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BBT July/August 2018
July/August 2018
For Business, Corporate Travel & Meeting Buyers & Arrangers

Analysis: Curating your stay

Global hotel chains are embracing innovative technology to shape the experience of corporate travellers

Just before last Christmas, Hilton CEO Chris Nassetta capped a record year of growth for the global hotel chain – opening its 5,000th property and welcoming 11.5 million new members to its Hilton Honors loyalty scheme – by launching what he described as an ‘innovation gallery and incubator’ adjacent to a Hilton hotel close to its global headquarters in McLean, northern Virginia.

The 1,300 sqm gallery showcases the latest technology and service developments the hotelier is considering introducing to its 13 brands, ranging from its flagship Hilton Hotels to Hilton Garden Inn and Doubletree by Hilton, along with newcomers such as Canopy and Tru.

Ideas already under way include new noise reduction systems to help achieve better sleep, allowing guests to customise their room’s digital artwork to their own tastes, and new food and beverage concepts. Visitors to the invitation-only gallery, such as hotel investors, can visualise the room developments with the aid of virtual reality headsets, while designers, inventors and others can brainstorm their ideas in the building’s ‘Innovation Theatre’.

“We’ve actually been an innovation factory for almost 100 years,” says Nassetta, citing Hilton’s leadership in introducing developments, such as putting televisions into guest rooms, developing central reservation systems and, more recently, the introduction of its smartphone-based ‘digital room keys’ app.

This app replaces conventional room keys (of the plastic variety) and controls in-room services such as heating, lighting and media. While more than 2,500 Hiltons in the US and Canada (about half the hotelier’s global room stock) already have this facility enabled, only around 100 of Hilton UK’s properties so far use the technology, according to industry sources.

Security concerns
Other chains, including IHG and Hyatt, are reportedly taking a more measured approach to introducing ‘smart room keys’ because of security concerns. These include the hotel’s room management system, which stores important data about a guest’s account being hacked, as well as power failures and the loss or theft of an individual’s phone.

But Nassetta also suggests that the use of such innovative technology is a fundamental part of the hotel group’s push to get travellers to book direct with the hotel rather than through third parties, such as online travel agencies (OTAs) or TMCs.

“As they connect with us directly, we know more about them so that we can customise and personalise the experience,” he told a recent hotel conference in New York. “Imagine a room anywhere you travel with us in the world which we are personalising. We know you and what your preferences are because you’ve told us, and our rooms are adapting to you.”

Hilton is not alone in investing in the future of its hotel brands. Rival Marriott International actually pipped Hilton to the post by opening its own innovation laboratory in late 2016, although it had been planning the venture for several years.

Back in 2013, Marriott acquired the run-down Charlotte City Centre hotel in North Carolina for US$111 million with the aim of creating what it described as its first M Beta hotel – a test laboratory of new ideas that it could expose to paying guests as well as potential new hotel owners.

As the majority of Marriott’s hotels are owned by investors, which the hotelier operates for them as well as maintaining brand standards, it is in the company’s interest to show a willingness to innovate. But in a canny move last summer, the renovated and innovation-friendly Charlotte hotel – on which Marriott had spent US$40 million – was sold to a financial investor for US$152 million, meaning that Marriott effectively broke even on the deal but gained an innovation incubator in the process.

Marriott’s innovations at the M Beta largely focus on improving the guest experience – from the way they are first greeted to greater use of communal spaces and more flexible meetings and event facilities, while rooms are more functional and streamlined. Marriott was also early into the trend towards allowing guests to stream video services such as Netflix or You Tube on to large, fixed, in-room television screens.

Yet Charlotte may not be the ideal place for some of the more ‘edgy’ concepts coming out of M Beta. A new shower room, for example, developed at the innovation centre is being tested at the Irvine Marriott hotel in California’s Orange County.

But this is no ordinary shower: when the shower’s glass door steams up, a ‘wired’ surface means that any inspiration or thoughts the guest writes or draws with a finger in the misty glass are automatically captured and a picture can subsequently be emailed to a smartphone or tablet.

The inspiration behind this special shower door, called a ‘Splash of Brilliance’, was given some credibility by a Marriott survey of 5,000 international travellers last year which found that just over half those surveyed claimed they had some of their “best ideas” while in the shower. But those wanting to test it out may have to wait: so far the special shower is only available in one of the Irvine hotel’s 496 rooms.

