City hotels with small rooms staffed by robots are already a reality, John Brennan, chairman of Amaris Hospitality, told senior hospitality managers at the inaugural ‘Firm Talk’ organised and hosted by hospitality industry recruitment consultants, The Firm.
A Japanese company, he said, opened its first hotel staffed by robots in 2015 and plans to open 100 more.
“The trend appears to be towards smaller rooms, less human service and comfortable lobbies at the lower end of the hotel market, and increasingly around amazing locations, style and, critically, a sense of destination and an authentic, personalised service experience at the luxury end,” he said.
Hotel companies are extending their operations into hostels, home-stay, extended stay and micro hotels in response to a need to intensify activity on expensive land and reduce operating costs as well as focussing on a life-style product for younger travellers.
“The Digital World is also impacting hospitality with services such as mobile marketing, ‘smart’ appliances, personalisation via artificial intelligence, chatbots, virtual reality, beacon technology which sends messages to smart phones in specific locations, Big Data Predictive Analytics, facial recognition to speed up check-in, and driverless technology in resorts.”
Hotels will embrace these technologies in an environment of slower revenue growth, rising costs of labour, insurance, distribution and energy (including carbon taxes). “Making back-office functions more efficient and improving labour productivity are the keys,” he said. “We will see more self-service in F&B. Already in the US, room service has disappeared in mid and upper mid-scale hotels.”
“The hotel and restaurant environment is increasingly competitive, and pressure to have the right talent and, critically, the right leadership team that has the agility to lead in the dynamic environment ahead, will be critical and will separate winners from losers.”
Welcoming John Brennan, Micheline Corr, Director of The Firm, said he headed a company which controls 30 hotels with 4,870 rooms and 2,300 employees.
“John is also the founder and managing director of Cloudbrook Partners, a boutique advisory firm that provides advice to hotel investors around acquisitions, performance improvement, strategy and disposals,” she said.
Revealing results of research conducted by The Firm, Micheline Corr said that the impact of Brexit is a prime source of concern among industry leaders, together with rising costs and the search for and retention of talent. She said that hoteliers want to see an end to rising prices, a balancing of hotel stock with demand, over-reliance on the UK market and ‘complaining about Brexit’.
Picking up on the importance of recruiting and retaining talent, John Brennan said that the nature and type of hotel work is likely to change, with technology reducing the number of operative and administrative jobs. Labour costs will however rise due to government policies, but hospitality will continue to employ more people by ratio than most other industries.
“We have to focus on attracting, retaining and developing employees at all levels, but critically at the leadership level,” he said.
“First and foremost, we must commit to a strategy that puts respect and dignity for all employees at its core.”
While the world is ‘relatively stable’, he said, a rise in populism and protectionism is impacting both trade and immigration. Most countries have implemented pro-tourism policies, but ‘fragmented political dynamics’ in Western countries are leading to political indecision and short term thinking, particularly in relation to major infrastructural projects. Anti-business sentiment is evident ‘in places’, he said, and growth is slowing in some key markets such as China, the UK, France and Germany. Positive trends, however, include the continuing growth of air travel and rising level of education across the world, which will lead to more discerning travellers in the future.
A middle class is also expanding, adding c150m per annum, particularly in Asia, as are active retirees. Europe, with its rich cultural heritage will continue to be an attractive destination.
Europe, however, can be an expensive destination, he said, and prime tourism areas can be very busy in peak seasons. Ireland has shared in the success of Europe with the successful marketing of the Wild Atlantic Way and a growth in corporate travel.
Travel and tourism continue to grow, he said, with six decades of unbroken growth and probably 1.8bn people travelling by 2030. ‘New money’ has fuelled some of this growth together with low interest rates. Current economic uncertainty is postponing some investment, land and build costs are on the rise, supply exceeds demand in some markets, and hoteliers are facing rising operating costs.
“Hospitality competes with other sectors for capital and has benefited from the demise of retailing, but faces strong competition from new industries, particularly IT,” John Brennan told his audience.
Brands, he said, continue to grow in influence, but the European hotel market still lags behind the US in terms of brand penetration. Ireland is among the lower penetration markets, although many new Dublin hotels are now branded.
“Big brands keep getting bigger,” he said, with the top four hotel groups in the world sharing more than 100 brands. Small brands which connect with customers are also growing, however. They include Jurys Inn, Clayton, Maldron and the Doyle Collection in Ireland, Premier Inn in Germany and Travelodge in the UK.
“For me, the answer to branding is to choose the right brand for the right location- and if opting for a big brand, then the bigger, the better.”
Recent research has shown that it is critical for hotels to personalise and tailor services to the needs and preferences of travellers, he said. “This requires us to think about who our guests are, what design, product and service delivery is most relevant and, critically, how do we connect with those guests- and others like them.”
He concluded by saying that that sustainability ‘is now a real priority for consumers’.