The digital revolution is challenging the hospitality industry on many fronts, from changes in the way people plan and book travel to the technology needs of guests.
The impact of disruptive technologies such as Airbnb may dominate the headlines but many more changes are taking place behind the scenes as hotels refine their digital strategies to stay fresh and relevant.
This major transformation reflects the fact that travel research, planning and booking is now done almost entirely online for various reasons including convenience, according to Carmelon Digital Marketing, an Israel-based digital marketing specialist.
Holger Jakobs, vice-president of sales and marketing for Asia with Movenpick Hotels and Resorts, said he learned recently that one of the world's largest traditional travel agencies will stop using printed brochures by 2020.
The change has given rise to new businesses such as Representasia, a one-stop digital marketing and technology specialist for hotels, tour operators, and travel companies.
"Using technology increases efficiency and save costs," co-founder and chief marketing officer Tim Russell told Asia Focus. "When you increase efficiency, you deal with guests more quickly and effectively, and you also give hotel staff more time to spend on doing what they should be doing -- providing great service."
This in turn leads to higher levels of guest satisfaction, better online reviews and more repeat bookings. Hotels thus need to integrate digital strategy -- especially with regard to social media and Google searches -- into their overall strategic plan.
Olivier Berrivin, managing director of international operations for Asia with Best Western, said 88% of the chain's global bookings are made online.
"It goes without saying that digital marketing is a make-or-break area for Best Western," he told Asia Focus. "Content marketing also plays an integral role for Best Western's marketing strategy as content scores in terms of placement."
Sanjay Singh, managing director of Fico Corporation, a Thailand-based conglomerate with commercial real estate and hospitality interest, also stressed the importance of content marketing as well as user-generated content.
"Our strategy not only calls for strong SEO (search engine optimisation) but is also supplemented by social media, both with organic posts and social marketing -- focusing heavily on Facebook," he said.
"We engage key influencers which allows us to communicate in target markets, with an unbiased approach as the influencers are typically sharing their real experience and photos from their visits. In the current market, this kind of user-generated content is critical."
RISING COMPETITION
Online travel agents (OTA) are another platform that is increasingly popular. More people using portals such as Agoda and fewer people booking directly through hotels is a big challenge for the latter.
"The market share captured by OTAs is rising and commissions are rising at twice the rate of revenue growth," said Mr Berrivin. "But as a hotel operator we must 'own' our guests and have the opportunity to communicate directly with them even if they book through OTAs."
But Mr Jakobs of Mövenpick believes that as customers' online habits mature, they will see the value of booking without an intermediary.
Wimintra Jangnin, founder and editor in chief of the industry publication Hotelintel.co, says hotels know they can't live without OTAs as the industry itself created it has to learn to live with it.
"Hotels can't beat their marketing budget and furthermore, if you're not on their website you miss business opportunities," she told Asia Focus
Shin Hui Tan, executive director of the Park Hotel Group in Singapore, agreed that most hotel groups can't outspend the OTA channel from a marketing standpoint, so meaningful coexistence will be the way forward.
"We're working toward our own loyalty programme in the near term so that we'll be able to benefit from OTAs and use them as a customer acquisition tool," she said.
Ms Wimintra said that from a consumer point of view, the important factor driving them to OTAs is cheap room rates. However, many hotels that feel they cannot compete on price offer many more benefits when you book with them directly.
"Those benefits may not come in an economic way but may be something memorable such as dining with the chef or airport pickup in a Rolls-Royce," she said.
In any case, hoteliers need to learn to work with new technologies, even Airbnb, says Michael Marshall, chief commercial officer at Thailand-based Minor Hotel Group.
"New technologies are appearing every day. Just look at Airbnb and how quickly it grew and continues to grow," he said. "As well as utilising search engines and social media to drive revenues, we need to be working with all this new technology rather than ignoring it."
According to a study by HVS Consulting and Evaluation, hotels lose approximately US$450 million in direct revenues per year to Airbnb.
Between September 2014 and August 2015, 480,000 hotel room nights were reserved while over 2.8 million room nights were booked on Airbnb. By 2018, HVS estimates that Airbnb room nights will reach 5 million per year which may result in diminishing demand for traditional hotel rooms.
The reason is that the Airbnb model allows new rooms to be added or removed with negligible overhead. In contrast, increasing hotel room supply involves building more properties.
Besides, Airbnb offers a much wider range of products and services than hotels as users can rent anything from an apartment to a yurt.
Frederic Garnier, vice-resident of development at BHM Asia & Louvre Hotels Group, said that despite its potentially disruptive impact, Airbnb simply offers another way to interact between buyer and seller.
