There is not a secret that the hotel and tourism industries suffered severely in the current crisis. In this respect, digitalization became the easy way out of a difficult position offering a broad range of possibilities and new non-contact solutions to help hoteliers resume operations and ensure they are better prepared for future crises.
The following study by Frau Prof. Bronkmann from Fraunhofer IAO shows potential ways forward for the hotel industry and explains key terms and concepts related to the smart resilient hotel and digitization process.
1. THEMATIC INTRODUCTION
1.1.Clarification of terminology
What does the term “Smart Resilient Hotel” describe?
The Smart Resilient Hotel is a hotel that is characterized by a high degree of digitization and therefore capable of surviving stressful, threatening (life) situations without persistent damage.
What does the author mean by "Digitization"?
Digitization refers to the process of converting information from analog to digital formats. As we understand digitization and how we use it, it is the process of saving information digitally and making it available for electronic data processing.
What does the “Smart Hotel Concept ”mean?
The “Smart Hotel Concept ”stands for a network, technical one-system solution that improves the following:
● comfort and the quality of wellbeing;
● safety and energy efficiency in a hotel, as well as has a high proportion of automation through digitization.
The use of digital data can make significant contributions here.
1.2. Figures, data, and facts about the current situation of the hotel industry in the Corona crisis
The hotel and tourism industry has until now seen itself as a ‘high-touch industry’ because a great deal revolves around personal service in the hospitality industry. Now the crisis requires a change towards the ‘low touch economy’ in this sector as well. We should no longer meet, we should no longer encounter, we should no longer touch each other
- said Frau Prof. Bronkmann.
For the time being, the future lies in contactless solutions.
According to the DEHOGA media report, 223,000 companies in Germany lost around 10 billion in sales by the end of April. 70,000 companies are threatened with bankruptcy. (Source: Spiegel Online on April 19, 2020)
International hotel bookings showed a massive 75% decline in March 2020. We expect that the effects of this crisis will not be short-term. These changes will have a lasting impact with long-term consequences.
The industry has been hit hard. Now, the hoteliers need to save their business and still position themselves at the forefront of the longer-term shifts, as well as take a long-term perspective. It is important to think about the right solutions for the business and implement them in order to survive this crisis.
More than ever, digitization is becoming a critical success factor in managing this crisis. Unfortunately, many companies in the hospitality industry have let digitization slip in recent years.
2. IMPLEMENTING A LONG-TERM DIGITIZATION STRATEGY: WHY IS IT EVEN MORE WORTHWHILE TO PURSUE A LONG-TERM DIGITALIZATION STRATEGY NOW?
Today’s difficult time becomes an occasion for action, as well as for rethinking business models and devoting yourself to digitization strategy. If we look at the ecosystem of a hotel, it does not exist separately from its surroundings. It is embedded in a macro system, which includes the following:
● the social environment;
● the neighborhood;
● the staff and their families;
● the service providers;
● the suppliers;
● the cooperation partners;
● structural environment.
The hotel is becoming a “Smart Service Ecosystem” through digital networking, the Internet, and digital data exchange. This means that the hotel is only able to offer smart services as a smart ecosystem. But what do smart services stand for?
Smart Services are defined as services that can be offered and booked online. They often go hand in hand with a physical component for providing the services. Smart services are effective in the hotel when the system digitally networks guests and employees with each other and ensures digital communication in real-time.
This study refers to actions and solutions in four strategic fields of action:
● Smart Services
● New Work
● Digital Business
● Smart Building.
Below, we will focus on Smart Services and Digital Business fields of action.
Field of action 1: Smart Services
The digitization of services has a rather impersonal character. However, when it comes to digitization in the hospitality industry, this "impersonal", especially "contactless", service through automation in the current crisis becomes a competitive factor in the former "high-touch industry".
Effects of the measures in the Smart Services field of action
Positive effects of Smart Services:
The staff has less physical contact with other people due to digitization:
● in the front office
● in the back office
● in the service areas
● in the catering trade
● and on the floor.
In the meantime, guests can experience a comprehensive, warm, and personalized service.
Field of action 3: Digital Business
Starting points and measures in the area of digital business
The next question is, where can the hotel get funds for this? In this respect, the “Digital Now” is a great funding program to advance the digitization of the company and act in a future-oriented manner.
As part of a digital ecosystem, the online property management system (PMS) enables access to
● Data and information from anywhere and at any time.
● Planning, performance management, and personnel organization.
● Digital time recording, management, and digital access control that allows to control who goes through the door in a company and when. The technology that determines the location of people can also be used to record working hours.
● The opportunities associated with digitalization for automating contracts are in high demand now. They include:
+ digital contracts
+ contract management via automated contracts via “smart contracts”.
● Dynamic pricing options for hotel prices through automated price determination mechanisms.
● Online Revenue Management and Yield Management are already in use in many companies.
● Online personnel recruiting.
Effects of the measures in the field of digital business
Hotel operations processes can be controlled and monitored online. This removes many issues from the workplace and employees' activities.
Digitization leads to:
● more efficiency
● precisely tailored use of resources (sustainability)
● automation of standardized processes, e.g. the Standard Operating Procedures (SOPs).
The load is particularly strong:
+ Purchasing (also F&B)
+ Human Resource Management
Important basic requirements for successful digitization
The challenges are as follows:
● signal strength
● the bandwidth of the internet connection as a prerequisite for digital business processes
● the implementation of a holistic, digital ecosystem that successfully networks all subsystems.
3. CHALLENGES FOR THE HOTEL INDUSTRY IN THE CORONA CRISIS:
Securing liquidity, financing models, product design, and distribution
One of the central challenges is securing liquidity. There are some helpful measures, such as new financing model innovation in product design and distribution.
New standards for hygiene, health, and safety:
● Health protection: development, implementation, and compliance with increased and new hygiene standards and processes in the entire company/ in all areas.
● Building protection requirements, data protection, personal protection -Standards for law, ethics, security, and privacy.
Measures in personnel management and in dealing with external service providers:
● Active crisis management and clarification of responsibilities
● Standards and measures for safety, health protection, prevention
● Clear rules and regulations for external service providers and suppliers
The new design of contracts and insurances
● Establish partnership-based contract regulations
● Check insurance law
● New corporate travel framework agreements (e.g. in the area of business travel) for the time after the crisis
● Automation of contracts through "Smart Contracts"
Active development of networks in collaboration with partners and guests
● Expand loyalty management towards the guests and cooperation partners.
● Partnership or collaborative development of preventive measures, regulations, and strategies.
● Targeted communication policy and increased access to online information channels.
● Data collection and maintenance, etc. for personalized communication, strategic, regional cooperations, and networks.
4. POSITIVE THINKING: PROMOTING EFFECTS
These opportunities arise the crisis-related "digitization offensive":
● Distribution of high digital standards, as well as the following:
+ basic digital infrastructure
+ use of digital tools
+ increased digital competence.
● Dependent design of processes: as 100% digital is the standard, personal service can be tailored to your needs (smart service).
● Increased employee satisfaction.
● Digital education offensive through more online training.
● Innovative offer development for changed demand.
● New values in partnership-based cooperation.
● Improved sustainability.
● More appreciation of social interaction.
● Contactless self-check-in, mobile ordering, and payment with HotelFriend Concierge App.
True, the current situation in the hospitality sector caused by the сorona pandemic is hard. Yet, actions and solutions above can help provide contactless services and processes despite physical distance, foster the digital transformation of hotel businesses, as well as better manage the corona crisis and its impact.
Author: Thomas Friedrich