2018: Another Challenging Year for Hoteliers.

David Collins, columnist and Co-Founder & Chief Operating Officer at Great National Hotels and Resorts Group discusses 2018 which is set to be yet another challenging year for hotels..

BREXIT

With little or no sign of even the most tentative vision of a post-BREXIT UK/EU relationship, investment decisions remain stalled, currency exchange rates volatile and economic uncertainties heightened. No different one might suggest to even the most challenging times of our most recent recession.

Perhaps. However whilst the venerable mandarins of both Downing Street and Le Berlaymont jockey for position so as to avoid acceding too much too soon – or at least being seen to be doing so – this sustained stand-off, not helped by infighting within the UK Government, creates a vacuum wherein real, substantive challenges to business remain, becoming more exacerbated and amplified as the collective posturing and foot dragging continues.

Case in point, whereas this year there’s been a silver lining for UK hotels with more folks deciding instead to holiday at home, the Government would be well persuaded to future proof the UK tourism industry against the inevitable decline in inbound tourism: 2018 may have seen a bounce however this I fear may have masked a nett decline in international visitor numbers – business and leisure – which in turn will directly impact on hotels’ occupancies, ARRs, etc. particularly in the Regions.

GDPR

Chilling as it is, that ongoing negotiations between the UK and EU might in fact not be conclusive even beyond 2019, hoteliers are similarly faced with other challenges which have been perhaps over-shadowed by BREXIT and yet demand equal attention.

Take GDPR for example.

Otherwise known as the General Data Protection Regulation, this comes into force on 25th May 2018 replacing existing data protection frameworks under what’s called the EU Data Protection Directive.

So what ‘s it all about?

The official word is the following: “The GDPR emphasises transparency, security and accountability by data controllers and processors, while at the same time standardising and strengthening the right of European citizens to data privacy.”

In a nutshell, data protection is being democratised with the weight of protection shifting very firmly to the consumer. The GDPR aims primarily to give control back to citizens and residents over their personal data and to simplify the regulatory environment for international business by unifying the regulation within the EU.

So if you collect, store and process a customer’s data – which is pretty much every hotel I know – you must adhere to the GDPR.
The challenge for hotels however is that we typically work with multitudes of disparate IT systems with multiple data touch-points for our customers. Many of these systems furthermore simply don’t talk to one another – which is in itself a legacy issue created by PMS providers – which prevents integration and therefore the seamless management of client records.

It may have a smack of Y2K about it – and there are plenty of ‘snake-oil salesmen’ already winding folks up about ‘impending data doom’ – but in reality GDPR is a massive challenge for hotels with significant penalties for non-compliance. And the clock is ticking therefore hotels are best advised to root and branch data handling procedures in earnest and ideally with professional assistance: Crowe Horwath are leading the way here for example.

Artificial Intelligence

Of course the need for GDPR has largely been technology driven, the pace of which is accelerating as guests opt for a more seamless, frictionless online experience.

This in itself has become a key brand differentiator as guests increasingly expect personalised, intuitive engagement from brand providers. To do this, requires not just data collection but also data interpretation and implementation so as to deliver a truly tailored consumptive experience.

To mere marketing mortals, this is a huge challenge any day of the week whereby each of your guests is treated to customised advertising messages which reflect their needs, wants, likes and dislikes.

This is simply not possible. Or is it?

Enter Artificial Intelligence, AI for short.

It’s certainly nothing new. AI has been about for a while: Google’s intuitive programming for example enables it to learn from users’ past behaviour and preferences online so as to deliver a more refined, relevant search experience.

In terms of hosp-tech, hotel booking engine-specialists Avvio recently unveiled Allora which deploys machine learning to deliver a more personalised digital experience for users and in so doing, further leverage channel shift and direct distribution by hotels. One to watch as it is essentially the world’s first booking engine powered by AI.

So there are plenty of examples of applied AI within our daily lives: what’s interesting is the sense that this really is only the beginning, that we’re on the cusp of a something truly extraordinary, possibly even an industrial revolution for our time …

That how we interact with the world around us – as both business owners and consumers – is about to change immeasurably, where for example our individual thought processes become predictable and where product preferences are anticipated simply by virtue of our behaviour online.

And that – thanks to our digital foot-print – you get what you want, when you want it, where you want it, etc. before you knew you wanted that something in the first place.

Up/Down/Sideways Consolidation

For this reason, we can also expect increased cooperation, even consolidation within the hotel industry supply chain as competition for consumer attention escalates and the need to deliver a discerning and sustainable guest experience becomes more critical.

Driven in large parts by the significant cost of organically developing any type of tech IP, hotel brands are increasingly looking to secure unfettered access to both expertise and software as a means of ensuring competitive advantage whilst keeping pace with accelerating technologies. Cases in point being Marriott’s cooperation with Amazon Alexa and Accor’s acquisition of Gekko Group and its incumbent B2B technologies.

This race for the hearts and minds of consumers is also spurred on not just by those ‘dastardly’ OTAs with their high commissions and dominance in paid-search but also in part by increased competition from ‘market disrupters’ that have speedily debunked traditional models, having been permitted to operate under less onerous commercial/statutory terms.

UBER is one such example and AirBnB is another.

The irony of course with the latter, being the hosp-tech poster-child it is, is that it is now faced with a slow-down in new owner recruitment plus increased legislative pressures, and as a result is currently trialing AirBnB-branded apartments – much like ‘traditional’ hotel chains – to provide brand cover for independent properties …

Funny how if you’re long enough in this business, things come full circle.

About David Collins: David draws his expertise from an intimate knowledge of the UK and Irish hotel industry with a proven track record in brand development and business acceleration. David is Co-Founder and Chief Operating Officer for Great National Hotels and Resorts, currently one of the fastest growing, independent hospitality groups in Europe.
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