Transcript

Overview of hotel technology ecosystem (evolution, integration dependencies, hierarchy, and what is changing)

This is probably the most important lecture of this course. Anyone in the hospitality industry needs to be able to navigate in the hospitality tech ecosystem but not many people actually do. In order for businesses to be successful and be able to scale, It’s important to understand how the tech world is structured and what the relationships between different players look like.

Key takeaways:

• In order for businesses to be successful and be able to scale, it’s important to understand our tech ecosystem

• Our industry is still very fragmented (both on the buyer and the supplier side)

• Property Management Systems are at the center of the stack as they sit on the valuable reservation data and essentially dictate all the rules for others

• Many legacy PMS providers that own a large market share don’t make it easy for other vendors to connect to them; other providers are dispersed and have small market shares

• These integration dependencies are the main obstacle for tech vendors to scale in our industry

• Among the most recent trends in tech world are:

  • Emergence and growth of API-first PMS providers

  • App Marketplaces (platformification)

  • Fallout of smaller regional providers

Thank you for watching this lecture. As always, you can reach out to me directly if you have any questions.

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Main categories of vendors in hotel tech

The vendor map and main categories

Those of you who have been in the industry for a while, are probably used to seeing charts and graphs produced by different authors that attempt to bring structure to the chaotic hotel tech ecosystem and organize our tech players into clean categories.

Key takeaways:

• Hotel tech ecosystem is very fragmented and somewhat chaotic

• In general, existing vendors are divided into the following categories:

  • Operations

  • Distribution

  • Revenue Management & Analytics

  • Marketing

  • Sales

  • In-house guest experience

  • IT & Building Management

  • HR & Staffing

• This system is very dynamic and is always evolving with categories transforming and merging, new startups joining and some falling out

Thank you for watching this lecture. As always, you can reach out to me directly if you have any questions.

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Distribution category, the problem child

So now that we have learned how to navigate in the hotel technology ecosystem, let’s talk about one specific part of it - Distribution.

Key takeaways:

• Distribution is the most complex part of our environment, including our tech stack

• It also keeps developing, reshaping and transforming due to many disruptions in the last 10-15 years

• The 2 main parts of the Distribution system are:

  • connectivity tech (responsible for connecting the following channels: direct, OTAs, GDS and wholesalers)

  • Intelligence tech (RMSs, rate shopping tools, market demand intel, distribution intel)

• The specific configuration of the distribution setup in each specific case largely depends on the type of property, company preferences, as well as integration requirements/limitations

• The data flow between the players in this system includes:

  • From property to distribution partners: ARI and content

  • From distribution partners back to the property: reservations

Thank you for watching this lecture. As always, you can reach out to me directly if you have any questions.

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Non-lodging tech (Restaurants, Meetings & Events, Theme Parks)

If you recall from the first lecture, the hospitality industry is composed of the following segments: Lodging, Food and Drink, Event Planning, Theme Parks, and Tourism.

Previously, we discussed the composition of the hotel tech ecosystem and relationships between different categories and players in it. In this lecture, we’ll talk about technology of the other segments: Restaurants, Meetings & Events, and Theme Parks.

Key takeaways:

• Restaurant tech ecosystem is as fragmented and convoluted as the hotel tech space. Vendors are grouped in at least 16 categories. The system is also dynamic and constantly evolving.

• Most recent trends in restaurant tech:

  • Increasing demand for food delivery

  • Changes caused by labor shortage

  • Ghost kitchens

  • Mobile-Only Experience

  • Contactless Payments

  • Rapid IoT deployment

• Meetings and Events segment has seen drastic changes over the past ten years driven by advances in technology.

• Most meetings and conferences today go beyond the traditional lecture style and involve access to collaborative communication tools.

• M&E technology is traditionally divided into 3 major categories:

  • pre-event planning

  • on-site tech

  • Post-event

• Most notable trends shaping the future of event technology

  • Instant Contactless Check-In

  • Hands-Free Temperature Solutions

  • Contactless ID Verification

  • Virtual and AI-driven chatbots and assistants

  • QR Codes for Content

  • App Event Companions

  • Hybrid Events

  • Various implementations of VR and AR technologies

• New technological advances are also expanding the possibilities of theme parks and adding entirely new types of attractions.

