dart throwing". "Are the smartest minds of our time as clueless as we are?", he cheekily asks. For hotel IT managers who have been fretting over what the next 'big thing' in hotel technology will be and whether it is just around the corner, this should come as a relief. If the bleeding edge doesn't know which way the cookie will crumble, we shouldn't guess it either. There are plenty of enabling technologies out there now that have the capability to deliver a lot of innovation within the hotel. The key is to find the right application to fit each hotel's personality and to integrate it fully to facilitate smooth operation.

Hotel Industry's Labour Shortage in Singapore is here to stay

STB CEO Lionel Yeo

Meanwhile, at last week's Food & Hotel Expo in Singapore, the CEO of the Singapore Tourism Board Lionel Yeo delivered the news no one in the industry wanted to hear: manpower challenges, triggered by a tightening of foreign labour laws, are here to stay. And Yeo put the responsibility to deal with the chronic shortage of front and back of house staff in hotels across the city state squarely at the feet of the industry itself: "With even more hotel rooms coming onstream in the next few years, this situation will get worse if our industry does not transform. Based on our rough estimates, an additional shortfall of about 3,000 workers by 2017 is looming if we don't make adjustments," he said. While that is sobering news to many hotels struggling to fill positions, many hotels are taking the situation in their stride and are indeed looking at ways to transform their operations. The hotels we have been dealing with are increasingly interested in using the in-room IPTV system to streamline operations and offer self-serve ordering options for the most requested items from housekeeping to in-room dining. Flexibility and customisation are key here as of course no two hotels are alike, but to really benefit from these automated services it is imperative that they are integrated into the hotel's overall ecosystem.

How to not handle late check-out requests

During a short break on Okinawa recently we stayed at a new and comfortable hotel that was at the right location for the activities we had planned and didn't break the bank. All good reasons to recommend it and mark it as a place to return to, and it would be, if it wasn't for one thing: the late check-out charges. We should have had an inkling of what was to come when we were told of the rather early check-out time of 11am, but as we naively asked for a check out at 1pm (to match with our late afternoon flight departure), we were presented with the charges: 1,000 yen every hour, maximum three hours.

Not happy Jan...

While this was delivered with the same unfailing smile we received by staff throughout our stay, it smacked of mercenarianism that leaves a rather sour taste. I have come across fixed late check-out charges and worse behaviour by hotels wanting to make a quick buck by exploiting travelers' skewed flight times before - the worst was in the US where conference delegates who flew in on red-eye flights and wanted to check in earlier than the "3pm standard check-in time" were told their room would be ready for a US$25 fee. But this is not something you usually come across in Asia, and rightly so. Late check-out is not a given and should always be at the discretion of the hotel pending on availability. But even if it's not possible to extend a late check-out for these reasons, the fact that I can ask for it and the staff make an effort to accommodate my request, rather than slap a table of charges in front of me, will make me feel that the hotel values my custom. Not so difficult one would think...

In-Flight Entertainment vs In-Room Entertainment

While reading a recent report by Deloitte's on the future of In-Flight Entertainment systems (IFEs) and how they are changing the flying experience for both passengers and airlines, it struck me how the findings could just as well apply to hotel in-room entertainment systems (let's call them IREs, not that it's a recognised industry term yet, but if there's IFE, there should be IRE...).

Of course, there are some differences in operation and value proposition between planes and hotels. But the fundamentals on which both are rated on are essentially the same: price, destination served (airlines) or location (hotels) and quality of service. Yet, while these days even short haul and low cost airlines see IFEs as mandatory in order to compete, the notion that IREs are an unnecessary expense is still surprisingly widespread in the hospitality industry.  

This is in stark contrast to how airlines value their entertainment systems:  embedded IFEs are typically the single biggest expense after engines (yep...big gasp). Of course there is no point doing a like for like cost comparison between IFE and IRE, given the unique environmental and regulatory challenges of an aircraft that keeps the entry barrier for competition high. But are airline customers and hotel customers really that dissimilar an audience that it would warrant valuing entertainment systems so differently?

Let's take a look at some of Deloitte's findings.

Embedded IFEs are now able to improve the level of service, reduce costs and open up additional revenue streams for the airline.

