Digital Transformation and a Shift in Mindset

(GA, January 13, 2021)

By Giovanni Angelini

Reimagining hospitality in a world of QR Codes, Facial Recognition, and Blockchain

A digital mindset is not merely the ability to use technology. It is a set of attitudes and behaviours that enable people and organisations to foresee opportunities.

Whether you call it the ‘fourth industrial revolution’ or the ‘second renaissance,’ there is no doubt that technology and related innovations have transformed our lives and the way we conduct business. And the pace of change is increasing exponentially every year.

Breakthrough technology in the form of Robotics, Artificial Intelligence (AI), Virtual and Augmented Reality, Big Data, Voice Search and Voice Control, Automation, Chatbots, Advanced Software, Machine Learning, IoT, Cybersecurity and others require an industry-wide change of mindset – especially as hospitality businesses are generally behind the curve when it comes to applying new technology and learning how to use it.

As an example, migrating the core systems including property management and central reservation to the cloud services will help keep the operation much more agile. Having data and information available at a moment’s notice is of great advantage.

Operators and owners have to become much more open to investing in and applying new technology to meet customers’ shifting expectations, improve operational efficiency, and reduce costs. Technology adoption for hotels post the pandemic impact will be at a much faster place than witnessed earlier.

As more customers become accustomed to smart technology in their homes and workplaces, they have similar, or higher expectations, when they travel and stay at hotels. Hence, hotels have to match these expectations to prevent disappointment or, even worse, loss of business opportunities.

Migrating from ‘hierarchical-to-flat structures,’ from ‘bureaucracy-to-agility,’ and ‘paper-to-digital’ is now part of our reality.

Hospitality leaders worldwide have found themselves having to accelerate the digital/automation transformation of their organisations (without taking away the human touch) to respond to new industry trends and the shifting expectations of customers and employees. Success/survival is clearly at stake – particularly as the industry has to recover from the present nasty pandemic.

Of course have to avoid the over-automation and over-digitization but creating a more personalized customer experience and becoming more efficient is simply a must. Remember that customers continue to get smarter, more impatient and are demanding convenience and efficiency.

QR Codes (Becoming mainstream in hotels)

Created in the early 1990s by a Toyota subsidiary, QR (Quick Response) Codes are a sophisticated form of barcode that can hold up to 100 times more information than their traditional counterparts. They are designed to quickly and efficiently give users information and can easily be scanned with a smartphone.

The main objective of QR codes is to drive engagement and interaction with existing and potential customers. Thanks to improved technology and innovative applications, the use of these codes is on the rise within the hospitality business. They offer a simple way to engage consumers and direct them to a particular website or service.

QR codes can be customised to fit promotional items, are cost-effective, provide ready access to a host of information, and generate user interest. In short, they are an ideal way to create more dynamic marketing content, both online and offline.

Most hotels have started using QR codes in place of, or in addition to, traditionally printed materials to increase guest engagement and upsell products and services. Links can be placed in brochures, catalogues, ads, menus, and even signage to direct users to promotional and engaging content, including videos.

Some creative hotels are even using QR codes to solicit guests to make future direct reservations by offering exclusive services/discounts to those who make a booking after scanning a code. To achieve this, the QR code is displayed in a prominent place at the front desk/check-out counter with an eye-catching slogan inviting guests to scan the code and make their booking.

Of course, there are downsides to QR Codes we must be aware of – the potential for scanning difficulties, device incompatibility issues, the threat of cybercrime, etc. But if you implement them in smart campaigns, you are sure to delight your guests, bring extra value to them, and help generate additional revenue.

Facial Recognition (Safety-Security-Speed)

Facial recognition systems are experiencing rapid growth within the hospitality industry, and when carefully implemented, are highly recommended.

Facial recognition is a biometric method of recognition that can identify people by analysing their faces. In other words, technology can extract attributes about individuals’ faces and/or skin texture by looking at an image or video.

The technology can also be used more generally to recognise certain things about faces, allowing it to determine sex and age. Initially used by security services and law enforcement, it is becoming more prevalent among travel and tourism businesses. The latest systems can also identify people wearing face masks.

Facial recognition technology can help hotel operators to improve customer experience, make processes more efficient, enhance security, and reduce touchpoints (for hygiene purposes) within hotel premises.

On dealing with customers, it is highly recommended that only sophisticated facial recognition software is used. Creating confidence and peace of mind among customers, employees, and the operator/management should always come first. Safety is top priority.

One of the objectives of using facial recognition in hotels is to create a digital profile for each guest that can be used for direct sales and marketing purposes, loyalty programme/communication, and to facilitate customer satisfaction throughout the entire guest journey – from booking through to check-out.

Of course, the biggest challenge for hotel operators is knowing how to harness the benefits of facial recognition software without compromising guests’ privacy and safety.

Even though the technology is being used to enhance customer comfort, hygiene, and security/safety, it could, in fact, do the opposite if the system is breached by hackers who steal their profiles. So just to reiterate, confidentiality and data protection should be given maximum attention when implementing any facial recognition software or systems.

Blockchain (A Transformative Technology with strong potential)

Should the hospitality industry invest time and energy in further exploring the potential of blockchain? (Objective of this writing is to stimulate interests).

