In the last article I mentioned that at the end of the 20th century and at the beginning of the 21th century new elements became tremendous important: Brands, Distribution and Technology.

With the development of the Internet, independent hotels gained a huge opportunity: people could find them more easily than ever before. Many of these hotels believed that it would be possible to reap the benefits of the new technologies while remaining independent. At the same time, consumers’ mode of accessing information on the Internet has been evolving – the changes being so dramatic that independent hotels can’t always keep up with them.  Joining a franchise system allowed the independent hotels to stay at the forefront of technological trends, and of course membership drives additional revenue as well.

Other hybrid models were born from this necessity. Some hotel chains, having quickly grasped the challenges and opportunities that these new technologies and distribution models presented, opted to keep just the role of marketer and distributor. For instance, Choice was one of the first companies to introduce a quasi-brand, which gives hotel owners the opportunity to keep their independent name and “feel”, while receiving sales, marketing and distribution support from a major hotel franchisor, for a monthly fee.

Choice introduced the Ascend Collection in 2008 and several other franchisors followed, including Marriott with its Autograph Collection and Red Lion with its Leo Collection. Choice also introduced SkyTouch, the outside sale of its previously proprietary cloud-based property management system, becoming purely a hotel supplier.

That is an example of what the future may have in store for that independent hotel that does not have the capability of continually adapting to rapid and constant technological change: buy a set of services from a large brand company that does have the capability – and the resources. Being part of a large system is critical when it comes to distribution. The system’s scale and influence give it negotiating power, i.e. the possibility to obtain the right pricing from the online distribution channels.

Technologies offer us choice and control in many aspects of our lives. With the advent of the “Internet of Things (IoT)” and improved connectivity, people are able to drive more and more aspects of their lives via a personal digital device, from creating a boarding pass or paying for an online order, to scheduling their day and talking on Skype. This tremendous change is already affecting hospitality, as guests demand more control over their experience.

Some of this control derives from the way in which technology allows people to be very specific about what they want and how they want to engage with their surroundings. With guests accustomed to having that level of choice and control in all other aspects of their life, hospitality enterprises have to offer the same possibilities. Moreover, in this virtual space, the brand has even more importance than it does in the classical marketplace. For developers and lenders, hotels attached to brands are much easier to secure financing for, because much of the risk inherent in generating demand has been mitigated.

“If you plug into one of the big-brand engines, the debt financing is going to be cheaper and the equity more attainable,” said John Rutledge, president and CEO of Oxford Capital Group (SKIFT – December 2016).

Because technology continues to penetrate our lives in so many realms of activity, we expect that the service provider knows even more about us and our preferences. The future challenge is how to transition from a high-touch but relatively low-tech business to one that is high-touch enabled by high-tech.

But the most important consequences of the impact between the new technologies and hotel brands is the change of the nature of the brand itself. Technologies bring the customer’s emotions more closely to the brands. For years people believed that technologies depersonalize and de-humanize us, but today we realize more and more that they have the opposite effect: technologies create and deliver emotions. Our emotions are linked to our experience and our perception. In the next article (Hospitality part III) we’ll discuss about customer satisfaction, experience and perception.

About the Author

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Ray F. Iunius Director Business Development at Lausanne Hospitality Consulting SA

Prof. Dr Ray F. Iunius is the author of various academic and professional articles published by journals in the management of services, technology, and innovation. He is also the author of a number of books such as « Industrie de l’accueil », « Hôtellerie de Luxe », « La gestion des spas », “Un Hôtel, un modèle ?” in de Boeck editions and co-author of the “Lausanne Report on the future of Hospitality Industry.” He is the founder of the Ecole hôtelière de Lausanne Institute of Technology and Entrepreneurship (EHLITE), the Institute for Innovation and Entrepreneurship (INTEHL), the Students Business Projects (SBP), the EHLITE magazine, and the Chair of Innovation Paul Dubrule. Ray earns a BSc, MS and PhD in Technical Sciences from the University of Transylvania Brasov and an MBA and PhD from the Faculty of Business and Economics (HEC) of the Lausanne University. He is currently Director of Business Development at Lausanne Hospitality Consulting, an Ecole hôtelière de Lausanne and Swiss Hotel Association company.