Events that were lauded as major market disruptors for the hotel sector over the last decade, such as new homestay brands becoming mainstream, have in fact barely made a dent in the success of the hotel industry. For over ten years, hotels have enjoyed record occupancies and record profits. That is, until early 2020 and the COVID-19 pandemic knocked everything off course.
Hilton’s EVP and chief commercial officer Chris Silcock refers to business pre-2020 as a “golden age” of the hotel industry. He explains, “The figures generated by some of the world’s largest hotel businesses over the last ten years clearly show that market disruptions haven’t actually knocked anything off course. For example home-sharing as a trend gets talked about a lot, but it hasn’t actually had a huge impact. We have seen hotel brands do more in this area, but it didn’t change the fortunes of the sector.
“The COVID-19 pandemic is an unprecedented challenge. Owners and hotel operators suddenly moved to zero occupancy, no revenue and have struggled to survive. Brands like Hilton will be judged on how they navigate out of this, and it’s a critical time for the hospitality industry.”
In fact, the lessons and brand developments since the early 2000s are the things that are now helping the global hospitality business counter the impact of the COVID-19 outbreak. For Hilton, a huge emphasis has been placed on understanding how to operate in this new normal and to look at the trends emerging pre-lockdown, in particular what product trials were proving successful. Addressing the learnings from these pilots has seen the brand pivot new offerings and market the benefits of being a consistent corporate experience around the world.
Contactless and careful: the new safety requirements driving up loyalty engagement
Quick off the post as global lockdowns began to ease, Hilton introduced its Clean Stay initiative. As Silcock outlines, this programme is all about reassurance and confidence; “With over 6,000 properties around the world, it’s a pretty compelling message to our guests that we can execute a commitment to their wellbeing consistently across all of that portfolio.”
Of course, this might be an area where homestay brands will find it difficult to offer such a guarantee but Silcock is very mindful that having private space is also highly coveted in this new environment. “We have to watch and be part of the ways in which people want to stay and travel in the longer term,” he cautiously adds.
Right now, the quick pivot to get the Clean Stay promise to market is working. For hotel brands changing operational practices is tough and takes hard work, but Silcock is resolute that Hilton’s successful weathering of this extensive storm will be by staying true to its core values. For him, Clean Stay is about building on what Hilton is already known for.
A contactless arrival, digital key and choosing your own room were all existing services for loyalty scheme members. Today, for a contactless experience, guests need to download the Hilton Honors app, in turn meaning more people are making use of the technology. COVID-19 is accelerating the roll-out and up-take of new services, and Silcock isn’t shying away from the fact that this situation is pushing more people towards loyalty scheme membership. “Guests have a choice where they can overcome what they may regard as some risks, and take advantage of a contactless check-in. Importantly, they also recognise that by Hilton understanding more about their preferences and having a direct relationship, we can add more value.”
Data explosion: making the most of the digital revolution
Capitalising on the digital revolution is all about harnessing data. Simply storing and processing the data available to a hotel brand is one area of market disruption where businesses have to constantly invest to keep up with the increases in capacity required and invest yet further to interpret the data. Harnessed properly, this explosion of data is one of the most powerful assets at the hands of a hotel.
Explaining the opportunity, Silcock says; “By tapping into the data we can gather from a specific guest, we can begin to offer them more specific experiences that match exactly what they really want. That can be as simple as tailoring arrival and departure times outside of the industry standards, or offering incremental personalised extras from other areas of the hotel such as the golf course, restaurants and spa. What is exciting about the capability we have at our fingertips, is the level of maturity in the fields of analysing and applying data to add real value.”
He continues, “In all areas of our business we have far more data than ever before, and our focus is being able to empower real-time decision making rather than simply collecting and analysing. Real-time decision making is what will drive our future.” However, this vision is a little further away than was predicted pre-2020. “We need real scale to be able to get true value out of the data and make some services mainstream” explains Silcock. In a world impacted by a pandemic, the application of this science is slowing. Lower occupancies and tough trading mean that for every business the investment and timeline for any roll-out of new services is being re-worked.
Connected and respected: trialling the power of mobile devices to take control
The investment versus business protection paradigm is a tricky one. Hilton has a new service that was beginning to operate at scale in 2019 that sees everything from air conditioning to TVs, and room access to lighting, all controlled via the guests’ mobile device. But the impact of the COVID-19 pandemic means travel and hospitality businesses around the world are having to cap the investment into new services in order to survive. It’s a possible risk to the sector that there simply isn’t the capital available for innovation right now, but on the other hand there are clear green shoots of revolution in how hotels are finding ways to attract and reassure guests.
