In Newsletter #48: Why guests "hire" hotels | Room service makes a comeback | A recent hospitality technology company acquisition raises questions.
I was recently reminded just how great Dmitry, my cofounder and CTO, is at humanizing technology. If you didn’t catch his webinar with Duetto on Rethinking the Hotel Tech Stack, I highly encourage you watch it. He uses the “Jobs Framework” - the topic of the most recent book we are reading in our “famous” book club - to facilitate this rethinking. More on that below. Also below, we thank a few hotels for prioritizing room service and we take a look at a surprising acquisition in the review space.
Meanwhile, it’s the week of the year we most look forward to… HITEC! Hospitality technology’s biggest showcase is next week in Toronto. If it’s your first time going or if you simply want to learn more about the show, check out an Insider’s Guide that we published today. It’s going to be crazy next week and we look forward to seeing a lot of you there. If you are not going, but have a shopping list for technology, send me an email this week and I will have the team look into it for you.
Lastly, want to let everyone know about a not-so-secret piece of exciting news (we’ll be publishing some press on it very soon I hope). HTNG, the industry’s technology standards body, has just announced a new workgroup that will be co-chaired by Dmitry and could really help our industry… an API Registry. Our industry has so many inefficiencies created from technologies being disconnected from one another. Imagine a future in which you can just look up which options work best with your existing tech stack when you need a solution. Sign up here to learn more and be part of this.
See you in Toronto?
HIGHLIGHTS FROM THE WEEK'S NEWS...
Hoteling like a local
Harvard Business Review | What Airbnb Understands About Customers’ “Jobs to Be Done”
Why it matters:
How might a hotel approach technology decisions if it thought of providing a guest experience as a “job to be done”?
Instead of thinking about technology features or stages of the customer journey (like “booking” and “in-stay”), what if hotel technology decision makers thought instead about the jobs the hotel needs to be doing for the guest in a holistic way and selected technology accordingly?
Such is the proposition of Harvard Business School professor Clay Christensen’s “Jobs” framework. As Karen Dillon, Christensen’s co-author, describes, “Too many companies focus on making their products better and better without ever understanding why customers make the choices they do. Customers don’t simply buy products or services. They “hire” them to do a job. That job is not just about function (having a nice bed to sleep in) but about creating the right set of experiences for customers.” One need only to look as far as Airbnb’s “Live Like A Local” campaign to see how powerful this exercise can be.
Why might a guest “hire” a hotel? You have to know what job customers are hiring you to do before you can hope to create the perfect solution for them – one that they’ll choose over all other options.
If you stood in a hotel lobby, and ask guests why they “hired” the hotel, you’d likely hear a wide variety of responses:
“I wanted to experience a new culture.”
“I wanted to have an adventure.”
“I needed a place to rest and do work on my business trip.”
“I needed a convenient hopping off point for my trip with friends.”
“My wife and I needed a romantic getaway.”
“I needed to get away and decompress on holiday.”
“I needed a place to call home while I visit friends.”
How can hotels activate this information? Indeed, when thinking about why a guest chose your hotel in this way, it’s clear the “job” of a hotel is to deliver a personalized experience that transcends an individual stage of the customer journey or an individual technology system.
As Dillon notes, honing in on the “job to be done” is something Airbnb identified early on, and one of the reasons, she believes, the company has been so disruptive to the hospitality industry. “Before launching, the company meticulously identified and then storyboarded 45 different emotional moments for Airbnb hosts and guests. Together, those storyboards almost make up a mini documentary of the jobs people are hiring Airbnb to do.”
And it’s the experience of staying in an Airbnb that’s central to its customer strategy. As Airbnb’s former Head of Global Hospitality and Strategy Chip Conley told Dillon, “One of the critical storyboard moments, for example, is when customers first turn up at the home in which they’ll stay. How are they greeted? If they’re expecting a place that has been described as relaxing, is that evident? Maybe there should be soft music playing or a scented candle. Has the host made them feel at ease with their decision? Has the host made clear how they will solve any issues or problems that arise during the stay? And so on. The experience must match the customers’ vision of what they hired Airbnb to do. The Airbnb storyboards — which have been constantly tweaked and improved since its founding — reflect the importance of the experience customers are seeking when they hire Airbnb.”
