Turning limited-service hotels into vending machines with technology
by and
Thinking about our current hospitality problems, vending machines are immune to labor market hiccups. One rep can service multiple units across a wide geography, while newer vending machines monitor utilization to eliminate stockouts and further optimize labor. Importantly, once installed, such automated machines enhance profit margins by reducing both fixed and variable costs. Can this mode be applied to limited-service properties to drive profitability? Let’s investigate.
LEARNING FROM VACATION RENTALS
Without drilling into any specific statistics from 2021, as this is the making of another article altogether, the broad trend from the past year shows that short-term rentals – Airbnb, Vrbo, Homestay, onefinestay, Sonder, Homes & Villas by Marriott, and their ilk – grew in overall market share to comprise roughly a third of all stays in the United States. Besides the immediate demand for contactless travel due to COVID-19, key benefits include variety, flexible room configurations, and a direct appeal to the modern tempo of travel.
Variety is easy to understand; each room, apartment, villa, or rental house is typically distinct in some way, adding a new zest to the discovery phase as well as to 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 tempo of travel is fast, automated, and frictionless, with in-person contact largely seen as a point of this friction, and this extends across all segments and star ratings. Guests still will enjoy meeting new people and chatting while abroad, but many no longer want to waste time on transactional conversations. They don’t want to line up at the front desk for check-in. They want to be able to reserve dining or spa appointments off a website or app without any human interactions. They want a frictionless journey so their time is better allocated toward meaningful experiences.
ELIMINATING MOST ON-SITE LABOR
In a deflationary world propelled forward by rapacious technology, the hotel with the fewest expenses wins because such businesses can charge less while sustaining profitability or, alternatively, only somewhat undersell the market while diverting lots of cash back into R&D and marketing. For this, the only way forward is replacing labor with cheaper SaaS costs.
So, what happens when we try to turn a limited-service hotel into a vending machine? A tad extreme, but a time will come soon when properties can use technology to eliminate on-site staff, save for security, maintenance, and housekeeping, although the latter two also can be outsourced to on-demand services. Such a hotel would have an envious EBITDA! Let’s examine 11 daisies in the tech chain that can make this happen, either today or very soon in the future.
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1. SEARCH
Mapping platforms can now automatically update all OTA content while AI-driven revenue-management products can analyze travel intent data in real time then yield rooms up to the minute. With these tools in place, a revenue manager working at a corporate office can run more than a dozen hotels at once.
2. RESERVATIONS
Besides using a seamless booking engine, intake can be fully outsourced to call centers or AI-based voice services along with integrated chatbots for SMS or social media. You won’t need a reservations time save for a front-office manager who also can work out of a regional office to handle complaints or complex bookings for multiple properties.
3. PROPERTY MANAGEMENT
There’s no need to host on-premises and devote IT resources to maintaining your own servers. Cloud-everything is the way forward, especially for your PMS, for which there are a plethora of secure options already on the market.
4. PRE-ARRIVAL
Advances in CRMs, CDPs, and open APIs allow for rich data integrations so hotels know their guests before they arrive and offer bespoke, one-toone upsells, with all of it automated through a robust PMS or communications platform of choice.
5. CHECK-IN AND CHECKOUT
This can be wholly contactless to eliminate the front desk. Mobile keys will reside in a digital wallet, accessible via a phone, smartwatch, or smart ring, as prompted by a pre-arrival check-in portal. Or, in the rare case that a guest doesn’t do this in advance, a kiosk will be available in the lobby.
6. IN-ROOM
AI-based voice-command speakers can act to address guest questions instead of a live agent at the front desk or concierge. Everything in the room will be IoT-controlled, while casting to the TV to access a guest’s preferred streaming service will be made increasingly frictionless.
7 FOOD & BEVERAGE
While on-site restaurants are critical for four stars and above, for midscale and economy hotels, online food ordering like Uber Eats, Grubhub, and Doordash will suffice. Once you set up the drop-off rules for security, you can scale back this entire department.
8. PARKING
It all will be self-park with automated ticketing and monitoring. Realistically, though, most people will be using Uber or Lyft to get around.
9. HOUSEKEEPING
This can be only upon guest departure for short stays. Or, via integrations to the PMS, you can let the guest choose between no stayover cleans and leaving fresh towels at the door or daily cleaning for an extra charge. Using existing systems, room attendant routing can be optimized with cleaning schedules updated in real time and pushed to a staffer’s phone.
10. ACCOUNTING
No cash transactions will be allowed on-site, with mobile payments becoming the norm. Moreover, new centralized payment operations platforms are emerging to expedite audits, workflows, reporting, clearing, and reconciliation so that, much like other departments, accounting can be moved to a regional office with one controller for multiple properties.
11. RECRUITMENT
Networked on-demand labor platforms are emerging to verify and onboard staff members, giving HR quick access to a large pool of potential hires with little extra work.
THE END OF ON-SITE ADMINISTRATION
What’s fascinating here is that, in a vending machine model, there’s no need for a front desk manager, rooms division manager, executive housekeeper, or even a general manager. Let that sink in. Hotels at the low end of the spectrum will need only a regional manager who oversees the guest value chain and runs the IT team that safeguards all the connections that make this end-to-end automation a reality.
This may seem revolutionary, but it’s really a matter of survival in the face of heightened competition from new brands, the rise of home sharing, and impending commodification. Instead of reacting day by day, think of our current staffing shortage as a wake-up call to truly rethink your operations and drive the bottom line. Technology is the salvation for owners, and with the expectation of a modern tempo, your guests will thank you for it or not even notice.
Together, and represent one of the world’s most published writing teams in hospitality, with more than a decade’s worth of material online. As the partners of Hotel Mogel Consulting Limited, a Toronto-based consulting practice, Larry focuses on asset management, sales, and operations, while Adam specializes in hotel technology and marketing. Their experience encompasses properties around the world, both branded and independent, and ranging from luxury and boutique to select-service. Their work includes six books “Are You an Ostrich or a Llama?” (2012), “Llamas Rule” (2013), “Hotel Llama” (2015), “The Llama is Inn” (2017), “The Hotel Mogel” (2018) and “More Hotel Mogel” (2020). You can reach Larry at [email protected] or Adam at [email protected] to discuss hotel business challenges or to book speaking engagements.
