What is the best response to the new uncertainty?

The hotel industry has suffered more than most through the pandemic. As the global lockdown loosens, it’s hard to predict what the rebound will look like. Consumer behaviour has changed, with increased expectations around safety, flexibility, connectivity, and ease-of-use. The potential impact of a reduced in-person and location-agnostic workforce is unknown as are the new expectations of leisure travellers.

The response to lockdown could still send further shocks through the hotel industry. For the brave and bold, however, it could bring significant opportunities. To win customers' hearts and minds, hotels must adopt flexible, customer-centric approaches that integrate systems, share data, and embrace test-and-learn experimentation. By developing best-in-class experiences based on customer data, hotels can make their customers feel safe and welcome in what for many remain worrying times.

Red Badger teams build digital experiences that change industries. In this timely article our senior consultants explore the 5 keys to applying customer-centric technology to prepare for the rebound in travel demand, weather difficulties and make the most of opportunity.

Competing customer forces are changing the hotel industry

The pandemic has accelerated the adoption of digital technology and has changed how consumers experience and interact with people, places and brands. In hospitality, where service is everything, social distancing, hygiene regimes and data sharing will remain necessary for the foreseeable future. However, unclear rules around vaccine passports, restrictions on events, lower business travel rates, and peaks in demand for leisure are all predicted, but the extent of their impact remains fuzzy. 

Through this, hotels need to find a way to balance the two competing demands of their returning guests: reassure me and ‘wow’ me.

As seen in this research, reassurance is likely to come from the physical measures you put in place and how well these are signposted. 

In delivering ‘wow’, the business advantage of customer experience has been a recognised cornerstone of hospitality for decades. The digital disruptors such as Airbnb and Sonder continue to extend and double-down on service offerings such as Airbnb Plus, their new hotel-like offering with verified quality, amenities and personalised features most popularly requested by customers, and Airbnb Experiences. Where previously the luxury market set the trends that trickle down, it's now just as likely for innovations to arise from anywhere, either through robust consistency (eg Hypnos beds at every Premier Inn) or virtual, contactless check-in as a budget cost-saver or late-arrival service.

For the business traveller and the local day guest, as working practises change and the emergence of Work From Anywhere (WFA) patterns start to impact urban, regional and mixed use placemaking, the services demanded of hotels will evolve again. How can the hotel lobby and coffee lounge, long seen as a free-to-use meeting room by some, evolve beyond the business centres of old, to a workspace of choice and generate revenue from a range of  service innovations?

To deliver on these twin demands of service reassurance and service excitement, operators will need to offer a seamless experience, contactless technologies, and higher levels of transparency and flexibility to their guests.

A crowded and confusing marketplace for digital solutions

Within the context of this accelerated digital adoption to meet customer expectations, the sector is likely to see an explosion of products and services. But, the marketplace is already crowded - according to Hotel Hero, a software discovery platform, there are over 140 digital products that cater to the hotel guest experience alone.

When you add in sector-agnostic products, hotel group leaders face difficult decisions:

• What is the right technology strategy for now and the future?

• What products and approaches will support rapidly shifting customer demands?

• How can I be sure the investments I make now will serve my future needs?

The answers to these questions come with risks. Often the customer and operations systems hotels rely on reside in data islands that don’t talk to each other in real-time, are clunky to use and difficult to evolve. Data and systems that are not joined up, can’t communicate with each other, and rely on third parties, can wreak havoc on customer experience. 

The sector now faces a reckoning as these become core to future revenue generation.

Loyalty flows from customer experience built on knowledge

According to Gartner research, customer experience ranks ahead of price and brand as the key factor in driving loyalty. The Holy Grail of loyalty is moving people from “I need a hotel” through “I prefer this hotel” to “I will only stay in this hotel”. This level of stickiness and brand premium comes when a customer feels deeply understood and is provided with a seamless, delightful service. The feeling when there are no hard edges in the experience and everything is just-so is what makes guests feel at home in your hotels.

While digital-first platforms have reconfigured the demand, supply, yield, pricing and booking of rooms, some hotels have responded with their own integrated apps, giving customers access to the best prices, contactless room entry and now remote ordering. Yet, the industry as a whole continues to rely on a disparate set of single-feature solutions such as hotel management, keyless entry, restaurant booking, interactive TV etc. each meeting a single customer requirement with little integration between them. 

