Is the Independent Hotel Sector a Late Adopter of Innovation

18-Mar-2016
Business, Hotels, News, Trends

In this article, Lucienne Mosquera asks ‘Is the independent hotel sector a late adopter of innovation?’ and explores how a change in attitude could help improve performance and return on investment.

As a small child I had a toy box which included Lego, wooden blocks and every empty bottle and food container I could find. Add to the mix a few toy cars and some Barbie and Action Man dolls, and my brothers and sisters and I had all we needed to build and pretend for hours.

Times have changed. Today, toys come with batteries or consoles and instructions as to how to play with them. Very little is left to the imagination.  And if our creativity has not been crushed at a young age, at adulthood guidelines, rules, restrictions and expectations are great for productivity but they can hinder our ability to change and innovate.

I am often confronted and surprised by the huge disparity between the high standards of innovation in hotel and restaurant chains and the lack of it in the independent hotel sector. Since online travel became mainstream, hotels and restaurant chains are being rewired and rethought from top to bottom and every part of the business is being turned over, questioned and retooled. For example, the incredible effective distribution and revenue management tools now available in the market, are significantly supplementing the bottom lines of the branded hotel chains.

This development has led to enormous advances and savings and according to a recently published report by Grant Thornton (‘An instinct for growth’), the hospitality sector is often seen as the driving force behind digital innovation.

However, with the independent hotel sector accounting for 51% of the market, it seems that in the vast majority of this sector, innovation adoption is lagging behind. Most customers are familiar with advanced technologies such as mobile booking and checking in, and are often disappointed when a hotel or restaurant does not meet needs or expectations.

Innovation as a human expression of creativity and smart thinking, is not the result of economic development, but rather the source of social progress. The best definition I have found of innovation is: Innovation causes significant positive change (Steve Jobs).

In times of economic uncertainty and cut-throat competition, it is essential for hospitality operators to ensure that they stand out. This means not only having all the basic requisites of having a welcoming environment, a top-notch product and exceptional service, but also taking steps to innovate and create something extra special and to be different.

For example, new and quirky hotel brands such as CitizenM, Hoxton or 25-Hours have a completely new and streamlined business model, which differs significantly from your traditional ‘Owner/Brand Operator’ model. These are highly profitable businesses that provide modern, colourful and simple, but functional rooms at a good price. They provide creature comforts, easy check-in and check-out facilities and are 100% service minded. As a result, guest satisfaction ratings are consistently in the 90%+ range.

A lack of engagement and creativity with the customer in over half of the hospitality sector is causing huge missed revenue opportunities.

The reason why independent hotel owners resist innovation can be due to a number of factors:

  • Fear of change
  • Fear that it is too expensive
  • Fear that it is too complicated
  • Fear that innovation will make ‘the old ways’ look bad
  • Fear that innovation will fail
  • Clueless about the steps to take

Online services, one sector where innovation has rocketed in the last 20 years, could easily address these barriers.

For example, Online Travel Agents (OTA’s) have brilliantly tapped into this market.

What is their success? OTA’s strongly understand the fear of independent hotels for anything relating to online marketing and distribution. They are overcoming this by making their booking engines extremely easy to use and upload. There is no upfront investment required and hotels only pay a fee per booking generated, thus eliminating any risk.

The opportunities are immense for the independent hotel sector and for independent restaurant owners, who are prepared to change with the times. To learn how Hospitality Business Development can help you build for the future and maximise profit, talk to us today.

Would you like to know more?

Download our latest White Paper entitled “Why Return on Hotel Investment Can Significantly Underperform” or contact me, Lucienne Mosquera (Managing Director) for an informal conversation about your Investment.

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