The COVID-19 pandemic delivered a gut punch to the hospitality industry. When it hit, it hit hard and rapidly, slowing or stopping hotel and restaurant chain growth plans in their tracks. Our research suggests that hotels went from occupancy rates in the high-80% range down to single digits, while at least 40% of restaurants have closed their doors or have permanently shut down. Hospitality business executives we speak with are focused on recovering business to levels that are at least half of pre-pandemic levels—but growth remains part of their longer-term plans.
The new dynamic between hotels and restaurants and their customers is shaping rebound and regrowth strategies. That dynamic is about giving people the confidence that when they stay with or dine in an establishment, they will be able to enjoy their experience without fear of contamination. People are yearning to travel and dine out, so the demand for hospitality services is building. Still, businesses will have to adapt their processes, procedures and circumstances to engender customer confidence to serve that demand.
A central business challenge is that in the COVID-sparked recession, most businesses are deferring capital spend on equipment, hiring and new technology. Any investment is directed at getting travelers and diners back in establishments. Revenue generation, competitive advantage and cost savings are critical to survival. Yet, growth in the hospitality industry is still out there, and we believe that the path back to growth is through digital transformation.
Digital Transformation to the Rescue
Most hotels and restaurants were digitally transforming their business models and operations for many years prior to the pandemic. Mobile payments and point of sale systems, online ordering and eCommerce, digital signage and interactive kiosks are technologies that were deployed to implement growth strategies. Today, using these existing technologies in innovative ways will help businesses implement new growth strategies devised to adapt to the changing dynamic between them and their customers.
This can mean realizing strategies to reconnect with guests to engage in the familiar experiences of staying in a hotel and eating in a restaurant, without exposing them to potential contamination sources. For example, people have high confidence in their smartphones that they carry with them, so creating apps for contactless operations, such as check-in and check-out, room keys, menu scanning and meal ordering, enables customers to limit exposure while traveling and dining.
New ways to use existing technology also extend to protecting hotel and restaurant staff, who are vital to customers’ hospitality experience. Intelligent kiosks in restaurants, for instance, can assist customers as they enter a restaurant. While they confirm their contact information, the kiosk can detect whether a customer is wearing a mask using AI-enabled computer vision, take temperatures and ask COVID screening questions. Once the kiosk has cleared the customer, they can safely meet with a host and proceed to their table.
In the back of the house at hotels and restaurants, data, analytics and business intelligence will become even more vital to the hospitality industry’s growth strategy. Establishments that have digitized their operations are collecting enormous amounts of data that can be analyzed to understand how customer behavior is changing to better shape their strategies to attract customers, make them feel safe and provide a superior hospitality experience.
In the longer term, digital transformation will likely mean automation in hotels and restaurants. Early trials for robotic room cleaning, meal delivery in hotels, and food preparation in fast-casual and fast-food restaurants may become more common if a positive return on investment is shown. Importantly, automation will not be used to replace front-desk staff and servers; rather, it will be used to limit potential sources of contamination and enable human workers to enhance the customer experience.
Planning Your Future Growth
There’s little doubt that the new dynamics surrounding customer confidence are here to stay. Getting a hospitality business back on its feet is the immediate priority, but that won’t assure survival. Hotels and restaurants have to plan for and resume a growth trajectory. The way back to growth may not be apparent, but businesses need to take a careful audit of their universe of growth opportunities. Once these opportunities are evaluated and prioritized, digital transformation can be a means to devise strategies and then implement them to drive growth. If you’re in the hospitality industry, take the bold step to commit to getting back to growing your business; your customers are waiting!