Hotel Industry and the Use of Mobile Techn Guest Experienceology to Enhance the

Introduction

Description of the Hotel Industry Structure

The hotel industry is one of the sectors in the hospitality industry. It provides its guest’s services like lodging and event spaces for both personal and business uses. This multibillion-dollar industry can be divided into several different classifications. These segments include:

• Full-Service Hotels- comprised of luxury resorts with premium amenities and are rated between four and five stars.
• Select Service Hotels- consists of hotels that are rated between three and four stars. They are often located in convenient locations such as airports.
• Limited Service Hotels- more economic lodging options that are rated between one and two stars. These include motels and hostels.
• Boutique and Themed Hotels- These hotels immerse guests and enhance their experiences because they are in their location of interest.

Examples of these types of hotels would be casino hotels, cruise hotels, and hotels located in theme parks (SOEG Jobs). The hotel industry is an intangible good, not a physical product, but a service provided for consumers (Nicholls & Roslow). Because of this, value is placed on the type of service provided to consumers, and market segmentation is important to ensure competitive and profitable pricing. Though the modern advent of online booking has made it difficult to identify which markets guests fall into, the industry has still been able to section their services into the following categories: transient, negotiated, and groups (Girrbach).

The transient market is offered to all consumers and is based on the best available rate or BAR. BAR rates fluctuate in a transient market. Negotiated segmentation includes government and businesses that have contracted special rates with hotels in exchange for exclusivity when using hotels for business purposes. In a group market segmentation, group rates are offered, and cancellation is made more difficult to minimize the loss of reservations. These can be booked far in advance (Girrbach).

The Dominant Competitive Strategy Within the Hotel Industry

Michael Porter’s generic competitive strategies can be used to explain the dominant competitive strategies within the hotel industry. These strategies are broken into three main categories, cost leadership strategy, differentiation strategy, and focus strategy (see figure 1).
Cost leadership strategy is prevalent when hotels use dynamic pricing to determine what rates to charge and create value-based pricing by using hotel websites such as Priceline.com to book reservations. The practice of dynamic pricing involves the ability to price rooms based on the dates needed, room categories, room availability, and length of stay (Al-Shakhsheer et al.). There must be a balance when determining the rates of hotel rooms based on value. Hotels must take care to price rooms that will maximize the consumers’ willingness to pay without hurting the business’ profits.

When a differentiation strategy is in place, hotel owners strive to have their businesses stand out from the rest. In order to achieve differentiation, businesses must be able to offer a service that is unique to them so that the hotels can charge a premium price that their customers would be willing to pay (Lo 58). Offering additional amenities that enhance customer experiences, like in-house gyms, pools, and spas, would entice consumers to book at specific hotels/resorts. Themed hotels offer an additional perk to guests.

Focus strategy involves a narrower market, and when hotels emphasize this market, there is a higher level of customer loyalty. When cost is the factor, the focused customer base may receive special loyalty discounts that will result in less revenue. However, when the focus strategy is based on differentiation, rates may be higher, and the customer base would not be lost because the exclusive services that are provided to them by the hotels will outweigh the higher costs of the service.

The Value Chains of the Industry

Porter’s value chain tool can help break down the makeup of the hotel industry that identifies how the services offered to its guests create value in the industry and enhance the customer experience. “The value of the hotel service industry can be divided into

1. product value, that is, the value of the guestroom, catering services, and so on;
2. service value, that is, the value of the service labor;
3. market value, that is the hotel market value of the marketing;
4. the property value, provided by the architectural composition, decorative style, infrastructure of hotel;
5. the value of hotel culture;
6. the value of hotel system and management” (Linsheng et al. 395).

Product innovation refers to the tangible parts of the hotel that generate value for the hotel. Examples of this would be the room décor that would separate a standard room from a premium or themed room and the dining options offered to its customers. Market innovation takes the target market into account to communicate to its current and future patrons. Human resource and management innovations encompass the talent of the staff and its ability to deliver customer service. Continuous training is necessary to create the desired culture for the business. Cultural innovation is what sets one hotel apart from the other and enhances the guest experience. Culture is built through product (ambiance) innovation through the intangible services provided by the staff and the promotion of its core values (Linsheng et al. 396).

The Business Process of the Industry

The business process of the industry can be broken down into multiple individual divisions. For a hotel to operate successfully, all divisions must work harmoniously and efficiently. This section will describe several common divisions, as well as how they operate.
Regarding the organization of skills in the hotel industry, human labor is divided into individual departments. Each department consists of a group of people with similar skills, which increases efficiency and coordination. In small hospitality organizations, such as bed-and-breakfasts, said departments are typically managed and supervised by the owner of the establishment. Larger businesses, such as chain hotels, require individual management positions to be created and implemented.

