T h e F u t u r e o f H o s p i t a l i t y :D r i v i n g b u s i n e s s g r o w t h b y u s i n g p e r s o n a l i z e d

t e c h n o l o g y a n d c o m m u n i t y - b u i l d i n g c o n t e n t t o

c r e a t e s m a r t e r h o t e l s .

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Rethinking the future of hospitality.

It’s no secret the hospitality industry is in momentous flux - Airbnb has re-imagined the category and is now valued at over $30 billion. Starwood and Marriott, once bitter foes, have corporately united, raising interesting questions about consumer loyalty and brand portfolio management. While the giants merge, boutique hotels are flourishing and tailoring themselves to highly segmented audiences, creating an interesting dynamic of consolidation at the top and fragmentation at the bottom.

It’s a heady brew and the industry has perhaps never before been under such pressure to anticipate, adapt and address its changing audiences and environment. We know successful brand building today is highly contingent on driving cohesive, relevant and engaging brand experiences (see the Group XP Experience Index at www.group-xp.com). So it is strangely ironic that the most experiential brands of all - in an industry where the customer actually lives at the brand for a period of time - all rank well below the leading brands in the study.

The question is “why” and, more critically, what can the industry now do to seize the opportunity to become the best experiential brands in the world - and increase their own brand value significantly.

From experience to engagement.

Historically, hotels have too frequently viewed great, on premise hospitality as the key to customer satisfaction and a direct function of spatial design, attractive amenities and face-to-face politesse. These are important, to be sure, but true customer-engaging brand experience goes far beyond a physical encounter with a product or service. As the most successful experience brands all attest, enduring customer relationships are built around fully explored give and take interactions that surround and extend the brand while constantly informing how it delivers on its promise.

Hotels of the future therefore need to be smarter and far more personally encompassing of the whole travel experience - before, during and after the time when their guests sign in, then pay their bill and head for the airport. Exceptional experiences are created through on-going dialogue, whether helpful prompts, timely tips, anticipated personal preferences, or the other nearly infinite possibilities hotels have for touching their customers, all made entirely feasible through technology and training.

// Why didn’t a single hotel brand rank anywhere near the top of Group XP’s Global Experience Index?

// Ironically, even the best hotel brands do not effectively engage with their customers.

GROUP XPEXPERIENCE

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Impression - stands for something unique.Interaction - delivers on your most important needs.Responsiveness - has better online services and engaging content.Resilience - strives to make people’s future lives better, through higher brand purpose.

GROUP XP // THE FUTURE OF HOSPITALITY DRIVING BUSINESS GROWTH BY USING PERSONALIZED TECHNOLOGY AND COMMUNITY-BUILDING CONTENT TO CREATE SMARTER HOTELS.

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What can the auto industry teach hotels?

The technology in today’s cars is remarkable - they are the ultimate mobile computers. Little icons on side-view mirrors tell you when there’s another car in your blind spot. In your windshield’s heads-up display, you can see your car’s speed, whether you’re in the middle of the lane and whether there are cars on your right or left. Media consoles now mirror your phone, so you never have to take your eyes off the road. Whilst high beams automatically turn off when cars approach and on when they pass.

Individually, none of this technology is spectacular, but combined, the features completely elevate the driving experience. Cars become thoughtful, personalized and hospitable, because they communicate throughout the ride. The experience has nothing to do with horsepower, torque or top speed. Instead, your car is a helpful friend and trusted advisor. What if hotels followed the same principles?If, from the auto industry, hotels can learn to better communicate, then they’ll also learn a great deal more about their guests. The back

and forth will open more doors to satisfying guests’ personal needs, and it will also create relationships hotels can leverage to produce community-building content. Ironically, unlike automotive brands like Tesla, BMW, Mercedes-Benz and Ferrari, no hotels have a top ranking in the global Group XP Experience Index. In the US for example, top ranking hospitality brand, Hilton, comes in with a score of 106.2, a full 5.8 points lower than top ranking automotive brand, Tesla, at 112. And this is precisely because hospitality brands are not engaging enough. Personalized technology and community-building content are operational investments hotels need to prioritize now in order to create extraordinary experiences that generate more money tomorrow.