Even when individual solutions work well, guests and staff feel the seams between them and get frustrated by every switch they are forced to make. When systems are joined together, there are countless opportunities to enhance the guest experience from timely notifications to contactless ordering and room access. Every one of these provide upsell and loyalty enhancement opportunities, all while collecting deeper insights into what guests really want. The more you know about a customer, their likes and preferences, the more a hotel can personalise the experience to them and build loyalty that sticks.

Make moments that matter with adaptable, seamless experiences.

What could you do if you had insight into every guest’s need and the ability to respond instantly? 

Guests should be able to interact with all services in their channel of choice, not be forced to call a busy reception desk or seek someone out in person. Enabling them to select rooms, be notified when it’s ready, and gain access with contactless check-in and check-out will meet new safety expectations. Add room service, concierge, upgraded services, restaurant and experience bookings all on their phone and they experience ‘wow’ moments throughout and beyond their stay. While staff get much-needed insights to manage services, resources and schedules.  

If every touchpoint with the guest is digitally enabled and connected to a central system, the guest gets an instant response. Hotels see the ebb and flow of demand and can adapt services in real-time. With this data, you can even go a step further and predict guests’ needs almost before they can. Customer data can be used to promote real-time offerings based on behaviour and preferences. The more of these moments that can be handled through an integrated, easy and fast digital experience the more likely to book, re-book and share, making you the ‘go-to’ destination.

5 keys to integrated, seamless guest services.

1. Start small, think big. Build incrementally to align your investment to the value it creates.

When technology has been developed over years and is a combination of stand-alone solutions and outsourced services, it feels like you need to move mountains to change things. The best response is to start small, breaking off parts of your existing systems that can be experimented with. Focus on customer value so the changes you make have an immediate positive impact and then remain obsessed on unlocking further value as you go. Evolving and maintaining your platforms with smaller consistent investment enables adaption and mitigates the risk of falling behind.

Apply a strategic planning approach and think holistically to avoid making tactical investments in technology and digital guest experiences that only respond to a single need. Take a step back to define a vision for your guest experience that aligns with your strategy. Recognise the opportunities it enables and create a roadmap of how to navigate to this future state. Complex existing product and supplier ecosystems can be unpicked over time allowing you to retire  future costs.

When Red Badger worked with Tesco to redevelop their eCommerce platform, we partnered on the international website first. This allowed for much less cost, an experimental attitude to technology, and a faster time to value. We delivered 5 years planned digital work in 8 months. Travel light and move fast. Connected digital experiences allow hotel chains to make key moments matter. What are some examples of key moments? It’s everything from researching, to booking, to checking-in, unlocking the room door, and ordering room service.

2. Go seamless by dissolving data and system silos

Your ability to satisfy customer needs will determine the growth and future success of your business. There is a direct line-of-sight from your business objectives and overarching strategy to how you engage with customers and the platforms required to do it well.

Modern technology practices are based on dedicated, loosely coupled services and APIs, designed to interoperate with each other, and co-existing in a coordinated ecosystem. They interact seamlessly, streamlining business processes and facilitate the sharing of data to better understand and predict customer behaviour. 

As customer expectations evolve, single monolithic solutions are unable to adapt quickly enough. As customer offerings become as much digital as physical, providing a bespoke, delightful, end-to-end experience becomes business critical and improving and innovating customer experience is key. 

Develop a core platform around your customer, supporting their experience through all interactions. The core becomes the backbone to support all your customer touch-points. Components such as: Customer Relationship Management, Property Management System, Content Management Systems, mobile apps, websites, even access control and security can be connected to this backbone. 

An ecosystem approach lets any individual component be upgraded and adapted without having to unpick the entire system, and without huge investment. Over time the isolated data and feature silos that individual systems exist in are eroded.

With this approach, new features, new guest services, and new customer journeys can be introduced and tested easily. Data flows more freely throughout the system as it is designed to be more connected. This allows for better collaboration between people, teams and systems and a far more informed view of your customers.

When Red Badger worked with HSBC to redevelop the customer journey for opening an account, the core banking systems were too entrenched and expensive to change. To build a seamless experience we wrapped them in modern technology services to expose them to a newly developed digital experience. This allowed HSBC to take their time to open an account from over 30 days (and a visit to a branch) to less than 10 minutes, fully automated. This sent conversion rates through the roof.