All indications are that while blockchain is mostly known as the backbone technology behind bitcoin, it’s one of the hottest, most intriguing technology concepts around – and it isn’t limited to cryptocurrency.

The technology may still be in its infancy, but it appears that it is poised to revolutionise the way we travel. When combined with IoT and 5G, blockchain could provide a new experience altogether in the way we book travel tickets and accommodation, and provide a seamless user experience. It could be the next phase of the technological revolution.

A good starting point for those of us who are not familiar with blockchain’s potential for the industry is defining what blockchain is and how it works.

Search online, and you’ll find many interesting definitions of this fast-moving technology. Here are just a few:

– “Blockchain is not a brand; it is a recording system. It isn’t proprietary to any one country. This technology claims to offer a more secure, cost-effective, and frictionless system to manage data.”

– “Blockchain is a shared, immutable ledger for recording transactions, tracking assets and building trust among various parties. Designed in 2008 to serve as a public ledger, blockchain is a growing list of records called blocks that are linked to cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. Transactions are recorded anonymously and permanently, this prevents manipulation and makes all data transparent, and there is no central point of failure or vulnerability.”

– “Blockchain technology is one of the most exciting digital technology innovations of recent times, and despite its relative youth (and not widely used yet), it has the potential to fundamentally alter the way transactions are made, and information is stored and accessed. Since the blockchain system is a digital technology, it serves as a sort of decentralised database, allowing users to enter information and store it across an entire distribution network.”

– “Although blockchain was developed and expanded alongside bitcoin, it isn’t limited to cryptocurrency transactions. It is a system or technology that’s easy to grasp and handle. It’s known as a distributed ledger technology which is nothing more than a transaction database. The difference between bitcoin and blockchain is that bitcoin is cryptocurrency while blockchain is a system to record transactions.”

Is blockchain a new disruptor? Should hotel companies embrace it now or wait and see how it develops? It appears that a large percentage of hotel organisations have realised the potential benefits of blockchain and are looking at it seriously. The use of digital technology like blockchain in travel and tourism will only help in expanding the sector further.

Is blockchain the ‘new internet’ of the travel industry? Clear indications are that this technology will make it easier, faster, and more efficient to connect to systems and distribute. Hotels will have to explore if this technology can make systems like GDS, Consortia and others less relevant and eliminate the use of some third party intermediaries, including wholesalers.

The biggest question at this stage, of course, is if this new technology will eventually reduce the reliance on OTAs and other intermediaries? (Don’t forget that OTAs are usually much better at adapting newer technology than hotels – and have much deeper pockets when it comes to marketing budgets).

It’s important to understand that blockchain should not be a solution looking for problems, but the other way around. Have you identified any problems you think blockchain can fix? Now is the time to start exploring further.

Advantages of blockchain (as reported to-date)

Security and stability of data (as blockchain data cannot be manipulated)
Secure and traceable payments/deposits
Secure handling of loyalty programmes and reward schemes
Safe storage of data with easy access
Chance to facilitate more direct contact between hotel inventory and the customers.
Physical contracts replaced by digital copies
Easy tracking of quality/service ratings and reviews
Digital identification (of customers, suppliers, and employees)
The ability to track transactions throughout the entire guest journey

There are many potential uses for blockchain within the travel and tourism industry. Some applications have already emerged and are having a transformative effect. Tui Bed-Swap, Trippki’s Loyalty Reward System, ShoCard & Sita-Identity Management, and Winding Tree’s booking and baggage tracking (used by Air NZ, Air France-KLM, Lufthansa, Emirates, and other airline carriers) are just a few examples. It’s also interesting to note that the UAE Government is using blockchain for some of its official processes.

That said, Blockchain has not yet had a significant impact on the hospitality business. Many people still do not understand how the technology works. And there are still those who are sceptical about implementing it due to their perception (or misperception) that blockchain is affiliated exclusively with cryptocurrency – which it isn’t.

Remember that blockchain is produced by people and businesses all over the world using advanced software that solves mathematical problems. It has enormous potential, and with the right application, it could be revolutionary.

A word of caution

Of course, the new technology outlined above does not come free from risks, and implementing it requires much careful thought. As good business people, we must thoroughly explore the challenges, costs, and benefits of the technology, and see how we can implement and integrate it safely and effectively within our existing systems and processes. We must fully understand the complexity and functionality of how the new technology will work.

At present, it appears that costs to integrate blockchain are high, and the return on investment may not be there. But looking at the increasing interest in this technology from various industries, these costs may fall in the future, making the investment worthwhile, and ultimately allowing for better results in efficiency, market share, and operating costs.

Moving ahead and upward

New technologies and innovations are emerging at an increasingly rapid rate within the industry, and the above are just a few examples.

Understanding the threats and opportunities of new technology, and making use of it, is essential to staying ahead of the competition.

What holds you back on new/efficient technology? Budget or imagination? Hope that it is not the latter.

A recent survey shows that a high percentage of travellers expect hotels to use the latest technology to ensure safety and efficiency. As such, operators and owners need to invest in long-term digital transformation.

Remember that balancing short-term performance/goals and long-term vision is the benchmark for any successful organisation. And reaching this ideal requires a clear mindset.