Given that it is way more complex and expensive to upgrade an IFE system, it's understandable that hotels were somewhat quicker in realising the potential that IREs, combined with flat panel TVs and even smart TVs offer. Having said that though, viewing IREs as a revenue generator and cost reduction enabler has yet to be embraced by the industry as a whole. Way too often hotels still hold the view that now in the age of declining VOD revenues IRE is a cost centre and that's that. Maybe the big price tag forced airlines to find a better way to utilise - and thereby rationalise - their systems, but fact is that good IREs have long been ready to provide substantial tangible and intangible value to hotels.

Personal electronic devices (PEDs) will not replace IFSs, at least not in the immediate future. Airlines must choose IFE systems which allow and encourage the use of PEDs in conjunction with IFEs.

An important point that hotels should note: simply abandoning the TV and concede defeat to personal devices would be shortsighted. A TV is prime marketing real estate in a hotel room and even with an increase in the use of PEDs, television still reigns supreme when it comes to entertainment - even among the

much coveted Millennial demographic. Interaction is key here, so offering Miracast and/or Airplay integration with the in-room TV is a must for any IRE system to provide the type of sticky service that creates brand loyalty.

A cost effective and scalable Wifi internet solution will be an industry game changer.

Well ok, this is where the airline industry has long been on the backburner because (we were told) it was not compatible with navigational instruments. Or something. But where there's a will there's a way, apparently, and just now I read that ANA has joined the fray of airlines that are enabling Wifi internet access on their flights. My guess is that the airline industry will go through a similar trajectory with Wifi as the hotel industry did: to start it will be a novelty that people are willing to pay big bucks for, then it will be an expected commodity with charges petering out towards a free or tiered model. I wished airlines took a leaf from their cousins in the hotel business and go straight for the freemium model. But somehow I think it's not going to happen... 

  

IFE is no longer a must-have offering for long haul full service carriers, but a tool for improving business of low cost and short haul carriers.

Just like IFEs, IREs were very much a five star proposition just a few years ago. But the relentless march of technology has made IREs now an affordable and viable option for budget hotels, just as it has done for budget airlines. Smart TVs are playing a major role here, but so does the ability to integrate with workflow systems that streamline backroom operations, such as housekeeping. For airlines it is now much easier to provide IFE, for example with tablet based systems, but it is also how they use it that matters. And similarly to budget hotels, low cost airlines see the system as a tool to provide upsell or streamlining operations, rather than "just" an entertainment tool, which has long been the main purpose of IFEs.

Passenger are placing increasing emphasis on IFE and connectivity, thus a quality offering is an easy way to market an airline as cutting edge and an effective way to fill seats.

Well, replace "airline" with "hotel" and "fill seats" with "generate bookings" and you have the purpose of an in-room entertainment system in a nutshell.

Thanks Deloitte!

Horsing Around: Five Thoughts for the Hospitality Industry in the Year of the Horse

Time flies when you are having fun, so as the lunar New Year is almost upon us, I better add my two fifth to the canon of opinions and predictions that have so far poured out for the New Year of the Horse.

1. Integration, not Innovation    

As I said many times before, technology should be the conduit for a smoother guest experience, not the raison d'etre. The "hotel room of the future" has reared its head again with a follow up of what was launched last year at the FITUR hotel conference in Spain. Now, a full one year later (a lifetime in technology these days), apparently people can finally try it out. Judge for yourself here, but I very much doubt that this will "take the hotel experience to the next level" as the people behind it want us the believe. Given the fact that the hospitality industry in general has to bridge a large generational gap at any given time, it cannot and will never be the hotbed of technology innovation. So rather than putting more technology into the room (like all those screens in the supposed hotel of the future...), hotels should focus on looking at how to better integrate what's already there to deliver a smoother experience - for guests AND hotels. This is where the ultimate expertise lies - not how many clever gadgets you can throw out there, but how you can intelligently integrate them into the overall ecosystem. As for the gadgets: to paraphrase Publicis chairman Maurice Levy at the Davos World Economic Forum last week, nowadays participants at Davos carry smartphones, tablets or both, whereas 10 years ago delegates were handed Palm Pilots (remember them?), and more recently it was Second Life that was predicted to dominate our lives, and is now of course almost never heard of. Enough said!

