As any volcano settles after spewing hot dangerous lava and causing irreversible destruction, so will this unsolicited phase of Covid-19 settle. The fastest vaccine developed to date has given masses a fresh impetus to return to their normal working lives. There are signs of life on the horizon as the land gradually re-opens. The collapsed economy is recovering, trade is recovering and travel is picking up more and more speed – thanks to future-oriented offers from destinations and hotel brands.
It’s no secret that the hospitality industry has been hardest hit by the coronavirus. Hotels – a large CRE industry, have been hit by two different elements in the spread of Covid-19: the freeze on global economic movement and government-mandated social distancing norms. March 2020 saw the worst abrupt drop in occupancy and hotel income ever due to increasing domestic and international traffic restrictions. The noise of travel caused thousands of cuts in the hospitality industry and the economy as a whole. The budgets were similarly exhausted. The situation worsened when the owners and their asset managers ran out of CAPEX and FFE reserves and the effects of the shortage of liquidity ranged from downsizing to keep businesses alive.
Hospitality think tanks around the world have developed innovative business, operational, and technology solutions to minimize operating costs and keep the trade show alive. Many companies are looking to technology to replace labor resources to promote contactless service and other service concepts that may require fewer people to operate and manage. Yes, robots are already being used in hotels and restaurants for serving, cleaning, and other functions, and androids will be next. Virtual assistants and software applications such as BOTs have certainly raised the bar for a customized service landscape. The fact that the pandemic has highlighted the vulnerability of the hospitality industry cannot be ignored and there is mounting evidence that a certain percentage of jobs will never return. However, the most troubling question, which may still remain unanswered by the industry, remains, “Can we afford to belittle people in a people-first business?”
Let’s analyze the avenues that have been instrumental in determining how human contact / workforce has contributed to hospitality business profitability and will be there forever: –
1. Experience: The entire linchpin of this $ 1.1 trillion trade weighs on the subjective immaterial physical and psychological experience. Indeed, the industry is characterized by service, that is, satisfying the needs of guests. Every hotel built is a dynamic result of extensive research, surveys, funding and planning regarding location, project costs, technology, business forecast and product profile. Why do we believe that despite such careful planning, the properties are underperforming in terms of ROI?
Well the answer is pretty straightforward. Brands that stand out from others are known for the quality and consistency of their employees, their attention to personal details, their ability to anticipate guest needs and exceed guest expectations. The hotel brands build an exemplary service reputation by creating a culture that embraces the spirit of service, cultivating relationships, and showing genuine empathy.
2. Creativity: The Orange Economy – as they call it – has become one of the fastest growing economies in the past two decades (valued at nearly $ 4.3 trillion) and has been a complex element of new management concepts by hoteliers in the new age, such as Guest journey mapping (through the effective use of CRMs and data analysis) are all an invention of human intelligence. Revolutionary ideas like Airbnb – a collision between hotels and the aggregator business model have completely changed the travel landscape. The times have come when the consumer is in control and hotels can no longer afford to operate traditionally to attract, retain and develop a customer. Today’s smart consumer expects their experiences to be creative and fresh. This is where human strength scores over technology and keeps companies alive in a highly dynamic environment. Please remember –
Robots and artificial intelligence are only designed to work in calculated algorithm environments with constant conditions. They are a small appendix to the human brain, not its replacement.
3. ROI of Human Capital: There is ample evidence of how finance-savvy business owners / CEOs understand the return on investment of their most important corporate asset, ie human capital. Let me repeat the same concept by referring to the hotel sales department. The hotel relies primarily on three elements of revenue to generate revenue: acquiring, retaining, and developing businesses. According to a recent survey by an international hospitality company, nearly 63 percent of its business comes from the latter two elements, with customers acquired (which comes with maximum brand cost) being held and developed through service delivery, customer relationship, cross-selling, Service Recovery & Human Touch – Tools that go way beyond the AI and robotics scale.
4. Socio-Emotional Needs: In today’s highly mechanized world, we are surrounded by so much technology that it is sometimes quite understandable to overlook the power of human touch. Imagine a customer planning a vacation to unwind from their busy schedule (usually dominated by gadgets and repetitive schedules) in the expectation of realizing their need for belonging, albeit temporarily to a location of the Relief and rejuvenation, but ends up in a similar kind of child room that deals with robots and AI-operated systems. In the course of the further development of quality assurance, hotel managers are increasingly paying attention to the emotional aspect of guest feedback and are placing less emphasis on reviews. Customer decisions are driven by emotions and influence the decisions as to whether this guest will come back / recommend the hotel. It is the employees who are the real differentiating factor for the guest in order to shape and influence his emotions and decisions.
5. Happiness: What is that one thing that 7.9 billion people in this world hunt? His ‘LUCK’. Gone are the days when people found comfort and happiness only through meditation. Today, happiness has become an industry valued at over $ 4.2 trillion, which is almost four times the size of the entire hospitality industry. That brings us to the more important question, “What exactly is happiness”? A good cup of coffee served in the morning by a steward with a smile is happiness. Polite and smooth check-in is luck. A personal handwritten welcome message from a housekeeper is happiness. It may be subjective, but what all actions have in common is the human connection. It is now up to the smart hoteliers to get the most out of this economical mammoth cake.
As they say, the only constant in this universe is change. So if the past two decades of the hotel industry have to be traced back to data analytics, revenue management and geo-targeting, the future depends on the diversity, inclusion and satisfaction of your employees.
Conclusion: Studies using census data show that technology has created more jobs than destroyed over the past 140 years as it creates more productivity and frees human resources to create new opportunities. There is no doubt that technology will stay here, playing an increasingly important role in escalating hotel services to the next level, but it would be more logical to adopt the blue ocean theory of creating an ecosystem in which technology and Synchronizing human forces to create a better world to live happily and grow in by reducing human effort and improving standards of service and delivery.
(The author is a professional hotel manager with over 15 years of extensive cross-functional experience in some of the best luxury and business hotels in India and Australia. He is currently serving as an additional auditor in the President’s Secretariat.)
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