The classic philosophy in hospitality goes like this: Customers – whether they are leisure, business, corporate group or SMERF members – need services provided by kind, smiling and well-trained human beings.
I think the notion that guests demand human-provided services is greatly exaggerated, especially today. A great example of why guests are so disinterested in human-provided services as some believe in our industry comes from the vacation rental sector.
What can hotels learn from vacation rentals?
In 2021, nearly one-third of room nights in North America were consumed in vacation rentals/short-term rentals: homes, villas, condos, and apartments. third! The vast majority of short-term rental bookings were made online via Airbnb, Vrbo, FlipKey, Vacasa, etc.
Just imagine the entire vacation rental experience: you book online, receive online confirmation and pre-arrival information (directions, keyless entry information, destination information, etc.); Upon arrival, enter the unit with a mobile phone key or keyless entry; enjoy your stay; Pack your bags and leave them on the day of departure.
All this with a completely inhumane experience! All human activities “behind the curtains” remain hidden from the actual guests: vacation rental management, IT and technology management, revenue management and distribution, marketing, housekeeping, utilities, maintenance, etc.
The ‘gold standard’ in short term rentals is a customer experience without any human contact between guests and hosts, yet not only do guests complain, they devour and love this ‘non-human’ service! Over the past two years of the pandemic, I’ve spent over 150 nights in short-term rental rooms without ever seeing any of my hosts in person!
This means that a third of travelers consuming accommodations have already experienced inhumane hospitality and are willing to do so in traditional accommodation types such as hotels, resorts, casinos, motels, etc.
Why is the topic of human services in hospitality so important?
There are three very important issues plaguing the industry today that need an immediate solution: endless labor shortages, unsustainable labor costs, and the inability to provide adequate services to tech-savvy and do-it-yourself clients.
According to the Bureau of Labor Statistics, in October of 2021, the number of job vacancies in the United States reached 11 million, of which 1.78 million were “only” in leisure and hospitality, which means that the labor shortage is not a hospitality problem.
We cannot simply “bribe” – with higher wages and sign-up bonuses – people to work in hospitality, since professional services, retail, transportation, utilities, manufacturing, construction, education, health and other industries that pay an equally higher average wage are affected.
The increasing cost of labor in hospitality due to labor shortages should not be underestimated. Total labor costs per available room (LPAR) in North America was $47.50 in September, which is 96% of the same level for 2019. Same as in Europe and the Asia Pacific region. Higher labor costs significantly reduced all key profitability measures, including gross operating profit (GOP).
According to McKinsey, the pandemic has accelerated digital transformation by 10 years, and today’s travel consumers are more digital and technology savvy than ever before. Many of today’s passenger service expectations revolve around self-service and do-it-yourselfers, from online planning and reservations, to contactless check-in preferences, mobile phone keys, voice assistants, and communications with hotel staff via messaging.
It’s time for our industry to give DIY-obsessed customers what they want! Accelerated investment in technology is needed to “satisfy” these highly technically savvy guests and their extremely high technological expectations.
In my opinion, only through accelerated investments in technology – cloud, mobility, artificial intelligence, robotics, IoT and other next-generation technology applications and innovations – can the hospitality industry solve the three major industry problems outlined above.
The future: do more with less
The ultimate goal the market is imposing on hospitality is simple: to do more with fewer employees with technology and thus significantly reduce the staffing needs of the property.
Example: You can reduce your front desk staff by 50% or more by offering mobile check-in and mobile keys, self-check-in at kiosks, website chat bot to handle service requests and information, and email reservation assistant app to handle Email requests, a problem-solving app and in-room voice assistants to handle customer service for staying guests.
All of this can be achieved with a fraction of your payroll expenses.
Additionally, you can halve your housekeeping needs if you enter on-demand housekeeping as a step during mobile check-in or when checking in via a self-service kiosk in the lobby. The guest should be able to choose in advance what kind of housekeeping is suitable for him during his stay: daily, once every three days, weekly, etc., or without housekeeping, just leave fresh towels at the door.
This allows for better planning, scheduling and utilization of housekeeping staff and results in a significant reduction in labor costs.
And the list goes on and on. The technologies that exist today can significantly reduce staffing needs and labor costs at all stages of service delivery, from customer engagements before arriving to in-hotel guest services to customer retention after the stay.
During a call with investors earlier this year, Hilton CEO Chris Nassetta nicely summed up the direction the industry is heading: “The work we do now in each of our brands is about making them higher-margin companies and creating More labor competencies, particularly in the areas of housekeeping, food and beverage and other fields.
When we get out of the crisisAnd Our brands will be higher margin and require less labor than they did before COVID.”
Is hospitality ready for less human services?
Driven by data and next-generation technologies, digital transformation is changing both customers and hospitality at an unprecedented rate, and hoteliers are largely unprepared. What prevents hospitality from adopting next generation technologies like AI, mobility, robotics, IoT, cloud, etc. to rebuild the hotel’s new technology stack?
At this time, I believe that there are three main barriers to the rapid adoption of next-generation technologies in our industry:
- Owners and operators’ reluctance to invest in new technologies, the mindset that has transformed hospitality into one of the most technology-averse industries today.
- Lack of understanding and fear of new technology: who will deal with it? I don’t have trained staff to deal with it. It makes the operations very complex”, etc.
- Labor unions in major metropolitan areas with a hospitality workforce with labor unions are highly opposed to any robots, automation, or any technological advancement that could reduce the number of paying members.
In my opinion, none of the above can stop the rapid adoption of next-generation technologies in our industry, in the same way that the Luddite movement in the early 19th century could not stop the Industrial Revolution.
Will technology ever replace humans in hospitality? Good question!
Over time, next generation technology will undoubtedly replace or collaboratively augment all the normal, repetitive and dangerous jobs in hospitality such as housekeepers, porters, baggage handlers, concierges, security guards, line chefs, bar tenders, waiters, etc. Technology will not replace any time soon highly qualified hospitality jobs like highly skilled and educated hotel managers, revenue managers, digital marketers, technologists and IT managers, CRM experts, sales managers, etc.
Using AI, mobility, the cloud, robotics, cobots (collaborative robots), the Internet of Things and other next-generation technologies, a hotel – especially 4 and 5-star properties – can still maintain a “guest-facing human interface” but automate all back-end processes , enabling intelligent guest communications, automating and personalizing each touch point with the client. And sure enough, add humans with a warm smile to the mix.
So how much human labor will the hotel need in the future? In my opinion, five years from now, the hospitality industry won’t need half the people it did in 2019, and the savings from payroll will mean investments in next-generation technology will pay for itself.