March 18, 2013

Ernst & Young on new ways of reaching hotel guests


On the spectrum of “high tech” versus “high touch” technology and service philosophies across the lodging sector, common practices for the application of emerging technologies have evolved, with a focus on sales and marketing, distribution and guest services via social media, mobile applications and in-room technology.

Technology has revolutionized the way customers interact with each other, as well as with brands, products and services. Social media and mobile technology are at the forefront of this revolution, and many different sectors are evaluating the application of these technology trends and cultural shifts for their businesses. In the lodging sector, participants also face the strategic assessment of technology implementation to enhance the way they market themselves, sell inventory and service their guests.

On the spectrum of “high tech” versus “high touch” technology and service philosophies across the lodging sector, common practices for the application of emerging technologies have evolved, with a focus on sales and marketing, distribution and guest services via social media, mobile applications and in-room technology.

Social media has provided hotel companies with new marketing tools to build customer relationships and deepen engagement. A survey of social media platforms conducted by Ernst & Young shows that all major global hotel brands use Facebook, TripAdvisor, Twitter and LinkedIn to communicate with consumers and guests.1 Hotels are integrating social media into hotel operations to enhance customer relationships and to analyze guest satisfaction and brand reputation by tracking and resolving guest complaints presented on social media outlets. Some hoteliers are also combining the power of social media sites with customer relationship management (CRM) technology to develop guest profiles that are used to provide enhanced service to customers.

Hotel companies also measure consumers’ social media influence to identify influential customers. Some hotels engage guests to conduct word-of-mouth marketing, providing incentives such as upgrades upon check-in.3 Other hotel brands have integrated social media into their rewards programs, awarding hotel loyalty points to guests who check into a hotel via Facebook or Foursquare.

A recent study by Cornell University identified a material correlation between the social media reputation and pricing power of hotels, particularly as it relates to the popular hotel review site, TripAdvisor. According to the Cornell Hospitality Report, if a hotel enhances its review score by one point on TripAdvisor’s five-point scale, it can increase its rate by 11.2%, while maintaining the same occupancy or market share. Not surprisingly, a different study, conducted by PhoCusWright, found that 53% of respondents would not book a hotel if it did not have any TripAdvisor reviews, and 87% agreed that TripAdvisor reviews increased their confidence in the selection of a property.

Mobile technology is also transforming the way hotels interact with guests, given the fact that global smartphone ownership exceeded one billion in 2012. Major hotel companies have demonstrated a commitment to enhancing their mobile presence; in the survey conducted by Ernst & Young, most large hotel brands offered mobile websites and dedicated mobile applications.8 One international hotel brand, for example, offers an application allowing guests to view or cancel existing reservations, check in, use location-based technology to find and book rooms, download directions to its branded properties and collect information about a destination, including local time, weather and area maps. As an example of inventory distribution via mobile technology, some hotels offer a mobile booking application, providing discounts and promotions exclusive to mobile bookers, a strategy aimed at capturing incremental demand while avoiding cannibalization of other distribution channels.

In hotels, technologies across lobbies and guestrooms are expanding further, often to shorten the service time required for seasoned travelers via automation while freeing up hotel staff to answer travelers’ questions. Tablets have been launched as standard tools at the properties of major hotel brands, allowing guests to check in, check out and interact with room service, housekeeping and concierge services. Tablets have also been utilized by guests to research area attractions, make dining reservations and print boarding passes.

Social media, mobile distribution and in-hotel service technology have been shown to affect guest satisfaction, guest loyalty, brand value and, thus, financial performance. However, the impact of these technologies is not universal across chain scales or hotel brands and properties. Instead of adopting a more-is-better mentality, hotel companies may benefit from a careful review of their technology tactics to assess investment parameters, return metrics and benefits. If implemented strategically into the lodging- business architecture, technology has the potential to materially enhance the value pathway for hotel brands, operators and properties.

Download the full report "Ernst & Young Global Hospitality Insights - Top Thoughts for 2013" (PDF 500 KB)

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