According to Krstić et al., there are four main operating processes that take place in a hotel. These processes are housekeeping, supplying necessary inputs, managing the arrival and departure of visiting guests, and the preparation and serving food to guests. (Krstić et al. 31)
The housekeeping process is imperative for the cleaning of not only the individual rooms guests will be staying in but also cleaning of the entire facility, including elevators and swimming pools. In addition, housekeeping conducts the decoration of the building. It is also necessary for housekeeping to be concerned for the safety of guests. They are responsible for ensuring the hasty correction of possible hazards to guests’ health. According to Krstić et al., housekeepers are all required to know first aid.

The process of supplying necessary inputs relates to the purchase of products and goods for the consumption of guests. The process involves selecting and certifying ideal suppliers and purchasing and receiving food, beverage, and nonperishable items like cloth goods and appliances. After receiving, goods are stored in separate warehouses for each type of good.

The process of managing guest arrivals and departures is characterized by five categories: pre-arrival, arrival, occupancy, departure, and post-arrival.

The pre-arrival stage involves the guest selecting a hotel and making a reservation. An agent in charge of reservations will use a program to record the event. Reservations can be categorized into short and long-term. Short-term refers to reservations made days in advance, while long-term involves reservations made months in advance.

The arrival stage refers to at-desk registration and the assignment of the guest’s room. The front desk will answer any questions the guest may have and describe the hotel package the guest has purchased.

The occupancy stage involves the time in which the guest is checked in and staying in their room. During this phase, charges, such as for internet access, food, and phone usage, are recorded on the guest’s account. A primary goal of the front desk during this stage is to satisfy visitors to a point where they are willing to return in the future.

The departure stage is the period in which the guest checks out of their room and receives the bill. The front office then adjusts the online software to display the availability of the room, as well as alerts the housekeepers of the empty room which needs cleaning. In some hotels, this process is done automatically with the appropriate software. (Krstić et al. 32)

The process of preparing and serving food to guests is performed in kitchens located within the hotel. Depending on the size of the hotel and menu, there may be multiple kitchens in one building that specialize in different, specific areas, such as main courses and desserts. The food is then typically served directly to guests’ rooms via hand delivery by a hotel worker.

The Use of Mobile Applications in the Industry

In the modern era, mobile applications play a major role in the hotel industry. According to Dan Kosir, mobile apps can be used to make reservations, order room service, check in and out, and pay for accommodations and services, among other things. These applications additionally allow the administrators who manage them to gather data and information about the users. This helps to increase the efficiency of hotel operations as well as to inform decisions regarding the allocation of resources. (Kosir)

Another critical aspect used with mobile technology in the hospitality industry is the loyalty program. Applications allow hotels to send notifications relating to offers only available to users of said app. These features potentially further impact a guest’s willingness to return to a specific hotel. (Kosir)

According to Jun Mo Kwon et al., there exists a compelling relationship between how easy it is to use a mobile application and how useful said application is. In addition, the more useful an application is, the more users will download them. Kwon et al. break down the usefulness of applications into four categories: reservation information, the facilitation of information, information regarding the surrounding area, and contact information. The ease of use for an application is broken down into how self-efficient the app makes the user, the level of anxiety experienced by said user, and the enjoyment a user receives from the use of an app. These factors are reportedly the main contributors to whether the user downloads the application or not. (Kwon et al. 89)

If a hotel owner wishes for their customers (and therefore profits) to benefit from the use of mobile applications, all the requirements must be satisfied. Authors Kwon, Bae, and Blum suggested in their article that little to no correlation existed between the promotion of mobile applications and the number of downloads.

According to Lajoie, legal concerns regarding mobile applications involve controlling intellectual property and creating terms of use and confidentiality policy. It is recommended that the creator of an app ensures his employees sign contracts ensuring the intellectual property belongs to the said creator. Lajoie states, “A prudent entrepreneur should make sure that all of the intellectual property associated with his mobile app belongs to him.” (Lajoie). The terms of use are necessary as a contract between the owner of the application and those who download said app. The confidentiality policy is imperative for applications that store data and information about those who use it.

Implementation of Mobile Applications

There are multiple software packages and applications becoming more prevalent in the hotel industry. A variety of mobile applications are used by hotel management to encourage high-speed communication among the members of the hotel staff. Other apps are specific client based and are used to organize the booking/check-in process for hotel guests. ALICE is an application that combines both valuable features. ALICE “offers a platform of solutions for the hotelier that creates a unified hospitality experience, fostering meaningful relationships with guests and connecting departments across the hotel” (“Nordic Choice Hotels…”). It has emerged as the official Staff Operations Technology for Forbes Travel Guide.

