The hospitality landscape today has transformed drastically in recent years. Online booking platforms have seized a tremendous market share of the industry. Digitization has brought about dynamic changes to the hoteliers’ business frameworks. Within a short time period, online platforms have successfully widened their share of bookings in Europe to over 20 percent; and the numbers are still growing. In addition, 70 percent of these bookings are driven by only a few companies.
Further, information are always readily available today due to the new media culture; and therefore has made it easier for consumers to compare vacation and accommodation offerings. At present, the widespread use of mobile devices by individuals have also allowed potential guests to communicate with one another, source of information and make reservations anytime and anywhere. In the new media culture, residual capacity any sort is also integrated and made available for sale online. This practice is also prevalent in the travel industry and is expanding exponentially due to the attractive last moment offers of accommodation, mobility and culinary delights. Concurrently, private capacity that has yet to be tapped on and was not even accessible until recently is increasingly enter the market and beating down its competitors.
These cultural shifts have penetrated every segment of the population, particularly that of the Millennials and Generation Z. These groups have been predicted to account for close to half of all potential hotel guests. They are the very first generation to have adapted to digitalisation from a young age. Highly interactive and challenging, these global citizens are determined and well-informed on the quality of education. They are open to options and are unlikely to commit themselves until the eleventh hour. They expect top-notch digital infrastructure and quintessential service as standard. They share new experiences with friends almost immediately and heed recommendation of others. They socialise and seek connections and both physical and virtual places of encounter.
Hotels unlike bookstores and bank branches cannot be replaced digitally. Hence, they have an upperhand over other industries. However, hotel rooms can still be replaced by private capacity that online platforms have been progressively offering; which has therefore affected the industry. Hence, it is essential for the hotel industry will have to adapt to the technological changes, and there are three key factors to look out for:
- Interaction with customers or guests
- Optimisation of back-office operations
- Diversification into new business opportunities that relate to traditional core business
However, at present, there has been little evidence that digital applications have been implemented in hotels. In addition, there are still several white spots where existing opportunities have yet to be leveraged. For instance, in the case of social media. No other digital platforms have been used intensively other than Facebook. Less than one third of the respondents surveyed currently have videos on YouTube, even though video is now one of the most significant online format.
Source: rolandberger.com
