What are the Top Challenges Facing Hotels in 2018?

In The Digital Marketing Blog by Sean3 Comments

The title of this post is a question we first asked back in 2016.

Our Head of Digital, Scott Colenutt had just finished writing his eBook, What Can Hotels Learn From Airbnb About the Sharing Economy and had realised that the rise of Airbnb was just ONE of the major changes that was happening in the hotel at the industry at the time.

In his post, he covered:

  • The Growth of Airbnb
  • The impact of VR/AR on the hospitality industry
  • The importance of reputation management.

You can read it here.

Two years on, I’m revisiting the subject and I’ll be looking into what’s changed in the last 2 years and any new challenges that are facing hotels in 2018. To help I’ve also asked fellow marketing and hospitality experts for their opinion.

Read on to find out what the top challenges facing hotels in 2018 are.

Because of Airbnb, Hotels will be Forced to Provide an Experience

That’s right, two years on and Airbnb are still causing massive disruption within the hotel industry.

Airbnb has changed people’s expectations when it comes to travel. For travellers in 2018, a standard hotel room simply won’t do.

Airbnb has caused travellers to expect an increasingly personalised experience.

The impact on hotel companies is that if they wish to compete with the level of personalisation and experience that Airbnb are providing, they’ll need to consider how they can turn someone’s stay into something much more than just that.

Eric Johnson, Content & Video Specialist at FeedbackWrench thinks this is crucial:

“In 2018, hoteliers have to equip themselves to provide an “experience” not just a “stay.” With Airbnb introducing these “experiences” as part of their arsenal of services, travellers will soon be conditioned to expect reasonably priced and entertaining outings as part of their trip. Since Airbnb is leading the way here, hotels that haven’t already embraced this will be forced to catch up if they hope to compete.

The best way to combat Airbnb on this is to strengthen existing relationships with surrounding local businesses. Many hoteliers have already partnered with those around them to create these fairly priced entertainment opportunities, but these opportunities should be moved into the limelight in terms of a marketing strategy. A great marketing effort should portray a hotel as a destination, not a functional necessity”.

Richard Gornall of The Hideaway at Windermere agrees with Eric and suggests that hotels need to make more of an effort to differentiate themselves from Airbnb.

He says:

“Airbnb remains a major threat to the hotel industry. It is a threat that isn’t going away.

In the UK, Airbnb prices are approximately 40% cheaper than hotel rooms and most hotels are unable to halve their prices to compete. This means that they need to offer something more, or something different.

Hotel owners and marketers should consider the reasons that travellers stay in hotels rather than self-catering. Consider the luxury of the hotel and the fact that there are employees on hand to respond to visitors’ needs. Food and drinks offered on the premises are another major point, along with additional services like dry cleaning or even a morning newspaper service. These are things that often aren’t included as part of Airbnb.

Reviews on sites like TrustPilot and TripAdvisor, as well as on Google, are one way to promote these services, but you’ll also need to make sure that your web content and other literature highlights these benefits. Encourage visitors to share their experience online, have a social media presence, as well as review site presence, and make it easy for guests to check in and share”.

Jason Donahue, Co-Founder & CEO of Sidewalk also weighed in and explains that, “…one of the most interesting challenges of 2018 is how to appeal to 21st Century travellers who value experiences?  More than 85% of a traveller’s waking hours are spent outside of the hotel, but that doesn’t mean that hotel brands need be out-of-sight, out-of-mind.

Guests are seeking out local experiences, and if hotels are smart and technology-focused, they can be the ones to deliver these experiences. The benefits: increased loyalty, more brand awareness, increased foot traffic.”

So, What Can Hotels Do to Provide an Experience Rather than Just a Stay?

There are several advantages of using a hotel rather than an Airbnb and as Richard, Eric and Jason have mentioned above, hoteliers should place these at the forefront of their marketing.

Hotels will need to market themselves as a destination and an experience, rather than just a necessity.

It might seem obvious but there are lots of things that hotels offer that most Airbnb’s won’t be able to.

