The hospitality industry is lagging in digitization efforts when compared to other industries. It has been resistant to change due to its labor-intensive operating model and value proposition, which involves hands-on, “personal touch” interaction and customer service. However, hotels are at risk of becoming less relevant to consumers as digital, property-less, and non-labor intensive hospitality disruptors, such as Airbnb, become popular and increasingly convenient. One company that is facing pressure to offer value to its customers through digitization and yet has a business model that is differentiated on in-person customer service on its luxury properties is Hilton Hotels & Resorts.
To identify gaps in its value proposition, Hilton conducted a number of customer surveys and found that customers were looking for control of their room choice and rate. The company concluded that digitization trends are the culprit for this desire in that customers look for and are granted more control through their devices. Hilton executives recognized a number of additional trends: Digital access to more information is leading customers to compare rates on a level playing field, new competitors such as Airbnb are built to be digital from day one, and the trade-offs between price, efficiency, and innovation are beginning to disappear through digitization. As a result, Hilton adapted its business model for high-end properties to still provide for personalized care and service, but through digitized channels instead of mainly relying on in-person means.
To do this, Hilton has thought of digitizing aspects for all touch points of a customer journey – from booking a room, to experience at the hotel, to feedback post-stay.
Hilton became the first hospitality company to enable room selection and customization via digital platforms. Hotel guests now have the ability to choose their exact room from digital floor plans, in addition to digitally customizing their stay through special delivery requests, purchasing upgrades, and ultimately, checking out. The company also announced that guests can use their smartphone as a room key by 2016. A lot of members are saying “I want to skip the front desk,” according to Geraldine Calpin, Hilton’s Global Head of Digital. In response, Hilton is eliminating the need to interact with a customer service representative on its luxury properties.
How does Hilton’s luxury property business model, which relies on in-person service play into this? Is there a trade-off between digitization and quality customer service for a property that prides itself in hospitality and employs higher room rates accordingly? The answer lies in high quality eCare. Essentially, customer service and care are shifting to digital channels as in-person touch points are reducing. In fact, customer satisfaction actually increases through the addition of digital channels!
For example, Hilton found that 42% of hotel guests expect a response to their post on social media within an hour, and this increases to 72% if it’s a customer service related issue. Hilton has trained an army of customer service representatives to respond to digital feedback systems in a timely manner. The company has taken this so seriously that it has tweaked Conrad Hilton’s original vision to “Fill the earth with the light and warmth of hospitality – one tweet at a time.”
What else can Hilton do to prevent digital disruption and even become a digital disruptor? There are opportunities in three key dimensions:
- Win the stay with a digital experience: Hilton can focus on delivering more on-property digital agency in the room such as the ability to control temperature, lighting, and smart bathroom effects.
- Use digital as an efficiency multiplier: Digital tools can help make hotel representatives be more productive. For example, housekeeping managers can send alerts to staff members when rooms are ready for cleaning.
- Raise the digital standard within the company: Increase organizational analytic capabilities to drive competitive advantage and increase revenue.
Overall, there is much white space to be seized in the digitally lagging hospitality industry and Hilton has a chance to digitally innovate upon its core competency of customer care to create more value in the form of customer convenience and service.
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 “Hilton Revolutionizes Hotel Experience with Digital Check-In, Room Selection and Customization, and Check-Out.” Hilton, 28 July 2014, www.news.hiltonworldwide.com/index.cfm/news/hilton-revolutionizes-hotel-experience-with-digital-checkin-room-selection-and-customization-and-checkout-across-650000plus-rooms-at-more-than-4000-prope.
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 Banfi, Francesco, Boris Gbahoue, and Jeremy Schneider. “Higher Satisfaction at Lower Costs: Digitizing Customer Care.” McKinsey. August 2014.
 “Hilton Suggests.” Hilton, www.hiltonsuggests.hilton.com/about-us/.