Digital distribution: mobile platforms and tech spending

Five years ago, hotel guests might have felt uneasy turning up at a property, heading straight to their room and swiping their smartphone to gain entry without so much as a wave to the receptionist - but this has become, if not the norm, something today's travellers wouldn't be surprised by. This is not the only way, however, that operators are using technology to enhance the hotel experience for their tech-savvy guests.

Many have made big investments in apps that allow customers to interact with hotels, iBeacon technology - and the Wi-Fi connectivity that enables it - and many more mobile-based services. Hoteliers have focused on optimising the way they connect with their customers through social media while, behind the scenes, they have kept up with fast-evolving revenue management and ensured that office technology, from property management systems (PMS) to guest reservation systems (GRS), are able to cope with the demands of the complex distribution landscape.

The future's mobile

Paul Mulcahy, senior vice-president commercial at Mövenpick Hotels & Resorts, says: "Mobile really is the future; it's where it's all going to happen. Not only is it the fastest-growing booking channel for our industry, but there are also more Google searches on mobile devices than on desktops, and one in five millennials, who are expected to be half of the travel industry's customer base by 2025, access the internet exclusively on their mobile device. I truly believe mobile will be key going forwards."

Mulcahy isn't alone with these sentiments. According to Apurva Pratap, vice-president of distribution and commercial marketing at IHG, the company is finding ways for mobile devices to allow the guest to manage every part of their journey. "Whether it's the dream stage, the planning stage or the post-booking stage, mobile plays such a critical role that, in aggregate, it is now nearly half of all traffic we get to any digital device," he says.

IHG has been ploughing investment into its booking, reservations and deals app, which originally launched in 2010. "Once you use the app instead of accessing us through a mobile website, it makes a dramatic difference," Pratap says. "Conversion goes up many multiples, and the likelihood to rebook in the next three months also goes up."

Due to IHG's renewed focus on its mobile app, revenue in Europe from the app doubled from January to October, and the next focus for the group will be on a series of pilots designed to provide a more personalised and interactive experience for guests.

These include mobile check-in and check-out; mobile folio, which allows guests to view their hotel bill in real time; mobile room-key technology, which means they can bypass the front desk to check in; IHG guest request, which facilitates guests' requests instantly through the IHG app; and the iBeacon technology, which allows IHG to send information to a guest's smartphone, including personalised notifications and offers relevant to their stay, and is currently being tested in a selection of hotels in China.

This increased emphasis on personalisation has been driven by IHG's previous success in this area. "What we do now is that every time we have an offer or campaign for members of our loyalty programme, we offer it personalised down to the individual, based on their past behaviours and preferences," Pratap explains. "When you do that, engagement increases dramatically."

At Marriott, a key focus for the future will be to have guests interact with hotels via its app. In November, the group expanded its mobile request services globally, which lets customers request a specific service from a predetermined menu, such as late check-out, extra pillows, room service or a two-way chat with hotel staff using the Anything Else service.

The next phase will be enhancing the applications it already has by integrating them with as many hotel facilities and functionalities as possible.

"The main purpose is to make it easier for the consumer to engage with hotel services through a seamless, flexible environment on their mobile phone," says Osama Hirzalla, vice-president of brand marketing and e-commerce for Marriott International, adding that personalisation is likely across all applications.

"The key that I always stress is consumer choice," he says. "The danger is that companies go after these preferences without consumer consent or consumer choice but, as an industry, we need to be conscious of customer choice, allowing more personalisation based on customer preferences and permission rather than it being forced upon them."

For Mulcahy, the same philosophy applies across all aspects of a guest's stay. "One of our big focuses over the past 12 months has been web check-in and check-out, but you need to give customers the choice whether they want to use it," he stresses.

Focus on Wi-Fi

With mobile connectivity so crucial to guests' experience, hoteliers must make Wi-Fi free and fast. "We've been really focused on rolling out Wi-Fi, really market-leading Wi-Fi," Mulcahy explains. "We have 1Gbps internet pipes, and the overall promise is that we will have 100% coverage of free Wi-Fi, which we already have for most of our properties and will continue to make sure we have for everyone."

