Hospitality and Tourism

Hotels pressured by ‘sharing economy’

HOTELS must embrace the age of mass personalization to survive, as the industry goes through a period of unprecedented change amid the rise of a digital economy that threatens traditional operating models and sales channels, an expert said yesterday.

Facing intense competition from the likes of home rental service provider Airbnb, hotels that deliver effective mobile-centric personalization -- from guests’ booking experience to their in-room preferences -- will become brands of choice in the next five years, said Gillian Saunders, global leader of the hospitality and tourism practice at Grant Thornton, citing the company’s Hotel 2020 report.

“It’s not the same world anymore: sharing is the way of the future and it is technology that is enabling this sharing economy,” Ms. Saunders said during the P&A Grant Thornton 3rd Growth Series in Makati City.

Between February and December 2014, Airbnb’s stock of available rooms expanded from about 300,000 to over one million, putting it ahead of InterContinental Hotels Group (IHG), Hilton, and Marriott as the world’s biggest provider of rooms.

In terms of actual bookings, Airbnb remains a relative minnow, selling about 37 million room-nights last year against IHG’s 177 million. Yet, Airbnb was only founded in 2008, while IHG traces its history back to 1777.

Businesses are under pressure to make digital a part of their operations with digital natives or millennials set to become the hotel industry’s key customers, Ms. Saunders said.

Hotels should develop new touch points to effectively communicate with their current and prospective customer base across the mobile, social media and online channels, while striking a balance between automation and personal touch to thrive in this new landscape.

“Human touch is important and that’s going to be the challenge for hoteliers. The winners will be hotels that can connect and integrate cyber-experience. It’s not just cyber alone. It’s an integrated cyber experience,” Ms. Saunders said.

However, most hotels are simply not geared for the digital business era, and those that are showing interest are taking a too-slow, too conservative approach, she said.

To survive, hotels must prioritize investment in the new talent and technology they will need while reshaping their organizational structure, Ms. Saunders said.

As published in Business World Online by Krista Angela M. Montealegre dated 10 November 2015