// Your car is a helpful friend and trusted advisor. What if hotels followed the same principles?

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The Group XP Experience Index shows that brands that create extraordinary experiences achieve financial returns more than double the market.

GROUP XP // THE FUTURE OF HOSPITALITY DRIVING BUSINESS GROWTH BY USING PERSONALIZED TECHNOLOGY AND COMMUNITY-BUILDING CONTENT TO CREATE SMARTER HOTELS.

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// Technology Personalized technology inspires direct bookings.

When guests book through sites like Travelzoo, Expedia and Kayak, hotels lose 15-25% in revenue. Last year, OTAs earned a staggering $16 billion by offering consumers massive inventory and price comparison Perhaps even more critical, with every booking through an OTA, hotels surrender their opportunity to “own” customer relationships. Hotels could reclaim both this money and these relationships if they were able to inspire their guests to book direct. It’s all about rewards, not discounts, says Stephen Hay of Collinson Group. Those rewards start by personalizing the hotel experience on the web: Invite consumers to log in with social accounts before searching for rooms; Inspire them to pick the right hotel based on peers’ past bookings - 83% of consumers trust recommendations from friends and family. Sure, guests can mine their own contacts and ask “where did you stay when you were in London?”, but their job would be a lot easier if hotels were smart enough to tell them this automatically.

Hotels can also lift the room-search experience. OTAs show bed size and room price; standard options, not exceptional ones. What if hotels promoted discovery by letting guests pick their actual room? You might want a quiet room, whilst

another traveler might like to be near the elevator. Why not promote choice and transparency? This also creates an opportunity for hotels to collect data on the most popular rooms and, like airlines, charge a bit extra for preferred options. Knowing exactly where we’ll stay also relieves us of any apprehensions. Uber won big here.

Hilton is leading the charge on pre-booking rooms by creating digital floor plans of 4,500 hotels. They could go even further by partnering with companies like Matterport, which scans residential apartments to deliver immersive, three-dimensional digital tours. Smart hotels will recognize that our personal choices go beyond just price, and that we experience hotels in three dimensions, not two.

Making the room-shopping experience more dynamic will allow hotels to rise above OTAs in the pre-purchase stage of the customer journey. It will also elevate guests’ perceptions of the hospitality brand’s Responsiveness, an area where even top hotels like the Ritz-Carlton and W have lackluster scores.

Once guests are settled into their rooms, Virtual Reality technology could allow guests to share their real-time experiences with family and friends across the world.

Hilton’s digital floor plans promote choice and transparency.

// What if hotels promoted discovery by letting guests pick their actual room?

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GROUP XP // THE FUTURE OF HOSPITALITY DRIVING BUSINESS GROWTH BY USING PERSONALIZED TECHNOLOGY AND COMMUNITY-BUILDING CONTENT TO CREATE SMARTER HOTELS.

A dynamic-room shopping experience demonstrates great online service.

// Community Community-building content drives exceptional experiences.

Personalized technology opens the door for hotels to deliver original content. Just as consumers crave peer purchase validation, they’re intrigued by experiential recommendations. While guests search for rooms, or after they’ve booked, hotels can showcase city hot-spots to build anticipation for the trip. There’s no reason for staff to spend time creating content from scratch – smart hotels will curate from existing feeds. As The New York Times’ Jenna Wortham writes, Instagram Geotags are “much more revealing than any other guide”.

Smart hotels can also create their own feeds. Holiday Inn’s Roadtrippers brilliantly leverages community-driven stories by showcasing guest photos of beautiful, easy-to-access destinations. Holiday Inn is building a community around road trips and positioning itself as a homely base for exceptional activities. After all, our cars can’t yet point out great viewpoints or hidden-gem restaurants.

Content strategies like these drive anticipation and awareness for guests, leading to a better overall experience. The more they know, the more likely they are to plan and book activities. Just as Amazon’s personal

recommendations produce sales, content will drive bookings. Hotels can maximize their guests’ experiences by partnering with restaurants, music venues and tour groups that they, or their community, feature - keeping a percentage of the revenue. Great photos of in-hotel restaurants or spas drive advance purchases - allowing managers the time to staff accordingly, whilst keeping more money in-house.

