Creating a digital ecosystem
13 AUGUST 2014 11:38 AM
The hotel industry must get mobile technology right for digital strategy success.
Looking for opportunities to drive revenue growth, successful hotel companies are developing a digital experience ecosystem that not only delights customers along the guest experience but takes a broader view of a customer’s life.
Anyone who spends time waiting to board an airplane knows that people use smartphones while traveling. According to a Smith Micro study, 62% of travelers prefer to purchase or reserve hotel services with their mobile devices, rather than face to face with hotel staff.
But hotel guests don’t drop off their smartphones with their keys when they depart. Consider the guest who wins points for writing online reviews about his stay. Or the loyalty member who has figured out that if she simply updates her location on Facebook each morning as she drives past the local hotel property on the way to work, she wins a few loyalty points. They are enjoying the company’s digital ecosystem while advertising their favorite hotel chains to hundreds of friends.
Focusing on the mobile guest experience will become key to commercial success in the hotel industry in the next five years, and will trump traditional product innovation. Getting the mobile experience right creates opportunities to generate new revenue streams and differentiate from the competition, including online travel agents.
Transforming from a mobile search-shop-and-book platform to a digital ecosystem is challenging. Hoteliers must standardize hardware and technology across chains, a large and unproven investment for major brands and a tough sell for large franchisers who do not directly benefit from on-property revenue. Plus, the physical upgrades pose a financial hurdle for owners. Installation could include networks and digital equipment, as well as standardized roomkey systems that work with smartphones.
Companies also will have to make sure the app is worth downloading, especially because the average guest only visits a hotel a few times a year. Forrester research shows that while 80% of companies across all industries think they deliver a superior customer experience, only 8% of their customers agree.
Already, nearly every hotel company has improved the upstream portion of the travel experience through mobile technology. Shopping and booking on a mobile device have become table stakes, with 72% of hotel mobile apps allowing users to make reservations. This was the obvious place to start in the development of a mobile experience. The return on investment was clear from the start and now well-proven as the channel sees strong growth at a low cost per transaction.
Hotel companies are starting to develop mobile services that enhance the guest experience farther downstream.
Marriott International recently introduced two programs. FlashPerks allows rewards members to redeem points or use cash for limited-time, exclusive deals or experiences, like test driving a sports car, according to USA Today. LocalPerks uses Apple’s iBeacon technology to follow the guest around the property and make relevant offers.
Kimpton Hotel & Restaurant Group has launched Kimpton Karma Rewards, a new loyalty program designed to recognize guests for actions such as attending a property's nightly wine hour, traveling with pets, dining at Kimpton restaurants, or mentioning a hotel or restaurant on social media. In addition, the program includes games and instant recognition through secret, behind-the-scenes calculations. For instance, according to the Huffington Post, if you tweet about your dinner there, you could see receive free snacks delivered to your room.
Closing the gap
So how should a hotel company think about closing this mobile experience gap and developing a strategy for mobile that has a proven ROI?
While mobile might be the obvious technology for transforming the guest experience, this experience and the brand it underpins are strongest when they are cross-linked to the brand’s broader commercial strategy, including elements of distribution strategy, loyalty strategy and even payment strategy. Hotel companies can no longer afford to think of these elements in isolation. Instead, they must be considered in a cross-disciplinary way and brought together in the mobile platform.
The timing is right; the early adopters are already demonstrating the applicability of mobile technology in the downstream portion of the travel experience. The surest path to a compelling ROI is taking a cross-linked, customer-centric view and transforming not just the guest experience, but the whole guest relationship, with a mobile platform.
Scot Hornick is a partner with Oliver Wyman’s aviation practice, focusing on travel and transportation. Previously, Hornick was CEO of consulting boutique Fenix Partners. Earlier, he was a partner at PricewaterhouseCoopers, and he spent 10 years at Andersen Consulting. Hornick was also an adjunct professor at Northwestern University. He holds two U.S. patents in revenue management and airline seat inventory control and serves on the advisory board of the Professional Pricing Society. Hornick has a B.S. in computer engineering, an M.S. in electrical engineering, and a Ph.D., all from the University of Illinois at Urbana-Champaign.
Dan Kowalewski is an associate partner in New York focusing on the hospitality and travel-related service sectors. Prior to joining Oliver Wyman, Kowalewski was the VP of revenue management for Wyndham Hotel Group. He has worked on reservations, distribution and revenue management functions, in addition to enterprise-wide technology strategy, business process transformation and organization change. He also has a strong understanding of travel industry technology trends and has managed several post-merger integration efforts.
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