Automation is Critical to the Hospitality Industry’s Longevity

The hospitality industry recovered from a sudden halt in demand quicker than most expected, and three years of growth since has owners and operators again feeling confident about the state of their businesses. While a reduced labor force and increased wages remain a challenge, in general, the industry finds itself on solid footing. 

Perhaps that’s why we’re hearing less and less about what was considered, at one time,  the industry’s biggest threat: Airbnb. Because, for now, there’s enough demand for both hotels and alternative accommodations to continue growing.

But year-over-year growth, when you’re starting from near zero, will inevitably get smaller. Demand and top-line revenue growth in 2023 is expected to soften, and leaders across many industries are calling 2023 the “Year of Efficiency,” shifting their focus to managing expenses and bottom-line growth.

Expect the fight for market share between hotels and Airbnb to intensify as the year progresses, suggests hospitality marketing consultant Martin Soler. “I wonder if the hotel industry fully realizes that when it comes to technology and the guest, the biggest threat isn't Google, Booking or some other tech player. The biggest threat is Airbnb,” Soler wrote recently. 

Soler suggests that Airbnb already has a leg up when it comes to the guest experience. But it’s not just guest-facing amenities where Airbnb has proven innovative – many Airbnb owners have managed to build next-generation businesses by automating much of the back-office infrastructure, too. 

The Airbnb and hospitality models differ vastly – and rules that apply to one may not apply to the other – but it’s clear there are automation strategies and operational efficiencies that  hoteliers can learn from Airbnb.

Automation to Improve the Guest Experience

Soler outlines several areas where Airbnb is currently providing a better guest experience mainly through a mobile-first strategy around guest communications, payments, and digital keys.

Verifying physical ID upon check-in has become a sticking point – while it’s uncommon and unrequired currently at an Airbnb, it presents a hurdle for hotels looking to allow their guests to bypass the front desk and head straight to their room.

In Skift, Executive Editor Dennis Schaal wrote about his recent experience with digital key at a hotel: “The idea was to skip the front desk, head to my assigned room, and unlock the door with my phone. When I arrived at the property, a very nice front desk employee informed me that for security purposes I would have to show her an ID so it turns out at this particular property, at least, there would be no bypassing the front desk. She then handed me a couple of card keys for my room door.”

Airbnb has ”used technology to make the guest experience better,” Soler writes. “Very soon, the advantage of going to a hotel will be minimal. Not because hotels are doing a worse job, but because they aren't figuring out ways to do a better job for the guest.”

Automation to Operate More Efficiently

While providing a more seamless guest journey is imperative, perhaps more crucial is adopting tools to optimize your hotel’s operations to run as efficiently as possible. Consider all the small tasks your front desk, GMs, and accounting teams can automate with technology. 

Again look at the Airbnb model where, in some cases, owners are able to skirt entire accounting, finance, revenue, sales and marketing departments. For larger portfolios where property managers are involved, they’re operating with smaller teams and larger margins. 

A good place to start is by automating the transfer of information across systems, and keeping it secure and accurate along the way, which will help maintain operational efficiency. Look to technology that captures data that will simplify otherwise manual tasks. 

In the accounting department, by streamlining processes, projects that used to take a day to complete can now be done in a couple of hours. 

Start small by adopting digital tools that replace printing documents and scanning them to email or fax. Consolidate the single-daily reporting and reconciliation process for all the properties in your portfolio, replacing the construction of multiple manual excel sheets for each property.

James Wilson, Director of Business Intelligence and Analytics Services at Outrigger Resorts and KSL Resorts, relies on automation to share reports with key stakeholders that include high-level performance metrics. He also has the ability to run ad-hoc reports and perform deep data analysis to inform specific business decisions.

"I come from operations, in the front office, and my passion has always been fixing inefficiencies," Wilson says. "The collection process - pulling data from the PMS and aggregating it – has become a lot easier."

Hospitality Consultant Adam Mogelonsky says he works with operators to help them look at a hotel more as a multi-source profit center, where the bar, restaurant, spa, golf and other amenities become part of a holistic guest experience. Automating the communication, data-sharing and operational workflows between these siloed departments is critical, and “will become a huge profit center in the future,” he says. 

Digital Adoption Can Level the Playing Field

One company bringing a more digital-first approach to hotel operations is Life House, a tech-enabled management company with 75 hotels. Life House aims to automate the complex back-office and redundant functions, such as accounting, finance, pricing, and housekeeping scheduling, according to Founder and CEO Rami Zeidan.

“Life House is trying to turn to automation to enable the onsite team to provide a better guest experience at a lower-cost operating model,” Zeidan said recently. “Independent hoteliers are way more receptive to automation. For example, many independent hotels don’t have revenue management teams, they’re yearning for solutions, and we automate the entire revenue management function from pricing, distribution and metasearch marketing.”

When staff and management spend too much time on redundant back-office operational tasks, they struggle to serve guests and ultimately run an efficient hotel. Automation will continue to assist hoteliers in becoming more efficient and cost-effective, allowing them to streamline operations while improving guest experience.