Investors raising US$5.2 billion to disrupt the hotel industry sounds like a lot to fear, but it really isn’t. That figure, which according to research firm CB Insights was raised over 348 deals with hospitality-focused tech startups in 2015, represents more of an opportunity than a threat to hotels.
CB Insights compiled a list of 62 startups “unbundling” the hotel industry by pressuring properties from within (concierge services, event and wedding management) and from the outside (budget hotel networks, alternative lodgings, online travel agencies). The firm said the startups it named—which don’t include business-to-business companies like mine that augment hotels’ revenue management—“threaten to peel away different niches and services currently occupied by the traditional hotel industry.”
That’s not such a bad thing, at least with regards to some guest services like concierge or weddings. OTAs and alternative-lodging providers in the sharing economy are their own category of threat.
Some niches are just that, and hotel operators would be wise to outsource some non-core functions to startups if they are not a particular strength of the property or are irrelevant to the hotel’s value-adding proposition.
Your hotel should already know who its customers are, but it can learn what those guests need from a concierge, strike local partnerships to provide that and then train its staff to guide guests toward whatever startup or service that works with the hotel. If those partners execute well, it won’t matter so much that your guests use an app you didn’t develop. They’re still satisfied with their stay on your property.
Hotels don’t need to own the pipes providing some service in order to be differentiated and relevant.
Does the growth of a tech startup focused on the hospitality industry really erode the power of your hotel? Only if you think you’re in the business of building hotel software. Your property should focus on what it does best: taking care of customers by being hospitable.
The advantage to hoteliers of this new tech ecosystem is that the best of these new apps will survive. Instead of a hotel building its own technology in house to serve customers or manage events, in many cases it can experiment with different startups until it finds the right long-term partner. As long as you’re adding value to your guests, your long-term business is protected and your hotel won’t be weighed down by expensive, ineffective technology.
Contributed by Patrick Bosworth, DUETTO, San Francisco