2. Bridging the Generational Gap

Having made the point about the challenges for hotels to serve multi-generational guests, hotels nonetheless are in danger of failing to adapt to a new breed of guests whose needs and demands are entirely different to those of previous generations. All too often we see hotels do nothing out of fear of alienating their not so tech savvy guests. This is a big mistake. A new study in the changing nature of hotel guests undertaken by global hotel consultancy HVS called  ‘A New Breed of Traveller’ says the impact of rising affluence, globalization and technology has led to modern hotel guests valuing experiences and the feeling of ‘being connected’ over traditional hotel luxuries. So what about the not so modern hotel guests you may ask? Well, offer both experiences. If you have interactive In-room Dining on your TV, make sure you also have a hard copy of your dining menu in each room to facilitate the transition from one generation's habits to another's.

3. Airbnb is NOT 'crushing' traditional hotel brands

Plenty of articles over the past year took aim at Airbnb and its imitators and how they are 'crushing traditional hotel brands'. I tend to think this is a tad overblown. Airbnb will definitely continue to grow and disrupt particularly the extended stay market, but 'crushing' the hotel market? I doubt it. The numbers may look intimidating, and there was much hoopla over the company's swanky new headquarters in San Francisco, but if you take a close look at what Airbnb is actually offering in terms of experience it puts those numbers in a different light. Let me share my Airbnb experience when I traveled to Tel Aviv last year. I booked a lovely looking penthouse in a funky part of the city. There were no elevators, so we had to lug our luggage up four flights of stairs - no porter in sight. The apartment didn't have a coffee machine as the owner apparently drinks tea. We were leaving during the Shabbat, so finding a taxi was a challenge as we couldn't ask the front desk to organise one. Don't get me wrong, these were not deal breakers and in terms of value for money it was absolutely alright for the holiday nature of this trip.

But would I book Airbnb for my business trips? Not a chance. And that's my prediction: Airbnb will grow within the extended stay and backpacking demographic. But I think the business and medium to high end leisure travelers will stay well clear of it.

4. ... but OTAs continue to disrupt the market

Rather than worring about Airbnb, hotels should focus on OTAs. OTAs are here to stay, and I think hotels have pretty much accepted this, but the challenge is how to wrestle some of the distribution channel control back from OTAs. So in the coming year we will see hotels ramp up their efforts to do just that, employing all channels available to them, including the in-room TV.

But that's not all of it. A recent article covered the challenges posed by the fact that despite the seeming ubiquity of credit cards and pay pal, a surprising number of countries still prefer different payment methods. In Brazil, paying in instalments is the norm and OTA Hotels.com has responded by allowing this form of payment since last year, as well as allowing guests to pay when checking out, rather than checking in, which is the preferred way to pay in southern Europe and Russia. According to the article in the FT, the online room retailer had to renegotiate 250,000 hotel contracts, but the potential upsides are evidently huge, given that, for example, Brazil's ecommerce market is set to grow from $18billion to $26billion in the next four years. So if hotels want to go head to head with OTAs they have little choice but to do the same.

5. The Labour Crunch will Increasingly Squeeze Operations

As the Asia-Pacific continues to plough ahead as the region with most growth potential, a dearth in qualified staff is starting to become an issue in some markets. Specifically in places like Singapore, where hotels suffer serious manpower shortages since strict new immigration laws have come into place. While there are no overnight solutions, a number of our hotel customers are seriously looking at how technology can assist with streamlining their backroom operations and ease the reliance on manpower.

But we are not talking about new technology, mind you. This is an issue of looking at existing technology in hotels and how it can serve to increase productivity, rather than jumping at new technology innovation. For example, a hotel's IPTV system can do much more than just infotain the guest. With the right programming and integration work it can easily become a crucial tool for streamlining backroom operations such as housekeeping. In the coming year we will see a much greater emphasis on this area, which proves again my first point: it's integration, not innovation that has the upper hand at this point in time.

And on that: Kung Hei Fat Choi - Happy Chinese New Year of the Horse!