Like every volcano settles after spewing hot dangerous lava and causing irretrievable destruction, so will this unsolicited phase of Covid-19. The fastest vaccine developed to date has infused a new oomph in masses to get back to their normal work-life schedules. There are signs of life on the horizon as the country starts to reopen gradually. Plummeted economies are improving, trade is recuperating and travel is progressively gaining pace –thanks to pioneering offerings by destinations and hotel brands.
It’s no secret that the hospitality industry was amongst the hardest hit in the wake of coronavirus. Hotels - a major CRE vertical, were hit by two distinct elements of the spread of Covid-19: the freeze of global economic movement and the government mandated social distancing norms. March 2020 saw the worst ever abrupt decline in occupancies and hotel revenues due to incremental restrictions on domestic as well as international travel.The sputtering of travel caused a thousand cuts to the hospitality industry and the economy at large. Budgets were similarly fatigued. The situation got worsened when the owners and their asset managers started running out of CAPEX and FFE reserves and the effects of cash crunch started percolating down to retrenchment of staff for keeping businesses afloat.
Hospitality think-tanks across the globe came up with innovative corporate, operational and technological solutions for minimising OPEX and keeping the show alive. Many entities are looking at technology to replace labour resources to promote contactless service and other service concepts that presumably will require lesser people to operate and manage. Yes, robots are already being put to work in hotels and restaurants for serving, cleaning and other functions and androids are next to follow. Virtual assistants and software applications such as BOTs have certainly raised the bar of customised service landscape. The fact cannot be ignored that the pandemic has highlighted the vulnerability of the hotel industry and there is growing evidence that a certain percentage of jobs will never return. However, the most troubling question which perhaps is still unanswered by the industry remains - “Can we afford to belittle people in a people first business?”
Let us analyse the ways which significantly define how the human touch/workforce has been contributing towards the profitability of hospitality businesses and is there to stay forever :-
1. Experience: The entire fulcrum of this $1.1 trillion commerce weighs on subjective intangible physical and psychological experience. The industry in fact is characterised by service i.e. providing for the needs of guests. Every built hotel is a dynamic resultant of ample research work, surveys, funding and planning in terms of location, project cost, technology, business forecast and product profile. In spite of such meticulous planning why do we think that the properties underperform in terms of ROI?
Well the answer is quite unequivocal. Brands that stand out are known for the quality and consistency of their workforce, their attention to personal details, their ability to anticipate guest needs and a desire to exceed guest expectations. The hotel brands build exemplary service reputations by crafting a culture that embraces the spirit to serve by cultivating relationships and by demonstrating genuine empathy.
2. Creativity: The orange economy- as they call it – has become one of the fastest growing economies in the past two decades (estimated at nearly $4.3 trillion) has been an intricate element of new age hoteliering management concepts such as light asset investment, guest journey mapping (through effective use of CRM’s and data analytics) are all brainchild of human intelligence. Revolutionary ideas such as Airbnb - being a collision of Hotels and aggregator business model has completely transformed the travel landscape. Times have come when the controls are with consumer and hotels cannot afford to operate on conventional patterns to acquire, retain & develop a customer any longer. Today’s smart consumer expects their experiences to be creative and fresh. This is where the human force scores over technology and keeps the businesses buoyant in highly dynamic environment. Please remember –
Robots and artificial intelligence are only designed to work in calculated algorithm environments with constant conditions. They are small appendix to human brain, not its substitute.
3. ROI on human capital: There is enough documentary evidence demonstrating how financial savvy business owners/CEO’s understand the return on investment of their most important business asset I.e. the human capital. Let me reiterate the same concept by relating it to hotel sales division. The hotel primarily depends upon three elements of sales for revenue generation being acquiring, retaining & developing business. According to a recent survey conducted by an international hospitality firm, nearly 63 per cent of the business is derived from the latter two elements wherein the acquired customers (which involves maximum cost to the brand) are retained and developed by the service deliverance, customer relationship, cross selling, service recovery & human touch - tools which are way beyond the AI and robotic gamut to control.
4. Socio-emotional needs: In today’s highly mechanised world, we are surrounded by so much technology that it is quite understandable at times to overlook the power of human touch. Imagine where a customer plans a vacation to get a break from their busy schedules (which are usually dominated by gadgets and repetitive schedules) expecting to actify need to belong, though temporarily to a place of relief and rejuvenation but lands up into a similar kind of space dealing with robots & AI operated systems. As the quality assurance has evolved, the hotel managers are increasingly looking at the emotional aspect of guest feedback and are placing less emphasis on ratings. Customer decisions are driven by emotions and the influence the decisions of whether that guest will return/recommend that hotel. It is the employees who are the real differentiating factor for the guest to shape and influence their emotions and decisions.
5. Happiness: What is this one thing which 7.9 billion people in this world are chasing.Its ‘HAPPINESS’. Gone are the days when people use to find solace and happiness only through meditation. Today happiness has become an industry worth over $4.2 trillion which is almost 4 times the size of the entire hospitality commerce. That takes us to the more important question which is “What exactly is happiness”? A good cup of coffee served with a smile by a steward in the morning is happiness. A courteous and a seamless check in is happiness. A personal hand written welcome message by a housekeeper is happiness. Though it’s subjective, but the common thing amongst all actions is the human connect. This is now up to smart hoteliers, how to extract maximum out of this mammoth economic pie.
As they say, the only constant thing in this universe is change. So if the last two decades of hotel business needs to be attributed to data analytics, revenue management and geo targeting, the future will depend upon diversity, inclusion and happiness of your employees.
Conclusion: Census data studies show that over the last 140 years technology created more jobs than it destroyed as it creates more productivity, freeing human force to create new opportunities. There are no second thoughts to the fact that technology is here to stay and has got an increasingly crucial role to play in escalating the hotel services to next level, but more logical would be to adopt the blue ocean theory of creating an ecosystem where technology and human force synchronise to synthesise a better world to live and grow with happiness by easing human effort and by upgradation of service standards and delivery.
(The author is a career hospitality professional with over 15 years of rich cross-functional experience in working at some of the finest luxury and business hotels in India and Australia. He is currently working as Additional Comptroller at the President's Secretariat.)