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Hotel Industry 4.0: Digital transformation can help hotels acquire customers in a targeted way and be more efficient

Munich/Vienna, March 3, 2016

  • Roland Berger and the Austrian Hotel Association (ÖHV) analyzed the opportunities and risks of digitization in the hotel industry
  • More than 50 percent of hotel bookings are already made through digital channels
  • Biggest opportunity: acquiring new customers; Biggest risk: price pressure
  • Roland Berger experts present recommendations for successful hotels in the digital age

More than 50 percent of hotel bookings are already made through digital channels today, with platforms calling the shots in online sales and new providers crowding in to the market. Roland Berger and the Austrian Hotel Association (ÖHV) analyzed the online activities of international hotel chains and start-ups from the travel and hotel business in a new study, "Hotel Industry 4.0 – Leveraging digitization to attract guests and improve efficiency". The result is a catalog of recommendations from the experts for how hoteliers can win back customers and turn digitization to their advantage. The study highlights 19 initiatives hoteliers should take in their own businesses. Respondents see the biggest opportunity in acquiring new customers and the biggest risk in the growing price pressure.

Hotels need to respond to change early on
The study highlights one distinct benefit enjoyed by the hotel trade compared to many other industries: "The core offering, the overnight stay itself, is practically impossible to substitute. Other branches of industry find themselves under much greater pressure," explained Vladimir Preveden, Managing Partner at Roland Berger Austria, referring to financial service providers, the media, retail companies and technology firms. Among these kinds of businesses, market leaders have been brought down to their knees, entire business models turned upside down. "Only those that react quickly to change can be successful here. This knowledge enabled us to derive a number of important insights for the hotel trade," said the Roland Berger expert. The main thing is to adapt all the cost structures throughout the business at an early stage and to implement change processes thoroughly: from cultural change to the digitization of core processes. Aside from this, hotels can specialize and deliver higher quality and use modern technologies to provide a better service. But that also entails building up special expertise in the core business and in IT.

From hotel search to guest rating: Address paying guests from start to finish
The study identified one of the sticking points as the way in which guests are addressed through every stage of the booking process – from their initial search for information to their payment for the room: "Customers go through six phases before, during and after a booking. The goal must be to address the customer in every one of those phases. That is not yet happening," said Markus Gratzer, secretary general of the Austrian Hotel Association, pointing out the room for improvement. The customers' "Discover and plan" and "Reflect" phases are still uncharted territory for the most part. "There is scope for ideas and innovation here, where other established providers have not yet cornered the market. Hoteliers need to exploit that," added Preveden.

Fit for the digital hotel era
"Nine recommendations put hoteliers back in the driving seat," explained Preveden. These "standards" should be realized in every business and as soon as possible:

  • Optimize digital marketing
    Design a modern, mobile website where content is constantly updated. The site needs to be intuitive to navigate and quick to load. It's also important to have a booking engine that is easy to use and fast.
  • Offer experience over service
    Make the customer's stay into a special experience to make them feel special.
  • Forge partnerships
    Partnerships are the way to go if your business is too small to handle your own digital activities.
  • Perfect your digital infrastructure
    The hotel's Internet infrastructure needs to be optimally set up so that guests can access the Web anywhere at any time. Core processes like pricing, staff planning and billing need to be digitally optimized as well.
  • Improve your digital expertise
    You basically need to transform your business into a new media culture, which can be achieved, for instance, by hiring greater numbers of staff from more digitized industries and systematically increasing the digital expertise of existing staff.

These opportunities present hoteliers with possible ways of increasing their competitive edge and making themselves less dependent on booking portals: hoteliers need their own strategy for systematically managing online travel agencies (OTAs) and turning them to their advantage. Primarily in times of under-occupancy, this would enable them to fill rooms and spread their revenues out evenly across the year. Customers could be addressed individually if customer data were systematically gathered and used. After all, the better the hotels understand their guests, the better they can address them after their stay. Digital tools enable this to be done on an individual but also low-cost basis, along the entire customer journey. Hotels should also introduce digital apps to support their positioning and make their business run more efficiently.

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