These include:

  • Bars
  • Gym
  • Pool
  • Room Service
  • Dry Cleaning
  • Catering
  • A Concierge

If you’re a manager of a hotel and you offer these as part of your services, you’ll want to make sure that these are well featured on your site and that you put these forward into your marketing campaigns as well as utilising your employee’s local knowledge. You could also create a landing page that talks about all the benefits of staying at your hotel.

At the same time, contact other local businesses and look for partnership opportunities. Do you have businesses nearby offering fun activities, tours or walks? See if you can offer discounts to nearby attractions for those who stay at your hotel.

As a local business, your unique assets over Airbnb are your local history, knowledge, partnerships and the spirit of your employees, who know the area like nobody else.

Luxury Hotels Will Also Have to Compete with Airbnb Plus & Beyond by Airbnb

The guys at Airbnb aren’t stupid. They know that in many instances, hotels can often offer more than they can in terms of luxury, reliability and amenities and that’s one of the reasons why they’ve recently launched Airbnb Plus.

Airbnb Plus is marketed as a brand of luxury accommodations that are guaranteed to meet 100 different criteria with and come with certain amenities, things like stocked kitchens, clean towels and comfy beds. It’ll essentially provide travellers with all the guarantees that often come with staying in a hotel.

In an interview with The New York times, Airbnb’s chief executive, Brian Chesky explained “Some travellers want predictability and certain comforts, Airbnb Plus will give them these”.

All properties will have to meet a set of required standards so that guests are guaranteed a great stay. But, with extra comforts comes increased costs. According to the same article, the average nightly rate of an Airbnb Plus home is $200 compared to $100 for a standard Airbnb listing.

Whilst a lot of hotels will be of a similar price (depending on the star rating), many will be able to guarantee and offer these amenities at a lower price and this is still one way that hotels are able to compete with Airbnb. 

Beyond by Airbnb Will Take on Luxury Hotels

Airbnb are also rolling our Beyond by Airbnb this year which will provide travellers with ridiculously lavish homes to stay in.

The company describes them as “Trips of a lifetime”.

Check out the video below and this article on Vogue to see what I mean:

Whilst being more expensive, this is another thing that the 4/5 star hotels will have to compete with, and that’s going to be difficult.
One thing’s for sure, Airbnb isn’t going away.

Providing an insight into how the industry might need to adapt in the future, we spoke to Chip Conley, Strategic Advisor at Airbnb about why hotels need data scientists on our podcast.

Give it a listen below:

Mobile First Indexing: Staying up to Speed with Mobile

Mobile is a hot topic in digital marketing right now and for good reason as Mobile First Indexing has just been rolled out.

Back in 2015/2016, Google confirmed that mobile search had officially surpassed desktop searches worldwide and unsurprisingly, later in 2016, Google also announced their development of the mobile-first algorithm, commonly known as the Mobile First Index which confirmed that they would be looking at the mobile versions of your site first and then ranking your desktop version next.

After years in development, this has just been rolled out, so now, the mobile version of your site will become the starting point for what Google includes in their index. It’s essentially your primary website.

We spoke to Izaak Crook, Digital Marketing Executive at the App Institute about how this might impact the hotel industry:

“One of the biggest challenges facing hotels in 2018 is keeping up with the increasingly meteoric rise of mobile. Many hotels might have invested in websites that no longer match current expectations both from users and search engines.

It’s therefore imperative to have your own mobile presence. A responsive website is a great way to start, but creating your own mobile app will offer improved user experience and help turn one-offs into return customers, through the use of mobile loyalty schemes and push notifications. 

Using a drag-and-drop app maker, smaller hotels with less budget can create an app for iOS and Android without spending thousands on developer costs or learning how to code themselves”. 

How Can Hotels Stay up to Speed with Mobile?

As Izaak says, investing in a mobile app can be a great way to help improve a user’s experience and create brand loyalty and we’d recommend looking into it if you have the time and resource.

