Overview

Digital and mobile platforms are changing everything…

In 2012, for the first time, over 1 billion international business and leisure travellers were recorded. Changes in global demographics and rapid technological change mean these consumers have different expectations, greater freedom of choice and a high degree of familiarity with digital technology.

By 2017, 88% of people in the UK will have mobile internet access. At the same time, mobile and tablet hotel bookings are already beginning to overtake ‘traditional’ web-based booking. The travel consumer is leading the way in driving technological change.

Travel consumers want mobility, flexibility and easy real-time access to information and to shop and pay safely and easily on the go. They expect seamless connectivity allowing them to access the content they want when they want it across all platforms, and also increasingly expecting seamless transitions between different platforms. Connectivity in terms of wifi-access has become an essential part of the hotel offering, on a par with electricity and water.

…creating lot of challenges (and headaches) for hotels – but also opportunity

While these trends present some opportunities for hotel companies, they also present a complex dilemma because as hotels try to differentiate themselves – from each other and from online intermediaries – the issue is how can they evaluate the optimal channel distribution mix as well as win and keep customers – and do it profitably?

It means conventional hotel business models are being challenged by the emergence of well-established as well as new online entrants mediating between hotelier and guest, and disrupting the traditional patterns of planning and reservations. These players are diluting hotels’ brand visibility, threatening their margins, and weakening customer loyalty by eroding the direct relationship between the hotel operator and even its most regular loyal customers.

Mobile is playing its part here too. In the first quarter of 2013, the hotels.com iPhone and iPad app topped the most popular travel app in both the UK and US, * something that the brand has used to its advantage by encouraging repeated use through loyalty points. PhocusWright has estimated that online travel agencies made up about 64% of gross mobile hotel bookings in 2012, compared with 36% for hotels' own mobile sites.

If free wi-fi is not a component of a broader digital strategy, then free wi-fi can become part of the threat of commoditisation, a commoditisation in which the hotel becomes just ‘a room and a router’.

Hotels are fighting back against commoditisation

Hoteliers’ toolkit for fighting commoditisation should include:

  • Developing a business strategy for the digital age (as opposed to a digital strategy)
  • Using social media effectively
  • Recognising the rise of the Digital Native segment
  • Using digital to take loyalty and personalisation further
  • Understanding ‘big data’ by thinking small.

Highlights: