Digital transformation has cascaded across industries disjointly and haphazardly, but a common theme unites business leaders around the world: the infusion of digital is everywhere and growing increasingly. Consumer expectations will raise the bar for businesses and will ultimately drive change. One such industry is the hotel industry, predicted to be a $550 billion global industry by 2016. But in order for hotels to tap into that revenue, it is critical for management to embrace digital transformation strategically and quickly.

How Hotels Got Blindsided

Mega disruptor Airbnb recently posted that over 150,000 guests stay in it’s member’s properties every night, which rivals the scale of the biggest hotel chains such as the Hilton and Intercontinental. Typical of other disruptors, the Airbnb took hold in a low-end market, and continuously moved up-market by improving quality, eventually disrupting established competitors. Airbnb did a brilliant job in creating a well designed, digital platform to connect travelers and hosts. But what Airbnb did best was disrupt by breaking down traditional barriers and providing a cohesive digital experience. Hoteliers that did not provide an online customer experience lost out to disruption.

A New Customer Relationship Strategy

Melia Hotels International, Spain’s largest hotel chain and one of the world’s largest resort chains, announced the creation of Melia Digital, a subgroup to lead digital transformation across their 350 properties. Developing a new strategy around the digital consumer was the catalyst to the group formation. Key initiatives include:

  • Providing one customer journey through various platforms. Mobile, business and web bookings will all have a consistent and responsive platform to bring digital consistency and ease of use to consumers. Users will also be able to unlock their hotel rooms with their mobile phones.
  • The development of a sales app for Melia brings together all of the tools, in one app, for employees.
  • An Owner Portal with extensive information about the Company and its products, will provide hotel owners and stakeholders access to owner benefits and to their personal reservations.

Advice to the Laggards

Digital transformation in any industry is a never-ending process, and refinement is key for any digital initiative as technology evolves. Harvard Business School has formulated tactics for hoteliers competing with Airbnb:

  • Provide transparency with community. Similar to TripAdvisor, the reviews within the Airbnb site are easily accessible and encouraged, providing insight into the quality of the stay which ultimately drives consequent guests. Hotel brands need to adopt a review model and allow customers to interact and rate freely. Hotel management then needs to act upon the customer suggestions.
  • Pack authenticity. If we have learned anything from the craft beer boom or boutique e-commerce sites, millennial customers appreciate an authentic and unique experience. Personalized experiences every step of the way will be the differentiator. Hotels can personalize the experience by curating city guides and highlight local events to the consumer. Jetsetter’s online magazine does a great job of creating interest-based city guides with focuses on adventure, culinary explorations, beach and city.
  • Stop over-serving customers. Most of the amenities such as hotel gyms and mini bars are rarely used by the majority of customers and stifle the cost flexibility of major hotels. By adopting sharing methods such as partnering with local restaurants to deliver food or developing relationships with neighborhood gyms, hotels will have more cash flow to compete with low-cost providers such as Airbnb.

Looking forward with Digital Transformation

Ninety-two percent of US travelers book their hotel reservations online, making investments to hotel websites immensely critical to compete. Sixty- three percent of people consult reviews before making a reservation, and sixty-five percent make same-day reservations with a smartphone. It is no longer an option to not be mobile as 81% of hotel brands now have a mobile-optimized website, up from 66% in 2012.

We recommend to establish a sound digital strategy to build a customer digital platform across all touch points. Mobile-first and personalized customer relationships will attract and retain consumers and lastly, incorporating transparency and listening to customer desires will help refine the digital transformation.