For those who maybe aren’t quite ready to create an app, there are a number of different tools out there to help you get started with a mobile first strategy and here are just a few

  • The recently released Mobile Score Cards allows you to see how you compare with your competitors in terms of mobile speed, whilst you can also calculate the potential revenue impact of having a slow mobile site. Many factors contribute to a user’s experience on mobile sites and speed is one of the most important. If your site takes an age to respond, often users will simply leave. In the words of Arcade Fire, everyone wants “everything now”. Using Mobile Score Cards, you’ll be able to see if your site adheres to the recommended site load speed of 5 seconds and if not, start to make the necessary changes.
  • The mobile-friendly test from Google allows you to test how easily a visitor can use your page on a mobile device. Simply enter your URL and you’ll be able to see how your site fares and whether it is mobile-friendly or not. If not, you’ll be able to see why and what needs to be changed.
  • Tools like Hotjar to see how people are interacting with your site. Using recordings and heatmaps you’ll be able to find out how are people actually using it and any pain points that they may have. You can then run tests and make the necessary changes to your mobile site.

Using these tools is just the start but can be a great way to get ahead of your competitors and make sure you’re well optimised for those ever-increasing mobile visits.

Responsible Travel and Sustainability

The idea of the conscious consumer is one that our Content Marketing Manager, Dave Gregory spoke about in his post on The Top 3 Challenges Facing Retailers in 2018 and this is also something that translates to travel and hotels.

In 2017, the United Nations declared the year as the International Year of Sustainable Tourism for Development with the aim of supporting change in policies, business practices and consumer behaviour and according to this post on the Travel Pulse Blog, tourism is the leading force for economic development. For many countries it’s a major source of income, but at the same time, it has an enormous effect on the environment and local communities.

As a result, the responsible travel movement has gathered pace in recent years with more and more people thinking ethically, morally and responsibly when it comes to travelling.

Companies like Rickshaw Travel provide travellers with services that support local communities and respect the environment.

But what does this mean for hotels?

We spoke to Inma Gregorio, Travel Blogger at A World to Travel who explained:

“While AI and VR have topped the rankings of every hotel wish list for a while, 2018 is the year of sustainability as the ultimate hotel feature.

Take, for instance, the eco-friendly rooms of Good Hotel in San Francisco, part of Haiyi hotels.

Each room has been fitted with bed frames made from 100% reclaimed wood, bedding made of 75% recycled soda bottles, recycling bins, and water-conserving ‘Sink Positive’ toilets.

It was about time that responsible travel was made a priority!” 

What Can Hotels Do to be Sustainable & Responsible?

With companies like these becoming increasingly popular, responsible travel is something that hotels will have to take on board.

They’ll need to think of ways to become eco-friendly, to reduce waste and have a positive impact on their surroundings.

Here are a few ideas of how hotels can do this:

  • Use locally sourced and organic food in the kitchens
  • Reduce the use of plastics
  • Encourage guests to reuse towels, sheets and bedding. (After all, you don’t change your bedding after every sleep at home do you!)
  • Use recycling bins within the rooms
  • Install energy saving technology e.g. lighting and heating

Although some of these might be costly, it could be worth it with an increase in responsible travellers. It can help to set you apart and can be a great USP for your hotel, plus it’s great for the environment.

To me it seems like a no brainer.

The Impact of AI and Real Time Engagement

Artificial Intelligence (AI) is a challenge that not just hoteliers, but all online businesses face.

No longer something limited to sci-fi movies, technology advances have meant that AI has become a reality and something that businesses are incorporating into their everyday operations.

This report, conducted by the Boston Consulting Group and MITSloan Management Review interviewed more than 3,000 businesses in 112 countries in 2017 and found that 83% of respondents believed that AI was a strategic priority for their business today.

It also found that 84% believed that AI would enable them to obtain or sustain a competitive advantage.

What does that mean for hotels? Well, in short, if you haven’t already given AI some thought, then you should probably start as chances are, your competitors already have!

The same report also found that customer facing activities including marketing automation, support, and service are predicted to be the most affected areas by AI in the next five years.

This is why if you’re working on behalf of a hotel, you need to give it some real consideration.

