Costs increasing, Profits shrinking: AI and scalability for growth

recent study shows that chain hotels are nearly twice as willing as small independent properties to prioritise technology investment.

While on one side independent properties strive to remain competitive and benchmark with chains for operational excellence, on the other hand, their investment priorities stay focused on the short-term goals and immediate tangible returns rather than long term vision for profit growth.

Self-check-in, smart rooms, digital concierge… Technology is making the travel experience at hotels as frictionless as possible by removing physical barriers and people intervention where it doesn’t need to exist anymore. Tech is taking over the mechanic actions, and people are going back in covering their “human” role again: bringing value, empathy and human touch to the travel journey.

On the booking process side, the evolution of online bookings is the primary evidence on the consumers’ shift to digital. The reason behind is simple: a faster, easier and immediate booking process that is one click away accessible anytime, anywhere.

How are the hoteliers coping with this ever-changing digital evolution behind the scenes? Channel managers, price checkers, RMS systems seem to be popular tools that make the revenue and booking management process more manageable. However, research shows that 71% of hotels worldwide are still looking for a more efficient and profitable way to improve their business processes. A Skift study of April 2019 says that less of 20% of hotels use RM technology.

There is enormous potential to grow our industry and take back control of our hotels’ distribution.

Going back to the difference between chains and independents’ approach to technology — we see significant gaps in the adoption curve, but at the same time, some similarities when it comes to missing opportunities.

Chains invest in tech to increase RevPAR by leveraging machine learning, AI and Big data to reduce to zero the human intervention nearly. This way, people focus on strategy rather than wasting time on manual tasks, non-value add activities or excel files. Technology is mostly internally developed by the chain to be adapted and tailored to the specific company’s needs.

Independent properties are willing to invest in tech and look at external vendors, but the trust in their gut- feeling and the presumption to know better than any software could do, somewhat prevents them from making the step further. Limited knowledge and training investment also plays an essential role in independent properties’ failure to make the best business choices.

The similarities between chains and independents are that both understand that to stay competitive, it is necessary to invest in technology and innovation. However, to thrive open innovation, scalability and long term vision for profit growth should replace short term goals, presumption and closure.

As highlighted in our previous article, inventory management is one good example of a manual frictional and non-scalable task that both chains and independents share on their daily business practices.

At Profiter, we believe in diversification, prioritisation, AI and scalability. In margins and predictive best profit mix we trust. The earlier we trust technology and fill the gaps in inventory management and control, the faster our margins will grow.

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