• Most notable trends in theme park technology

  • More touchless technology and artificial intelligence

  • More augmented and virtual reality in guest experience

  • Continued development of IoT infrastructure

  • More virtual assistants and video

  • More use of blockchain technology in ticketing

  • Robot assistants

Thank you for watching this lecture. As always, you can reach out to me directly if you have any questions.

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OTA relationships and evolving role of Google

You may or may not be aware of the situation in the lodging part of our industry related to the controversial relationships between hospitality companies and OTAs. Allow me to shed some light on the subject as it’s pretty important to understand the dynamics of these relationships in order to be able to navigate well in our industry.

Key takeaways:

• Relationships between hospitality companies and OTAs are controversial because of hefty commissions and conflict of interest

• Major OTA holding groups:

  • Booking Holdings

  • Expedia Group

  • Ctrip

  • AirBnb

• OTAs have long surpassed all major hotel brands in annual revenue generation as well as marketing budgets

• Google has potential to disrupt distribution landscape as it’s expanding its network of direct connections with hotel brands and booking engines bypassing OTAs

• Organic listings in Google vertical hotel search product are free. Paid listings get more visibility and are based on various models:

  • CPC (cost-per-click)

  • CPA (cost-per-acquisition)

  • CPS, aka PPS (commission-per-stay or pay-per-stay)

Thank you for watching this lecture. As always, you can reach out to me directly if you have any questions.

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Disruptions: Cloud computing

The last decade has made a big impact on the way hospitality has been shaped and where we are now. When doing research for my book Hospitality 2.0 and conducting interviews with top industry leaders, I identified 3 major factors that have been driving transformations in the industry in the recent years:

• Natural evolution of technology (cloud computing, AI/ML, VR/AR and others)

• Growth of the alternative accommodations sector

and last but not least…

• The COVID-19 pandemic.

In the subsequent lectures we’ll discuss them in more detail, starting with my favorite topic.

Key takeaways:

• The last decade has made a big impact on the way hospitality has been shaped. Major factors that have been driving it are:

  • Natural evolution of technology (cloud computing, AI/ML, VR/AR and others)

  • Growth of the alternative accommodations sector

  • The COVID-19 pandemic

• Adoption of cloud computing was certainly the major driving factor in speeding up the development of tech in our industry as well as many others, mainly by:

  • Removing financial barriers to start a technology company, due to lower startup costs

  • Removing financial barriers for hospitality companies to adopt new technology due to lower activation and subscription costs (via SaaS model)

• Main benefits of cloud computing:

  • Lower costs

  • Security

  • Handling data

  • Quick software deployment and iterations

• Cloud is also helping us deal with the PMS dependency issue through the emergence of cloud-native PMS players that started competing with legacy PMS providers.

Thank you for watching this lecture. As always, you can reach out to me directly if you have any questions.

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Disruptions: AI and Cobotics

Let’s continue our discussion about the evolution of technology and its role in the development of the hospitality industry.

Artificial Intelligence / Machine Learning

There’s a lot of marketing buzz around Artificial Intelligence and Machine Learning in hospitality. And in many cases, they are used very liberally and not always accurately. There’s a clear lack of understanding among many of us regarding what those terms really mean and how we can apply them in our industry.

And because we don’t understand it, we reject it.

We interact with AI everywhere in our daily lives... and yet, we can still count the number of AI-based hospitality tech solutions on the fingers of our 2 hands (and maybe one or two toes of the left foot). So for those who are advocating for the adoption of artificial intelligence by hospitality, the big task right now is educating the industry about what AI and ML can do and how we can benefit from it.

Key takeaways:

• There’s a lot of marketing buzz around Artificial Intelligence and Machine Learning in hospitality. And in many cases, they are used very liberally and not always accurately.

• It’s important to continue educating the industry about what AI and ML can do and how we can benefit from it.