3. Own your digital estate to break free of third parties

Many sectors start their digital journey with small, specific functions being made ‘digital’ by deploying off-the-shelf software products. This ultimately leads to a complex landscape of disconnected third party applications. When this is no longer sustainable, businesses migrate to a centralised solution, offering most of those features in a single large software solution. The migration is difficult and expensive. The end result works together as a whole and offers a reasonable though inflexible and costly to change customer experience.

The key to break free is owning an API driven, functional core system supporting the key capabilities needed for a great customer experience.  Outsource and integrate commodity capabilities (e.g. payments, CRM, identity management) and focus most of the effort on your service design and seamless customer experience. Control shifts away from third parties, which can now be swapped out without causing ripple effects throughout the technology estate.

Alongside technology maturity, their exists the threat of digital aggregators using their agility and customer-centricity to take ownership of customer demand (and by extension, margin). Generally, operators who depend on high volume, frequent customer visits (from coffee shops to hotels) have succumbed initially to the value exchange of the on-tap customer demand these platforms provide.

Over time larger service provider businesses have recognised the risks in giving up their control of the customer experience and invest to take back control. The only way to achieve this is with a combination of service, brand and offering - almost always underpinned by a loyalty programme.

To enable it requires a carefully considered and tailored approach to developing a Direct to Consumer (D2C) model and in-house ownership of a platform to deliver it. When successful, these approaches accrue many benefits in loyalty, margin protection, flexibility, customer insights and the ability to engage customers beyond your four walls.

Our recent work with Nando’s showed how they have in place many components, such as a near cult-like loyalty programme, huge brand recognition and a well understood service and product offering. Through lockdown we have accelerated their response to dramatic business change by integrating their Chilli Points loyalty programme into mobile wallets and building an in-house, integrated ordering platform.

4. Learn through experimentation and respond at pace

A digital estate built in this way can evolve and adapt quickly to respond to changes in the market or customer expectations, whilst continuously delivering best-in-class, personalised experience.

Once in place, the platform enables rapid experimentation. You are able to take ideas and concepts for improving experience and quickly build experiments to test directly with real customers. Those ideas that stick can be scaled rapidly to all customers and the learnings from others can be incorporated into evolving new offers.

Such agility does not require the entire service to be custom-built each time at great expense. With a flexible core holding the essence of your services, wrapped in open integration points, any of your own or other third party services can be plugged in easily to change or extend services.

This approach encourages rapid pivots towards any area where customer value is identified. As expectations change or emerge, as you consider services or integrations, and even as circumstances change in real-time, you are able to react immediately. You’ll maintain confidence in the integrity of your customer data throughout and capture deep insight into customer preferences.

When Red Badger worked with Santander to develop their new-to-market currency exchange PagoFX we built the initial core (including the ledger) on a modern digital architecture. This enabled Santander to deploy and rapidly evolve entirely new digital experiences.

For more on how to experiment at pace to uncover market demand, here’s a deep dive into Product Thinking.

5. Align and integrate to build loyalty over time 

The hospitality sector has been a fertile ground for digital disruptors meeting underserved customer demand, opening up fierce competition for revenue. But service-led aggregators such as Booking.com or Just Eat never command the loyalty of a hotel or fast food brand. How has Nando’s built its devoted tribe of followers and why do people insist on flying BA?

A critical aspect is how aligned and integrated their loyalty programmes are with their brand promise and service delivery. These three components act in synergy to reinforce one another. A distinctive brand with a strong and well understood promise must continuously and reliably deliver on its promise. Such quality and consistency of service develops organic loyalty that is cemented with programmes that build stickiness. VIP and integrated offerings reinforce the service offer further for the most valuable customers until a segment of customers would never consider a competitor, becoming a bedrock of lifetime value.

To get to this point requires alignment across many functional silos and a clarity of vision and strategy. Much of Red Badger’s work is in helping organisations transform to a sustainable, customer-obsessed approach. This always centres on building alignment and consensus. We deploy a range of tools to help clients experiment with what this might mean for them, some of which are showcased here.

Our advisory board  includes ex-CEOs and execs of travel, leisure and consumer brand companies who are always willing to share their experiences.

If your digital journey is well underway and you are acquiring customers and progressing them through well designed journeys already, then your next step may be to optimise at scale. Find out our thoughts on how here.

About the authors

Joel Williams is a Managing Director with deep expertise in platform development; Viktor Charypar is a Technical Director with a passion for an agile technology approach; Paul Stockdale is a Delivery Director with 20 years’ experience delivering large scale digital initiatives; and Jimmy Muldoon is a Product Director with deep expertise in data and insights.