Digital transformation in hotel industry

Digital transformation has made a significant impact on the hotel and hospitality industry in the last few years. Amongst other things, it has changed the way hotels operate while driving them to become more and more innovative and adopt new technologies.

Let’s look at the benefits of integrating technology into your current hotel processes and how you can get started with your digital transformation today.

Digital transformation in hotel industry
Digital transformation in 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?

There is a digital revolution happening in the hospitality industry in the last few years. At least, that’s what it looks like because innovative solutions are evolving at a rapid pace. However, digitalization looks to be happening fast, as the industry was not as adaptive towards tech only a few years ago. It’s a human-to-human business, so technology has never been top of mind previously.

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.

The pandemic affecting the digital transformation

When the pandemic stunned everyone in the hospitality industry, it also kickstarted a digital revolution. The contactless overhaul forced hotel management to go digital with online check-in and digital room information. Since the first steps are always the most difficult to take, future innovations in your hotel are only going to be easier. The industry is already moving towards consolidating hotel software into a single platform.

How does digital transformation affect hotels?

So, the pandemic forced the travel and hospitality industry to innovate and adopt technology, which is now pushing a digital transformation throughout the industry. 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 transformation in hospitality industry
Digital transformation in hospitality

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 apeleo, you can browse digital services and add them to your hotel management interface. See service samples below or click here.

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 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.