Technology will turn limited-service hotels into vending machines

From humble beginnings in the early 60s, as of 2020, vending machines have grown into a $35 billion industry in the United States alone. Almost anything that can fit into a vending machine and meets brand criteria is now sold that way.

Thinking about our current home issues, vending machines are totally immune to labor market hiccups. A representative can service multiple units across a wide geographic area, while new vending machines monitor usage to eliminate stock-outs and further optimize labor. It is important to note that once installed, these automated machines improve profit margins by reducing fixed and variable costs. Can this mode be applied to limited service properties to increase profitability? Let’s investigate.

Learn vacation rentals

Without digging into specific 2021 stats (as that is the writing of another article), the overall trend over the past year shows that short-term rentals (Airbnb, Vrbo, Homestay, onefinestay, Sonder, Homes & Villas by Marriott and their ilk) has increased its overall market share to account for approximately one-third of all stays in the United States. Along with the immediate demand for contactless travel due to COVID-19, key benefits include variety, flexible room configurations, and a direct appeal to the modern pace of travel.

The variety is easy to understand; each room, apartment, villa or rental home is usually distinct in some way, adding a new spice to the discovery phase as well as the on-site experience (which also feeds into the flexibility value proposition). But what do we mean by “modern tempo,” especially in the face of how COVID-19 has altered or catalyzed certain trends?

The modern pace of travel is fast, automated and frictionless (with in-person contact widely seen as a sticking point), and this extends across all segments and star ratings. Customers will still enjoy meeting new people and chatting abroad, but they won’t want to waste time on “transactional” conversations anymore. They don’t want to queue at reception for check-in. They want to be able to book restaurant or spa appointments from a website or app without any human interaction. They want a frictionless journey so their time is better allocated to meaningful experiences.

Technology drives prices down

It is worth at this point to take a small digression and examine the macroeconomic forces that support our thesis that some hotels will inevitably look like vending machines. We’re all familiar with terms like “disruption” and “creative destruction,” but another related, more fundamental spirit to ponder is direct “deflation” — basically, when prices fall.

It is essential that you note, technology works naturally to deflate prices due to the new efficiency gains that come from said innovation, namely increased labor productivity (the automation that increases output per worker ), improved supply chains (either through better transport methods or access to new markets) and faster information flows (to reduce price asymmetry).

Automation and lower procurement costs allow a hotel to reduce overhead and charge less while maintaining margins, making it more competitive. And for the third reason, consider the price and customer sentiment transparency brought about by OTAs and examine the websites that have stopped hotels from getting away with overcharged customers. Comparative information is now too widely available, which means that a property’s rates will be gradually forced down as members of the competitive set continually underestimate each other to gain market share.

Voluminous volumes of economics have been written on this principle. In the hotel industry, to fight against this race to the bottom, we brand, we rebrand, we advertise, we pack, we renovate, we personalize, we unveil new equipment, etc. But for some economy and mid-range properties, commodification inevitably occurs, with the customer only looking for a bed in a quiet room where lowest price is the law.

Elimination of most on-site work

In a deflationary world powered by rapacious technology, the hotel with the least spend wins because these companies are able to charge less while maintaining profitability or, alternatively, underselling the market only somewhat while diverting much money towards R&D and marketing. For this, the only way forward is to replace labor with cheaper SaaS costs.

For what can and should be done in 2022, getting rid of transactional conversations means applying technologies to automate almost everything, freeing up existing staff to perform other tasks (like having friendly conversations with guests) or reducing their numbers in wherever possible. Obviously, this applies more to the limited and select service side, and not so much to high end, resort, convention or luxury properties where “high end” service is a characteristic reinforcement of brand image. .

So what happens when we try to turn a limited-service hotel into a vending machine? A little extreme, but there will soon be a time when properties can use technology to eliminate all on-site staff except for security, maintenance, and housekeeping (although the latter two can also be outsourced to on-demand services). Such a hotel would have an envious EBITDA! Let’s look at all the daisies in the technology chain that can make this possible, today or very soon in the future.

  • Look for: Mapping platforms can now automatically update all OTA content, while AI-powered revenue management products can analyze real-time travel intent data and then generate rooms-by-the-minute close. With these tools in place, a revenue manager working in a corporate office can manage more than a dozen hotels at a time.
  • Reservations: Besides using a transparent booking engine, admission can be fully outsourced to call centers or AI-powered voice services, as well as integrated chatbots for SMS or social media. You won’t need to save time on reservations for a front desk manager who can also work from a regional office to handle complaints or complex reservations for multiple properties.
  • Property management: There’s no need to host on-premises and spend IT resources maintaining your own servers. Cloud-everything is the way to go, especially for your PMS for which there are already a plethora of secure options on the market.
  • Before the arrival : Advances in CRMs, CDPs and open APIs enable rich data integrations so hotels know their guests before they arrive and offer tailored one-to-one upsells, all automated through a robust PMS or management platform. communications of choice.
  • Check-in and check-out: This can be completely contactless to eliminate reception. Mobile keys will reside in a digital wallet (accessible via phone, smartwatch or smart ring) upon request from a pre-arrival check-in portal. Or, in the rare event that a customer does not do so in advance, a kiosk will be available in the lobby.
  • In the bedroom: AI-powered voice-activated speakers can answer customer questions instead of a live agent at the front desk or concierge. Everything in the room will be controlled by the IoT while streaming to the TV to access a customer’s favorite streaming service will become increasingly seamless.
  • Food and drinks: While on-site restaurants are essential for four-star and above, for mid-range and budget hotels, ordering food online like Uber Eats, Grubhub and Doordash will suffice. Once you set up deposit rules for security, you can eliminate this whole department.
  • Car park: Everything will be self-service with automated ticketing and monitoring. Realistically, however, most people will use Uber or Lyft to get around.
  • Housekeeping: This can only be at the departure of the client for short stays. Or, via PMS integrations, you can let the guest choose between not cleaning during the stay and leaving clean towels at the door or daily cleaning for an additional fee. Using existing systems, room staff routing can be optimized with real-time updated cleaning schedules delivered to a staff member’s phone.
  • Accounting: No cash transactions will be allowed on site, with mobile payments becoming the norm. Additionally, new centralized payment transaction platforms are emerging to speed up audits, workflows, reporting, clearing and reconciliation so that just like other departments, accounting can be moved to a regional office with a controller for several properties.
  • Recruitment: Networked work-on-demand platforms are emerging that vet and onboard staff members, giving HR quick access to a large pool of potential hires with little extra work.

The end of on-premises administration

What is fascinating here is that in a vending machine model, there is no need for a front desk manager, room division manager, executive housekeeper or even a general manager. Let it sink in. Lower-end hotels will only need a regional manager who oversees the guest value chain and leads the IT team that protects all the connections that make this end-to-end automation a reality.

It may sound revolutionary, but in reality, it’s a matter of survival in the face of increased competition from new brands, the rise of home sharing and impending commodification. Instead of reacting on a day-to-day basis, view our current staffing shortage as a wake-up call to truly rethink your operations and improve your bottom line. Technology is a homeowner’s salvation, and with the expectation of a modern tempo, your guests will either thank you for it or not even notice it.

Larry Mogelonski
Mogel Consulting Limited Hotel

See source

About Jason Norton

Check Also

2 shares with simple dividends to fight galloping inflation!

Image source: Getty Images With inflation hovering around 10%, I’m counting on dividend-paying stocks to …