Chekitan Dev, Marketing and Branding Professor at the Cornell School of Hotel Administration, suggests that because advanced booking let managers ramp up staff and predict inventory “they’re more practical for a hotel, rationally”. He also explains that, on an emotional basis, guests can “start savoring the experience before they’ve checked in”.

After check-in, hotels that hero guest and non-guest interaction in their shared space further the building of community, as guests make connections that will live beyond their trip.

Instagram Geotags are “much more revealing than any other guide” - Jenna Wortham, The New York Times.

Smart partnerships maximize guest experience, whilst providing hotels with additional revenue.

// There’s no need for staff to spend time creating content from scratch - smart hotels will curate from existing feeds.

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DRIVING BUSINESS GROWTH BY USING PERSONALIZED TECHNOLOGY AND COMMUNITY-BUILDING CONTENT TO CREATE SMARTER HOTELS.

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GROUP XP // THE FUTURE OF HOSPITALITY

// Content Sparking engagement through technology and content.

By the time guests check in, they’ll already have been warmed up by relevant stories and convenience. Smart hotels will continue to provide hospitality through consistent engagement during the stay. On the side of personalized technology, what better way than to deliver a digital welcome pack to guests via WhatsApp or a hotel app? Hotels can run their internal contact directory through in-room Amazon Echos, enabling guests to order that sumptious steak just be asking for it - from their bed, their shower, the sauna - wherever! IHG’s iBeacon technology marks the beginning of this journey.

Technology that instigates requests introduces a new channel of communication. Hotel staff don’t have to stay tied to phone lines all day and can receive and activate requests on the move. Smart hotels can welcome guests anew each morning with tips on how to enjoy their stay. A reminder that there are, say, free ski lockers at the hotel, or a 20 minute traffic delay en route to the airport, will build a strong bond between brand and customer. Many guests don’t feel like hotels are delivering on their most important needs, which is reflected across the board in low Interaction scores on the Group XP Experience

Index. Remember, travelers are staying in unfamiliar cities, buildings and rooms - help them acclimate. A series of photos of today’s happy hour specials inspire guests to have a drink in the bar. Recommendations on the best nearby bakers allows them to explore like a local. Making purchases easier reminds guests that the hotel is a thoughtful, welcoming, confidant.

Consistant engagement needn’t cost the world but, for guests, it can open the doors to exceptional, memorable experiences. How great would it be if, say, the Four Seasons sent you a curated list of partner social clubs or underground lounges and a password that granted you entry? Or, if the concierge shared a useful packing checklist for your upcoming day-trip to the Mayan ruins? What about when a surprise rainstorm blankets a beach destination for the day? It would be awfully helpful to know where past guests escaped to, to make the most of the dreary situation. These are crucial to improving hotels’ Resilience (“striving to make consumer’s future lives better”) in the eyes of guests. They say “we’re with you, no matter the weather”. Consumers will forgive a tired building, but they’ll never forget staff that go the extra mile. It’s time we started rating hotels in smiles.

IHG’s iBeacon technology marks the beginning of hotels’ journeys into the implementation of consistent engagement.

// It’s time we started rating hotels in smiles.

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GROUP XP // THE FUTURE OF HOSPITALITY DRIVING BUSINESS GROWTH BY USING PERSONALIZED TECHNOLOGY AND COMMUNITY-BUILDING CONTENT TO CREATE SMARTER HOTELS.

Predictive hospitality shows guests that hotels are on their side.

Group XP is a unique consulting model formed through the partnership between Brand Union, FITCH, SET and SET Live. We believe that great customer experience is the key driver of business growth.

Together, we are over 1000 strategic and creative thinkers located across 40 studios worldwide. By connecting diverse perspectives and skills in our network, we bring a holistic view of experience to create transformative interactions between brands and people. //

We continue to mine insights on the hospitaity industry. To discuss how we can assist you in creating experiences that maximize business growth, and for a copy of the Group XP Experience Index, please contact: ksenia.starikova@group-xp.com.

www.group-xp.com

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DRIVING BUSINESS GROWTH BY USING PERSONALIZED TECHNOLOGY AND COMMUNITY-BUILDING CONTENT TO CREATE SMARTER HOTELS.

GROUP XP // THE FUTURE OF HOSPITALITY