Digital transformation in the hotel industry

What is digital transformation?

Integrating technology into your current processes to an extent that it fundamentally changes the way your hotel operates and delivers value to guests is a digital transformation of your hotel.

It’s a broad definition and there are multiple ways of executing a digital transformation.

With multiple hotel software available to help digitalize both your property and your property management systems (PMS), the common way to implement technology is to leverage the services already available.

Shifting from the analogue approach as hoteliers are used to into a digital mindset is not just trendy, it can often have a bottom-line impact. The digital part of transforming the hotel often means operational efficiencies as tech can optimize workflows, automate processes, or reduce staffing requirements. Going digital is here to stay and you might as well buckle up if you’re not ready to get left behind by the increasing digitalization of the hospitality industry.

Why is digital transformation revolutionizing the hotel industry?

The hospitality industry has been undergoing a digital revolution in recent years. And this shift toward digitalization is happening quickly—especially considering that just a few years ago, the industry was slow to embrace new technology. Traditionally, hospitality has been a human-to-human business, so technology was never a top priority.

IT solutions have traditionally had low priority in budgeting. Today, however, IT has risen to top the list, and the reason is simple—the return on investment is high.

Hospitality companies are experts in operations and real estate, so it’s common to outsource IT. The number of companies doing PMS, guest messaging, check-in, and auxiliary services has increased tenfold in just a few years.

How does digital transformation affect hotels?

So, recently the travel and hospitality industry has been rapidly embracing innovation and technology, driving a digital transformation across the sector. To see the effect, consider the hotels not joining the digital revolution. Non-digital hotels will:

- Lack automated processes that help to drive costs down

- Require more staffing to fill tedious tasks

- Have less value-added service available to their guests which in turn lowers the guest experience provided per $ spent

Ultimately, differences in digital adoption create a gap between the hotels’ profitability. Hotels that can integrate technology into their current procedure are able to drive costs down which enables them to a competitive edge when pricing rooms. When—at the same time—offering guests unique experiences, they can harvest better reviews and increase the chances of guests returning.

What it looks like for the guest, in the end, is fair-priced rooms at highly-rated hotels.

Digital trends in hotel industry

Although the industry is still very focused on cost and economies of scale, some of the leading hotels have shown that adopting technology into their operations can be just as efficient as a source of profit.

Startups are rising, focusing solely on implementing technology in hotels. A noteworthy mention is apaleo, an untraditional PMS. They are all about providing the basic PMS services and easily enabling hotels to add new hotel software to their PMS, so when working with apaleo, you can browse digital services and add them to your hotel management interface.

The emergence of Airbnb prompted the largest European hotel group to disrupt the business model and the entire way they think customer journey. They have added a range of digital products to their bed-or-one-night default product, meaning that they are no longer just a chain of hotels anymore. They are even thinking of how to service and monetize the non-travelers with a social network company.

Rating is king. So, when the online travel agencies (OTAs) have a large influence on how many guests will visit your hotel next month, you have to think about what drives the guests to select hotels from the OTAs. Yes, that’s ratings. Radisson Hotel Group’s goal to offer extraordinary experiences to their guests does just that—and it might even build loyalty.

So, the experiences that you offer your guests are ever important, and there a digital transformation such as implementing a premium Lost and Found management platform such as Faundit might be your key.

Getting started with your digital transformation: tips and considerations

What is your digitalization goal? Do you want to achieve operational excellence in your hotel? Do you want to improve the experience that your guests receive?

When you have decided on the goal, you need to figure out where a digital upgrade has the most effect. Think about where you have the most analogue approach, and it doesn’t have to be the most business-critical area. The most important area has received a lot of attention throughout, so the percentual improvement might not be high.

In effect, you get the same operational result from innovating a minor business area as there often is a bigger relative change. The biggest benefit is that minor business-critical areas often are simpler and faster to change. So, you can act today and get instant benefits.

5 easiest ways to kickstart your digital transformation today:

1. Digitalize your Lost and Found

Dealing with lost property requires collaboration across departments, from housekeeping to accounting. A digital approach to lost items lets you automate communication with the guest and can take care of all payment and shipping.

Suggestion to digital Lost and Found software: Faundit

2. Digitalize your minibar

Let your guests order minibar items online; no need to check and restock the fridge daily and a great reason to upsell. That small 10L minibar can have a world of selection in stock.

Suggestion to digital minibar solution: Bartech

3. Digitalize your room service

Free up staffing by asking your guests to book room service online. Your guests do not want to pick up the old-school phone and wait for someone to pick up the call - and you definitely do not want to ask a staff member to man the phone.

Suggestion to digital room service software: Clock PMS+

4. Digitalize your check-in information

Give your guests all relevant information via text or email so that it is always available from their phones.

Suggestion to digital check-in software: DigitalGuest

5. Digitalize your concierge services

Your guests are used to Google and chatbots, so let them interact with your hotel in the same way. Integrate directly with the concierge or front deck to rapidly answer the guests’ questions.

Suggestion to digital guest communication software: Bookboost

How much does digital transformation cost?

Financially speaking, there’s an upfront payment, often a monthly subscription, to software that digitalizes your hotel, but the payment is worth the investment in almost every case. If not, the provider will eventually lose all its customers and the cost benefits from digital software are that the services are very affordable because they operate on a large scale. 1.000 other hotels can use the same software or service as you do, so you end up paying a fraction of the operating cost.

The software costs are mainly recovered in the following 3 ways:

- Upselling of services or food/beverages during the stay.

- Operations efficiencies that help save cost or free up staff time for other tasks.

- Improved guest experience that translates into loyal, returning customers.