Silcock is optimistic that the business intends to accelerate the roll out of such services, especially those that tap into consumer desire for hotel stays that are contactless in all possible ways. Dubbed Connected Room by Hilton, Silcock points out that the new service is not just about making guests feel like they are safer during a hotel stay, it’s about finding out yet more detail around the preferences of that individual guest. And it seems that the devil is truly in the detail when it comes to deciding where to focus future investment.
“By having more data on how someone interacts with the bedroom, and when they use certain services, we can optimise the room experience. Via our app, the guests’ mobile device takes control of the room, and we can understand more about their preferences and serve them better in the future,” Silcock justifies. As with many trends unfolding from the COVID-19 pandemic, Connected Room is a new service that began as a route to collect more data and place control in the hands of the guest, and now it has major benefits for an entirely different reason. For all hospitality brands, the emerging new normals are about finding ways to ensure past investments can work as hard as possible.
New normal: day rates, downsized offices and simplifying meetings bookings
In a climate where events for large numbers of people are almost impossible, and some of the world’s largest businesses are reducing their office footprint as homeworking becomes a successful norm, hotel owners have work to do in order to address the lost revenue from their meetings and events services.
With a large footprint of airport hotels, often offering different services to the rest of the Hilton portfolio, Silcock explains how what were previously niche services, are being eyed up for becoming mainstream. “We’ve offered room day rates at our airport hotels for many years, and so we’re working through offering day rates across as many of our properties as possible. Working from home isn’t easy for everyone, and many have distractions on hand such as children, intermittent Wi-Fi or quite simply don’t have the space for a desk away from the rest of the household. We have a huge inventory of quiet, spacious hotel rooms with high speed Wi-Fi that can be put to use, especially when overnight occupancies are lower.”
This is one area in which Hilton is testing demand and assessing if there is a market opportunity. Hotels around the world are pivoting to become working spaces, either for individuals in search of solace and reliable facilities, or even for businesses who no longer have their own meeting rooms. “For some businesses, homeworking has been the catalyst to giving up an office footprint altogether. This does mean that they still need spaces every now and again to bring their people together safely, or carry out business that achieves more face-to-face. With fewer offices, there is room for the hotel industry to deliver creative solutions that merge the benefits of a serviced office with pleasant extras such as quality F&B. It’s going to be harder than ever to make it worthwhile to leave your home, and this is something that hotels can do extremely well.”
Digital initiatives: keeping close to business strategies
Staying true to core services is Silcock’s mantra when it comes to thinking ahead for Hilton. “Our digital strategy is synonymous with our business strategy, the two cannot be separate,” he outlines. “The goals and impact of any digital initiative must work for our business model.” For example, as early indicators suggest that meeting room space in hotels may be used in different ways with bookers looking for greater flexibility, Hilton is working hard to deliver a meeting room online booking tool that makes it as simple as booking a bedroom.
There are further technology challenges for the hospitality sector when relying on what went before. Hotels manage their pricing often by setting high and low price points at which a room is available to book at across different platforms, based on historical trend data. There is no relevant past data anymore for setting pricing strategies in these early months of travel resuming in the wake of the COVID-19 pandemic. In pilot are new continuous pricing tools that have no set price point, but respond in real time to the demand seen across Hilton’s own channels and internet search traffic.
“There are huge opportunities for third parties here to find a way to make the opposing forces of price and quality assurance, around particularly cleanliness, work during the recession period that is to come,” Silcock muses. “Guests might want to find the best value room there is for their stay, but it’s the best value hotel that they feel confident will meet their safety and wellbeing requirements. So in this market the absolute cheapest might not be appealing, and in an online distribution world focused on price, there is clearly room for change.”
With new expectations driving guests to look for different things from their hotel brand of choice, there are plenty of opportunities for the hospitality sector to tweak and evolve current services to meet these needs. COVID-19 is the most unwelcome shot in the arm for the hospitality industry, but it is certainly driving highly efficient innovation that is setting a new course for the sector’s future. Brand assurance is clearly part of Hilton’s recovery armoury, and new services to bolster this proposition are helping the business take its first steps towards the next golden age.