• Areas of applications of AI in the hospitality businesses:

  • customer-facing applications

    • AI-enabled devices for in-person customer service

    • Mobile and voice-activated assistants

    • Chatbots and messaging

    • Frictionless booking process

    • Targeted Ad campaigns

  • back office applications

    • Analysis of customer reviews

    • Automation and efficiency of operations

    • Revenue management and profit maximization

• Cobotics is the new term defining the relationship between people and machine-learning robotics that describes how they collaborate that results in improved efficiencies.

Thank you for watching this lecture. As always, you can reach out to me directly if you have any questions.

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Disruptions: Metaverse, Web 3.0, Virtual Reality

Metaverse… Web 3.0… Virtual Reality… Blockchain… NFT… The novelty of these new digital capabilities are generating a lot of confusion in our industry and others.

The most popular recent buzzword, the metaverse, in general, can be described as a natural evolution of the Internet.

The Metaverse is not just a video game, or even a network of video games. While much of the production value and economics in the Metaverse will be "game-like" or perceived as such due to the 3D experience, the majority of the Metaverse experience will not be games and the users won’t all be “gamers”. There will be many of other kinds of experiences.

Many businesses are already putting this concept to use to improve efficiency and customer satisfaction, save costs, and generate additional revenues.

Key takeaways:

• The novelty of new digital capabilities are generating a lot of confusion in our industry and others.

• The metaverse, in general, can be described as a natural evolution of the Internet. It is a simulated digital environment that uses augmented reality (AR), virtual reality (VR), blockchain and other modern technologies, along with concepts from social media, to create spaces for rich user interaction mimicking the real world.

• Use cases and applications for these new technologies in the hospitality industry include:

  • Meetings & Events

    • Hybrid

    • Augmented

    • Holographics

  • Hotels

    • Digital Twins

    • NFTs

    • Geolocated AR

  • Restaurants

    • Virtual brands with home delivery

  • Theme parks

    • In-house AR experiences

    • Enhancing on-site experience with immersive tech

  • Destinations

    • “Try-before-you-travel” AR

  • Recruitment

  • Training & knowledge transfer

  • Education

Thank you for watching this lecture. As always, you can reach out to me directly if you have any questions.

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Disruptions: Alternative Accommodations sector

Another major disruptive force (along with the evolution of technology) that has been reshaping the hospitality industry in the last decade or so, is the emergence and rapid growth of the alternative accommodations sector.

The sharing economy has certainly become a prominent phenomenon over the past several years. Airbnb is the market leader as it relates to the vacation rental industry. Its presence in key markets all over the world has been growing at a rapid pace.

You may have noticed that the industry can’t agree on a specific term to define this sector. Alternative accommodations, vacation rentals, temporary accommodations short-term rentals… It’s because we still don’t know what to call it, and one of the reasons is that the sector is evolving so fast that it’s hard to catch up.

Key takeaways:

• Rapid growth of the alternative accommodations sector is another major disruptive force that has been reshaping the hospitality industry in the last decade.

• There’s no unanimous opinion in the industry about whether this new entrant is negatively affecting the hotel sector.

• Regardless of that, we certainly can’t ignore it because:

  • It’s young and innovative

  • It is a very large portion of global inventory

  • They have better technology

  • They affect hotel demand and consumer expectations through: availability, pricing and sophisticated e-commerce strategies

• Things hotels should learn from this new sector:

  • Learn to differentiate and improve your value proposition

  • Improve operational efficiencies to stay competitive

  • Rethink services and amenities

  • Don’t ignore the VR competitive data in the revenue management strategy

  • Lean on technology to help with all of the above

Thank you for watching this lecture. As always, you can reach out to me directly if you have any questions.

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Disruptions: Covid-19 pandemic, the elephant in the room

We would all agree that COVID has taught businesses that it's not enough to just recognize changes in the environment, it's necessary to be able to adapt to those changes in order to survive.

And as history shows, as always, most innovative and adaptive businesses will recover much quicker and thrive, leaving everyone else behind. Look at the examples of Airbnb and Sonder. Hotels have so much to learn from their ability to adapt and re-adapt, mainly through the use of modern technology and continuous innovation.

