Andrew Metcalfe, chief technology officer at Guestline, outlines three trends set to shape hotel operations and increase profitability this year.
We hope the next 12 months will be significantly more positive than the previous. The need to keep attracting new bookings, acting fast and meeting customer needs will all continue to take priority in an ever-changing market, whilst at the same time ensuring profitability.
The guest mix for hoteliers has seen a dramatic shift alongside the evolution in attitudes towards online interactions. Indeed, for both hoteliers and guests faced with the challenges of cash payments, online offers a safe and viable alternative. The increased willingness of guests to adopt a more self-service approach to the administration of a booking – for example online payments or check-in and check-out – have crucially paved the way for hoteliers to be able to safely operate their business against the backdrop of continued restrictions. In addition, it has enabled many hoteliers to take a more sustainable approach to staffing by offering greater flexibility and remote access.
The shift to greater online adoption has given hoteliers a vital opportunity to re-imagine how they interact with guests permanently. So how can hoteliers continue to build on that knowledge, and what trends in hotel technology will help them achieve sustainable profitability in the months ahead?
Greater ownership of end-to-end guest management
Throughout the pandemic, one of the keys to success for many hoteliers has been the agility to respond to a swiftly changing market. In the first instance, to the demand for social distancing, and then followed the adoption of online tools for many of the previous face to face interactions. This has accelerated a change in the preferred experience from guests. It has already happened with airlines, and the hotel guest journey will evolve towards a greater digitisation of the end-to-end experience as hoteliers and guests are increasingly more digitally competent.
The digitised guest journey needs to be seamless and easy to follow but also bring real opportunity for an improved overall guest experience. If guests have to change to different apps and systems throughout their journey then it can hold less appeal as they need to learn to navigate through different platforms. Having one system not only improves the administrative journey it can also pay dividends in terms of the in-property experience. For example, with staff shortages, queues can quickly build up at reception. Online check-in helps reduce the risk of queues and also enables staff to focus on delivering an enhanced service to guests.
Unquestionably Covid-19 has increased the rate of adoption of online hotel technology; it is now a given as guests have come to accept and expect self-service and self-administration of a booking to speed up the more time-consuming aspects. Moving into 2022 this adoption and implementation of a more digitised guest journey looks set to increase even further.
Pre-payments set to increase market share
Drilling down into the greater digitisation and self-serve approach to the guest experience will be a greater focus on and shift towards pre-payments as a key feature of the hotel tech stack. A win-win for hoteliers and guest alike it secures funds and removes the need for additional payment stages.
Guests can benefit from a more efficient and less time-consuming administrative experience of their booking. Hoteliers using a pre-payment structure can then bias the price and incentivise guests to use a pre-pay. Whilst hoteliers might have to take a hit on the price in the short term, in the long term the value that a pre-paid guest offers is worth it. Not least because of the protection that pre-payments and e-commerce offer hoteliers against no-shows and chargebacks, which pose less of a risk when initiated by the cardholder (guest). In this way the digitisation of the guest journey and technology available can shape a hotelier’s commercial decision around pricing strategy rather than drive it.
More efficient payment reporting will also come to the fore courtesy of pre-payments technology, especially for direct bookings. Hoteliers will have to use just one gateway to manage reconciliation, whilst guests will have more frequent and live access to their invoices and balance which again adds value to their overall experience.
Google Hotel Ads: a sea-change in pricing and inventory?
One trend to watch with baited breath will be how the market responds to the changing functionality and impact of Google Hotel Ads and the disruption this is expected to bring to booking behaviours and hotelier approaches to distribution.
Google Hotel Ads presents brand.com links and pricing alongside an OTA listing when viewing search results for hotels on Google. It has the potential to shift market behaviours in an unprecedented way.
From a pricing perspective, hoteliers may seek to utilise this opportunity to take a more competitive approach to their pricing strategy, to go completely against pricing parity potentially. Even if Google were to start charging more for the brand.com ad placements, offering direct guests a cheaper rate than on an OTA might for many hoteliers deliver more bookings and more revenue. Additionally, strategies like preferable rate options might include a nine per cent cheaper rate if a guest chooses to pre-pay, or five per cent cheaper if seeking a flexible rate, which could still be less than an OTA commission rate. It has the potential for guests to change their interaction with the hotels, and for hoteliers the opportunity to really expand their direct markets.
The question remains then: how will the OTAs respond to maintain market share and a positive guest experience as hoteliers seek greater control over pricing? Will they lower their commission percentages to remain competitive? Time, as ever, will tell.