We spoke to Chris Smith, Co-Founder & CEO of Kipsu who explained:

“One of the big challenges facing hotels in 2018 is what the industry is calling Real-Time Engagement.

Essentially hotels around the globe are moving toward digital messaging channels that include texting or SMS communication, loyalty app messaging, and/or web-based live chat capabilities.

This new form of communication offers a fresh channel for guest engagement, service opportunities, and feedback collection, but also forces hoteliers to face questions like whether AI has a place within such a service-driven industry and how these systems will be offered to guests or how they will be accessed.

AI can streamline some guest’s interaction and team efficiency, but also opens a hotel to a PR disaster or a guest experience flop when the AI fails at the subtlety demanded by some guest interactions. Similarly, many hotel brands are balancing the decision to offer messaging services to only loyalty guests (in the case of in-app messaging) or to expand the service to all guests through texting and other more publicly available channels.

Most of the major higher-end and luxury brands including Hilton, Kimpton, and Fairmont, as well as a variety of focused-service brands have already adopted one or more digital messaging solutions. For the rest? Digital guest engagement is decision on the horizon.

How Can AI be Used by Hotels to Provide a Great Guest Experience?

Well, the truth is that many hotels are already doing so.

Check out this example from Hilton who created Connie, a robotic concierge:

Or Rose a “sassy” bot concierge in the Cosmopolitan in Las Vegas:

The Cosmopolitan of Las Vegas Rose Chatbot from Manny Fernandez on Vimeo.

Implementing something like Connie or Rose might be an expensive option and not something that all hotels can do but that doesn’t mean that AI can’t be utilised.

Many customer service (and often menial) tasks that are often undertaken by humans can simply be completed using AI, digital assistance and mobile apps.

Let me give you some examples:

  • Ordering meals and drinks
  • Scheduling meals
  • Making reservations
  • Booking taxis
  • Controlling your rooms temperature

You should also consider using chatbots and messaging that leverage AI such as chatbot as Chatfuel and ManyChat, as you’ll be able to answer questions that their guests or potential guests have at any time of the day without the need to take up the time of your hotel staff.

Our advice: If you haven’t already done so, start looking at how AI can help you improve your customer service today!

Conclusion

In 2016 we spoke about the growth of Airbnb, the impact of VR/AR and the importance of reputation management as the challenges that hotels faced and in truth, these are probably still relevant today.

Airbnb isn’t going away and in 2018, hotels will also need to consider how they’ll compete with Airbnb Plus and Beyond by Airbnb as well as making sure that they can utilise their hotel facilities and local businesses to provide guests with an experience.

When it comes to technology, hotels will need to continue to invest time into how AI, alongside VR & AR can help them improve customer service and different experiences.  Customer service can be improved through automation, chatbots and messaging to ensure that they are on hand for guests 24/7. As a result, response times can be improved, human error eliminated, and a superior service delivered. Staff will even be able to spend more time on the tasks that matter.

With the roll out of the mobile first index, hotels will need to make sure that their sites are well optimised for mobile and provide a decent user experience. They also might want to look into creating apps in order to generate brand loyalty, whilst improving user experience. Failure to investigate might result in being left behind.

Being more environmentally friendly and thinking about how to make hotels more sustainable should also be high on the priority list with a growth in responsible travel in recent years. In doing so, hotels will  be able to differentiate yourself from competitors, build a positive reputation and at the same time do something good for the world!

So, what do you think? Are there any other challenges facing hotels in 2018?

Is there anything I’ve missed?

If so, I’d love to hear from you. Leave a comment below or feel free to email me with your suggestions.

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Comments

  1. Hi Bean, I totally agree with you that Airbnb is chewing the Hotel Industry like anything else. Its growth has thrashed not only in America but also in some other countries as well. We are constantly trying to empower ourselves to face the consequences whatsoever happens. Good to know such information. Thanks

  2. Airbnb has definitely changed the battle field. I can imagine price wars are coming soon…

  3. Pingback: 4 Challenges Facing the Hotel Industry Today | Verdant Blog

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