Similarly, IHG offers free Wi-Fi access in every hotel to its loyalty club members. Marriott, which has been upgrading its bandwidth, has introduced free internet in public spaces for guests and visitors to the hotel, as well as free internet for all rewards members.

"Operating systems are going to change and demand more bandwidth, and the next phase will be the integration with TV, which will demand a good internet connection as well. You have to make sure you have a cycle of upgrading and increasing bandwidth. In some of the markets we operate in, the city infrastructure doesn't allow it yet, so you have to work with those cities to make sure that when the service is available, you'll be the first to adopt it," Hirzalla says.

Let's get social

Operators are responding in different ways to consumers' use of platforms such as Facebook, Instagram and Pinterest to research and plan their holidays. IHG emphasises the success of a campaign run by its boutique lifestyle brand, Hotel Indigo, in partnership with the World Photography Organisation. It was designed to get people interested in smartphone photography and reached nearly 13 million people. Mövenpick partnered with Voyat this year to introduce social login when customers want to sign up for Wi-Fi in 30 of its hotels.

"Not only does this make it as easy as possible for people to access Wi-Fi in the hotel, it also allows us to keep a more permanent relationship with them so we can tailor offers and reward loyalty afterwards," says Mulcahy. "This is quite new, but I really believe it's the future. You're developing a relationship with the customer and, as long as it's relevant, it's not intrusive."

For Marriott, social media hub M Live was its most important social media initiative of 2015. "We established this in Washington, and we're now building these hubs across the world," explains Hirzalla. "Basically they're monitoring and listening services, as well as editing and publishing services on social platforms. So we're able to review trends, look at what people are talking about and how they're sharing their experiences, and determining how we engage with those conversations."

Back-office innovation

With so many different channels customers can book via - online travel agencies, metasearch and directly through the hotel - operators are looking at revenue management in an entirely new way.

"In the past, it was about selling the right room at the right price at the right moment to the right guest; we now need to add in 'through the right channel'," explains Mulcahy.

He says revenue management is moving beyond rooms to encompass F&B, spa, meetings and events.

"Revenue management needs to change; we're missing that customer value piece where you combine the idea of optimising fixed inventory with establishing profitable customer relationships," Mulcahy says.

"The lines are also blurring between revenue management, sales and marketing, and distribution - and I truly believe you need to have an overarching commercial strategy fully underpinned by revenue management, pricing and ultimately profitability."

Mövenpick has a two-pronged approach. Firstly, it created a commercial department to which the relevant teams report to ensure there are no silos. Secondly, in January 2015, it embarked on a major upgrade of all commercial systems to create a platform where everything from the PMS, the central reservation system and the customer relationship management (CRM) system works together in a fully integrated way.

"Historically, the hotel industry has been very disparate when it comes to technology, but we are fortunate enough to have the funding and vision from our shareholders to understand that we really need to have these systems all working with each other," Mulcahy says. The upgrade continues for a further 18 months.

Other key back-office innovations to be implemented include Mövenpick's cloud-based PMS in the Middle East, which launches in 2016 and IHG's next-generation cloud-based GRS, which is being developed in partnership with independent technology provider Amadeus and set to be rolled out in 2017.

"This will be the first community model for the hospitality industry, where we will partner with Amadeus to build a top-of-the-line, future-proofed system from scratch that can then be sold to the whole industry," Pratap notes. He says IHG is the launch partner for the system; the team will have exclusive, in-depth knowledge of how it works, allowing them to build dedicated middleware to connect the GRS to the PMS, taking personalisation to "the nth degree".

Technology is set to play an even greater role in the travel experience, according to Hirzalla. Not only will guests start dispensing with cash and use their smartphones as wallets, but apps from hotels and third-party providers will also be integrated to talk to each other, giving customers access to their entire travel itinerary, complete with weather forecasts and nearby restaurants, on one platform.

Meanwhile, the focus for hotel operators in 2016 includes perfecting proprietary apps, strengthening Wi-Fi connectivity, engaging guests through social media and ensuring they are able to sell to the right customer at the right time for the right price - all through the right distribution channel.