In 2020, the hotel industry suffered the worst decline in history. The resulting business failures were in the news everyday, and most industry experts agree that it will be several years until the industry returns to anywhere near the health it had in 2019.

Here are some illustrative statistics from the industry’s data supplier Smith Travel Research. Global quarterly revenues in the industry declined by over 70%.

Will we ever go back to how it was in 2019?

NOPE

Key takeaways:

• Covid pandemic is another disruptive force that has shaped the industry in the last few years.

• In 2020, the hotel industry suffered the worst decline in history.

• The industry will never go back to the old MO because many aspects of travel have changed forever: Booking patterns, Booking windows, LOS, Segments, Customer expectations, Compsets, etc.

• Due to the pandemic, travel companies around the world laid off or furloughed many employees, which resulted in global labor shortage.

• Hospitality businesses turned to automation to solve this problem, which resulted in increasing technology adoption.

• What hospitality companies have learned from this experience:

  • They need to be flexible, adapt to new types of travelers and new customer expectations.

  • They need to use data, not the shape of the moon, to make strategic business decisions

  • They need to embrace technology

Thank you for watching this lecture. As always, you can reach out to me directly if you have any questions.

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Main future trends in the evolution of hospitality tech

What you now probably understand after viewing previous lectures, our industry has gone through A LOT in the recent years.

As the dust from recent events is settling, we’re finally able to look around and see what our new reality is. The new Hospitality 2.0 environment. We’re starting to see certain patterns. And as an industry, if we're agile and innovative enough to detect and act on those patterns, we can be successful. This pertains to both: hospitality companies and vendors selling to those companies. Vendors, especially technology companies, play a crucial role in the evolution of our industry, through the

• products they build,

• through how they adapt to the changing needs of stakeholders,

• through how well they’re able to communicate the benefits of their products to the decision makers

• and through how easy and user friendly they make the sales and onboarding as well as the product itself

• 
  

Key takeaways:

• Both hospitality companies as well as vendors need to be aware of what the industry has been going through, where it is now and where it is going in the next 5-10 years, in order to adapt accordingly

• Major forces that have disrupted the industry in the last decade are:

  • technology innovations

  • covid pandemic

  • the evolution of the alternative accommodations sector

• Key transformations in our industry include the following:

  • More demand for functionality around profit maximization and collaboration between departments

  • Popularization of cloud platforms

  • Increased tech adoption rates (both B2C and B2B)

  • Changing consumer expectations

  • Data analysis and workflow optimization becoming a growth market

  • More end-to-end solution providers

  • More open API connections

  • The goal for tech vendors is a clean self-service SaaS model

  • Fallout among PMS vendors

  • More entrants into non-PMS categories

Thank you for watching this lecture. As always, if you have any questions or need any help, feel free to reach out.

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Main investment opportunities in the next 5-10 years

In the previous lecture, we spoke about the main trends in our industry. In this lecture, I will highlight the areas of value creation and opportunities for investment, and not only financial investment (though this is the most critical element) but also investment of our talent, time, and resources.

As we have seen in the previous lectures, the market opportunity for hospitality technology is tremendous. We looked closely at high-growth areas that are currently developing around new technologies, cloud computing, big data, machine learning, as well as business intelligence and revenue management. There are also many areas of opportunity in the way hospitality companies run their businesses, build their teams and approach customer acquisition and retention.

Let’s start with Technology as this is clearly where the revolution is happening and where most changes are going to take place in the next 5-10 years in our industry.

Key takeaways:

• There are many areas of opportunity in the way hospitality companies run their businesses, build their teams and approach customer acquisition and retention

• Main areas of opportunity and transformations in our industry in the next 5-10 years are the following:

  • Technology (both B2C and B2B)

    • Cloud

    • AI/ML

    • Data handling & data analysis

    • Integrations

    • Consolidations & end-to-end solutions

  • People

  • Climate & Environment

  • OTA Landscape

Thank you again for watching this lecture and this course. As always, if you have any questions or need any help, feel free to reach out to me directly.

Please see a high-resolution PDF of this map attached to this lecture.