Nordic Choice Hotels

A multitude of hotels is now implementing the ALICE application into their day-to-day practices. Nordic Choice Hotels is one of the largest hotel chains in Scandinavia, with a total of over 190 properties. They have successfully innovated the company’s properties by embracing ALICE’s hotel operations platform. This change happened in 2017.

Nordic Choice Hotels benefit through their use of ALICE because the application has improved their customer service regarding front-of-house tools. Hotel guests love using ALICE for concierge and guest services. With ALICE, guests are given complete control of services that allow them to request things like housekeeping and maintenance services from their smartphones. Visitors can communicate with the front-of-house staff on the guest-facing sector of the app. Before ALICE, guests would have to wait in long lines to check-in.

Although this transformation into a digital age has proven to be beneficial to Nordic Choice, there are still challenges that come with completely revolutionizing this industry. Christian Lundén, Nordic Choice’s head of business, explains that the staff “hesitated to adapt” (“How Nordic Choice’s…”) because they feared losing their jobs. The hotel management explained that technology would accommodate travelers who do not particularly enjoy talking to people, but it would not eliminate the guests that enjoy interacting with the staff and getting help in person. Overall, the application has provided more advantages than disadvantages for Nordic Choice Hotels. Kenneth Hervik, the Director of Digital Guest Experience, claims that “Nordic Choice aims to be the digital frontrunner” (“Nordic Choice Hotels…”) in the hospitality industry, and ALICE will allow them to do so.

Viceroy Hotels & Resorts

Viceroy Hotels & Resorts is a luxury collection of properties that provides creativity, comfort, and advanced services to their guests. Viceroy has earned accolades on the New York Times, and Condé Nast Traveler Gold Lists every year. Not only has Viceroy chosen to use ALICE as their task management system, but they have also even experimented with adding the Samsung Gear S3 smartwatches to their device fleet through a pilot program at their property in Beverly Hills (Terry).

ALICE has positively impacted the Viceroy properties because it has allowed them to provide impeccable service, which is a part of their brand promise. They use ALICE to organize their back-house tools and communication with the staff members. During Beverly Hill’s pilot, staff members who worked in housekeeping wore the smartwatches. The watches notified the hotel employees when guests asked for towels, toiletries, etc. Wearing the watch allowed them to fulfill requests much faster. Darren Clark, the Vice President of Technology at Viceroy Hotels and Resorts, states that the company expects to see up to “three minutes shaved off of each guest request” (Terry).

Expedia

Expedia is a major company within the hospitality industry. Unlike the previous two, Expedia is a travel booking website that can be used to book airline tickets, hotel reservations, car services, vacation packages, etc. Expedia has revolutionized the way hotel rooms are reserved, and they are still growing as a business due to ALICE, which, as of 2017, Expedia is a majority stakeholder in (O’Neill).

Senior VP of global product and design at Expedia, Arthur Chapin, believes that ALICE is officially “the world’s first operating system for hotels,” and he further explains that the platform is as invaluable as having IOS on an iPhone (Hoon). Though there are currently no plans to add ALICE to Expedia’s platform of tools, ALICE’s CEO believes that “having an investor and commercial partner like Expedia will definitely help bring opportunities to the company” (O’Neill).

Legal and Ethical Challenges

Although there are many positive changes that come with adopting new technologies into the hotel industry, companies may also face legal and/or ethical challenges when switching over. For instance, privacy could be a major issue with the platform since ALICE “not only records how guests use it but employee-to-employee interactions” (Del Castillo). Additionally, ALICE may have access to biometric information, such as fingerprint scans used to enter hotel rooms, and other information disclosed in hotel requests, such as private health information or sexual orientation (“ALICE Shares Everything…”).

“Hotel guests do not have the same right to privacy that they do in their home or even their car,” states Professor Stephen Barth – this becomes especially apparent when considering the fact that Motel 6 is facing a lawsuit that claims that guest information was supplied to ICE on a regular basis (Goldstein). ALICE could potentially present an even larger threat to guest privacy than a single hotel chain. Even if they had no intention of misusing guest information, they could be forced by the government to disclose information, or their data could be hacked by malicious individuals for profit.

Works Cited

1. ALICE Shares Everything They Learned About GDPR Compliance.” Hotel-Online, 15 Mar. 2018, www.hotel-online.com/press_releases/release/alice-shares-everything-they-learned-about-gdpr-compliance. Accessed 13 Nov. 2018.
2. Al-Shakhsheer, Firas et al. “Improving Hotel Revenue through the Implementation of a Comprehensive Dynamic Pricing Strategy: A Conceptual Framework and Empirical Investigation of Jordanian Hotels.” Business Management Dynamics, vol.7, no.06, 2017 Dec., pp.19-33 Society for Business and Management Dynamics

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