Yet it does show the extent to which hotel companies are prepared to go to meet the demand for innovation. Some hotel analysts also suggest that the need to innovate is essential as travellers become more comfortable with using new technology. “There is a friendly war going on to hook the best and fastest ideas and I think the shower door is part of that,” points out Bjorn Hanson, a professor at New York University’s Tisch Centre for Hospitality and Tourism.

So far this ‘friendly war’ has been fairly low key, with Marriott’s strategy based on the ‘Internet of Things’ concept, while Hilton’s ‘Connected Room’ approach is being tested in a relatively small number of properties so far.

But this is set to change this year as both hotel brands – mainly in the US but also in the UK – roll out rooms where guests can control amenities, such as temperature, lighting, and other room preferences via a smartphone app at Hilton or voice activation at Marriott.

Battle of the brands
Yet introducing new technology into hotels is not the only game in town; the battle for the business traveller of the future is also being fought over the brands themselves. Despite the surge of new brands in recent years – hotel analyst STR calculates there are now nearly 1,000 hotel brands worldwide – there is seemingly no end in sight for further expansion.

Midscale seems the current sector of choice by the major hotel groups. IHG’s new Avid brand, for example, is the latest of a clutch of concepts aimed at travellers – both business and leisure – who are on a budget and seeking contemporary but practical design features. 

Hilton’s Tru brand targets this group and especially focuses on the ubiquitous millennials by prioritising facilities including comfortable beds, high-quality showers, a free breakfast bar and large lobbies for those wanting to play games, eat or simply relax. 

But is the current focus on brands a misstep? “One of the biggest challenges hotels face is the decreasing value of their brands and their shrinking base of loyal guests,” suggests a recent study of prospects for the hotel sector by consultancy Deloitte. “From OTAs to the commoditisation of hotels, brands need to extend and deepen their relationship with travellers in order to stay relevant.”

The study also suggests hotels need to rethink their lobby function to allow travellers – particularly those on business – to relax after a long journey. The Tisch Centre’s Professor Hanson agrees, and suggests the traditional check-in desk is on the way out as hotels offer more relaxed lobby environments.

Hotel de Crillon in Paris, for example, reopened last year after a four-year refurbishment with an open lobby where check-in formalities are carried out as though in an elegant sitting room.

Yet for all the vibrancy that the hotel world is displaying with its focus on innovation and investment in new products and facilities, a rather darker trend is emerging: a willingness to impose ever-more egregious fees for services which used to be included in the room rate.

New Tisch Centre data suggests a 5 per cent hike in total US hotel fees last year to US$2.7 billion – helped by the spread of traditional leisure ‘resort fees’ to the cities. Two Hilton properties in New York City, for example, recently tested a US$25 a night ‘urban destination fee’. Several Marriott properties in Manhattan have also been ‘testing’ similar extra fees in recent months.

But the growing ubiquity of such fees is not confined to the Americas: they are also reportedly making an appearance in the UK and some European city hotels, according to traveller reports, which suggests the chains are testing the market rather than introducing comprehensive new fees. Yet it is something the savvy corporate traveller and travel buyer need to keep an eye on.

Trends to watch
Limited room service
  
The days when tired business travellers came back to their room after a long day to find their room tidied up and their bedspread removed may be coming to an end. More hotels are making a turndown optional, according to veteran hotel industry observer Bjorn Hanson, from New York’s Tisch Centre for Hospitality and Tourism.

The reason is twofold: the service costs extra in staff time and resources (sheets and towels) while some travellers, he suggests, are concerned about having their ‘personal space’ invaded when not in the room.

Staffed by robots
The real buzz in hotel technology is the introduction of robots to take over routine jobs, such as baggage delivery or room service. Marriott’s Aloft hotel brand was among the early adopters introducing a three-foot tall robot nicknamed ‘Botlr’, mainly because it had a black bow-tie painted on its front. It captured the imagination and ‘Botlrs’ can now be found in four other Aloft properties in the US. At the Las Vegas Mandarin Oriental, ‘Pepper’ is a distinctly feminine four-foot tall humanoid robot which supports staff by answering guest questions and providing directions, although ‘she’ has a penchant for featuring in guests’ ‘selfies’.

Investing in ‘wellness’
Hotel brands are continuing to invest in the ‘wellness’ trend. Last year, Hyatt paid US$375 million for health hospitality brand Miraval, a fee that includes upgrades to three US ‘wellness’ resorts. It then bought Exhale, a spa chain, for an undisclosed fee. Hyatt CEO Mark Hoplamazian is clearly a man on a mission: “Our purpose is to care for people so they can be their best,” he says.

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