"From this standpoint, we have also begun using Airbnb to distribute some of our property such as large branded luxury villas," he told Asia Focus. "At the end of the day, Airbnb offers a new way of booking and staying for a new generation of travellers, and the hotel industry needs to adapt quickly."
However, not everyone views Airbnb as a serious threat. Ms Wimintra believes it does not affect hotels much in Thailand.
"Hotels in Bangkok are relatively cheap compared with other countries and Airbnb is not the most economical choice. Furthermore, the target market for the two is different. People who stay with Airbnb want different things compared to people who chose to stay in hotels," she said. "The only concern is a price war and an oversupply of rooms."
Antony Picon, managing director of Colliers International Myanmar, agrees, saying that lower occupancy rates have more to do with a hotel oversupply that is set to continue.
"Also, there is far less choice of residential accommodations that would appeal to travellers in Myanmar compared to other countries," he said. "Renting a dark, ugly, large three-bedroom apartment without facilities is not very appealing. It will take time for the overall market to mature and then for such online services to thrive."
DIGITAL GUEST EXPERIENCE
Meanwhile, hotels are also seeking to improve the guest experience by increasing the use of technology.
Mövenpick is pioneering a cloud-based property management system to ensure the customer experience is seamless when visiting any of its properties worldwide.
"We are also implementing software into our daily operations, such as social login to our complimentary WiFi service across all of our hotels and piloting geo-based social tools to engage further with guests while they are at our hotels," said Mr Jakobs.
Although hotels that stay ahead of the game in terms of digital marketing and technology tend to see an increase in revenue, property owners and managers often need a lot of convincing.
A Grant Thornton study shows that concerns about return on investment (RoI) from technology tend to arise because of the difficulty in quantifying digital strategy.
Utilised strategically, technology can help reduce costs, achieve savings, increase efficiency and hence sales, so it should provide RoI within two to three years.
"Hotel staff can be resistant to change," said Mr Russell of Representasia. "Hotels, especially large groups, take weeks or even months to make purchasing decisions, which makes the implementation process slow."
Another common concern is whether the staff are capable of using the technology and thus whether additional recruitment or training will be needed.
"The key obstacle is not the technology itself but more the talent" said Mr Singh of Fico. "Some areas of digital require very specific skills. Finding talent that can fully understand our business needs and applying this to a digital format has been a key to success."
On the consumer side, digitisation requires effective segmenting of guests. Hotels need to ensure that technology does not become a turnoff for some as business travellers have different needs than older guests, millennials are different from families, and Chinese tourists are different to those from other parts of Asia.
"In Asia, the obstacles are mostly related to the customer mix, which is heavily reliant on Chinese travellers," said Mr Jakobs of Mövenpick.
"With the forecast for an increased number of wealthy tourists coming from mainland China reaching an all-time high for Southeast Asia, hotels should consider the online habits of this group of guests -- not only in terms of language and booking preferences, but also with regard to online media channels."
For a start, some digital gateways that other travellers use -- Facebook, Twitter, Instagram and Google searches -- are all blocked in China. Thus if a hotel is not well represented on the Chinese search engine Baidu, it is missing out.
Despite the existing challenges, many industry executives are optimistic about utilising digital marketing and technology.
"I think that overall, the investment in digital marketing is paying off; despite the challenging business environment we are seeing this year in some of our traditionally strong markets, we are still seeing positive growth company-wide in direct bookings to our properties," said Mr Jakobs.
"Digital investments are also proving to be positive as they allow us better targeting and tracking than more traditional marketing and are easy to adjust if we are not seeing the desired results."
Future development of in-room entertainment systems as well as the check-in and check-out process are also areas where the industry is moving rapidly.
"Within five years, technology -- even apparently non-essential tech such as keyless entry, mobile concierge apps, even robots -- will be seen as the core of a hotel's business, rather than something that's nice to have," said Mr Russell of Representasia.
"This will signal a move toward an increased focus on handling guests' own devices. Rather than providing TVs, computers and tablets for guests, hotels will be ensuring that guests' devices integrate with the hotel itself and allowing guests to use their phones or tablets to order room service, control lighting and air-conditioning, watch TV and check in and out."
Guest feedback will be crucial in maintaining and developing the hotel of the future, which could lead to a more collaborative approach to installing new technology.
"These are exciting times for our industry. It's time to be creative and try new software and tools that help us reach our customers in a much more personalised and targeted manner" Mr Jakobs said.
"Social media, online conversations and engagement are increasingly becoming a main factor when choosing a hotel and we cannot ignore this factor."