And as ALICE CTO and co-founder Dmitry Koltunov and Duetto VP of Strategic Alliances Dan Yacker explained in last week’s joint webinar, the Jobs framework and its emphasis on experience can be an instructive way to rethink and then leverage your hotel technology. Because personalization is so key to satisfying guest expectations - the reasons why they hired your hotel - it requires technology that can help bridge guests’ individual needs across the customer journey and at scale. In the webinar, a recording of which you can watch here, Dan and Dmitry shared what that might look like in the context of revenue management and operations, and how the two can be stitched together to create a holistic, personalized guest experience and reason to be “rehired.”
“Rooooom Service Please”
Why it matters:
It’s well known that room service is a luxury. Not just for the guest, but for the hotel’s profitability. You do the math… most restaurants are already struggling to break even. Then you have room service, which is effectively a full service restaurant, except that it runs 24 hours a day and only gets to serve the people in the hotel (not the city that surrounds it). In 2013, New York Hilton Midtown, a 2,000 room establishment, took the bold move of removing the service altogether, which you can read about here. After all, with the advancement of service-on-demand technologies like Seamless, couldn’t guests just order it themselves like the rest of New York?
To combat the rising relative costs of running a full-service hotel, some hotels have outsourced their room service to delivery services (some even dressing up to fit the part)... while most have simply cut down their nighttime offering to just “pasta, salads, simple sandwiches, and soups,” as Deanna Ting from Skift points out.
So, it’s great to see a positive piece of news from Deanna on the subject. At the end of the day, hotels are sometimes a luxury and who hasn’t enjoyed the occasion of a late night delicacy wrapped in a plush bathrobe. Hats off to you guys, The Dorchester, Four Seasons New York, and Shangri-La Paris for making the extra effort and prioritizing this service that is so under threat.
Yet another industry acquisition
Why it matters:
Last week, Japanese company Recruit Holdings acquired guest feedback platform TrustYou. Recruit Holdings has invested in or acquired several hospitality technology companies in the past few years. Recent investments include autonomous delivery company Savioke, restaurant iPad point-of-sale software provider TouchBistro, and vacation rental site Tripping.
The acquisition is interesting to us for a couple of reasons. It jibes with the prediction of the panelists at last week’s Goldman Sachs Lodging, Gaming, Restaurant and Leisure Conference (discussed in last week’s newsletter) that we’re likely to see a lot of industry consolidation going forward. The hospitality technology veterans on the Lodging Innovation Panel (which included ALICE President and co-founder Alex Shashou) agreed the fragmented state of the industry, the economics of hospitality technology businesses, and the general technology talent crunch make growing billion dollar businesses in hospitality technology difficult without considerable M&A. Indeed, TrustYou itself acquired messaging company Checkmate only a year ago.
The TrustYou acquisition is also interesting in the context of another piece of news out this week - a deep dive by Skift journalist Sean O’Neill into the growth strategy of Amadeus Hospitality. Amadeus Hospitality is the hotel software division of the Madrid-based Amadeus; itself a collection of businesses, such as Hotel SystemsPro, Itesso, Libra, MeetingMatrix, and MTech, which Amadeus has acquired over the past half dozen years. Amadeus Hospitality, as O’Neill describes, aims to do for hotels what Amadeus has done for airlines, in providing a full suite of solutions for running their operations. Despite growth through acquisitions and an ambitious mission, O’Neill says success for the division isn’t inevitable. The type of platform Amadeus hopes to sell to the industry hasn’t necessarily been successful before, he writes, and there are also several gaps in the company’s software suite.
It’s Amadeus’ bet on hotels gravitating toward grouping more of their technology elements together with a single vendor that’s particularly interesting to us, since, to a certain extent, that’s a bet we at ALICE (and many other hospitality technology providers, Recruit Holdings included) are making as well. O’Neill says this isn’t how hotels have typically bought software (some hotels prefer an “a la carte approach to tech solutions” comments Citizen M’s Michael Levie), but big data, and the emergence of other technologies in recent years make this type of procurement more appealing. Says Levie: “The benefits of centralized data are making that combined buy extremely interesting.”
However, as O’Nell explains, the viability of the platform play for vendors might rest on factors beyond the benefits of the technology itself: the “fragmented structure of the hotel industry - split among the various interest of property owners, brands, and operators - is the biggest challenge Amadeus Hospitality faces.” It’s a challenge you can sure we’ll be keeping an eye on as well.
- Airbnb Tries to Behave More Like a Hotel NYTimes
- Airbnb Puts €5M Into ‘Community Tourism Program’ Fund For Local Projects in Europe TechCrunch
- Why Hotels Are Setting up Shop in Suburban Shopping Centers Hotel Online
- U.S. Consumers Want More Tech in Hotels Lodging Magazine
- The Shocking Truth About Today's Hotel Industry! LinkedIn