Removing the Person Out of Personalized Care in the Luxury Hospitality Industry

Hilton Hotels and Resorts is looking to shift value from in-person care to eCare, while still relying on a business model that offers personalized customer service.

The hospitality industry is lagging in digitization efforts when compared to other industries.[1] 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.[2] 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. hospitality-industry

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.[3] 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.[4] 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.[5] A lot of members are saying “I want to skip the front desk,” according to Geraldine Calpin, Hilton’s Global Head of Digital.[6] 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.[7] In fact, customer satisfaction actually increases through the addition of digital channels![8] customer-satisfaction

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.[9] 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.”[10]

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.

Word Count: 758

[1] “Measuring Industry Digitization.” PwC, 2011.

[2] Ibid.

[3] Rogers, Bruce. “Why 84% Of Companies Fail At Digital Transformation.” Forbes, 7 Jan. 2016, www.forbes.com/sites/brucerogers/2016/01/07/why-84-of-companies-fail-at-digital-transformation/#7795e2ec588f.

[4] “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.

[5] Ibid.

[6] White, Martha C. “Skipping the Front Desk, and Checking In With a Click.” The New York Times, 3 Nov. 2014, www.nytimes.com/2014/11/04/business/hotels-test-turning-guests-smartphonoes-into-room-keys-.html?_r=0.

[7] Banfi, Francesco, Boris Gbahoue, and Jeremy Schneider. “Higher Satisfaction at Lower Costs: Digitizing Customer Care.” McKinsey. August 2014.

[8] Ibid.

[9] “Hilton Suggests.” Hilton, www.hiltonsuggests.hilton.com/about-us/.

[10] Ibid.

Previous:

East vs. West: Can JPMorgan Chase protect its lunch from the FinTech startups of the world?

Next:

Nike’s Play in the Digitization of Fitness

6 thoughts on “Removing the Person Out of Personalized Care in the Luxury Hospitality Industry

  1. Ranjani, this is very interesting. I think the demand for digital customer service models is driven by a generational shift. Older customers prefer “high touch” experiences with personalized human attention; younger customers may find these same experiences tedious. I wonder if Hilton will consider a dual-tier customer service experience that allows guests to opt in or out of human or digital interactions according to their preference.

  2. Great post, Ranjani! This is so interesting and definitely a problem that touches many industries. I agree with Blaine’s point on having a dual-tier service structure as my parents would be horrified by the idea of skipping the front desk. I think that if Hilton can be the first mover in the digitization of the traditional hotel companies it could be a huge competitive advantage. The easier and more digital they can make the process the better.

  3. This blog post surprised me, as I would have assumed that the hospitality industry required a more personal, human touch. I wonder whether the desire for digital experiences differs across different tiers of hotels within the industry (e.g. are the most upscale hotels expected to require a certain level of personalization/service vs. automation/technology? Is customer satisfaction related to digital experiences consistent across all ages of hotel guests — Will older customers, who have become accustomed to a more personal experience, be comfortable with the shift? Will younger customers, who seek innovation and new experiences, prefer and actively seek digitized hotels?)

    Your blog post made me recall a CBS News report I watched about a year ago about a hotel in Japan that was staffed entirely by robots. This is an extreme example of how technology has replaced the human element of personalized care, but I think it demonstrates the changing expectations of customers. In addition, an interesting benefit to shifting from “people service” to automation is that hotels have the potential to save on labor costs. In the example of the Sawada hotel in Japan, labor costs were reduced by 70%!
    http://www.cbsnews.com/news/inside-japan-robot-hotel-hennna-where-staff-are-robots/

    Hilton is not likely to be cutting staff as drastically, but it’s quite probable that the reduction of staff is a likely side effect of the shift your blog post discusses. For example, if customers want to check-in/out via their mobile devices, there may not be a need for many people at the hotel’s front desk 24/7.

  4. Ranj – great, very timely post! I really enjoyed reading this and to be honest, in line with what I would expect.

    As many of us start (or continue) doing consulting, we as business traveler’s are a huge revenue stream for hotels. However, when we go to hotels every week we do not want or need the personal touch that you get when you check in at the front desk. Monday evenings all the lines to check in get astronomically long at hotels as consultants wait to check in at the front desk and get their key card. For frequent travelers, getting to check in online is ideal and expedites our journey.

    For more infrequent, worried travelers (like my mom), she actually loves her ability at Hilton to log in and select the room (a functionality you mentioned above). While she still (as her normal nervous self) stops by the front desk at a hotel to make sure everything is ready, this overall length of interaction is seriously decreased therefore decreasing the cycle time of the check-in process as a whole.

    Overall I think Hilton is on track with these roll-outs and I think it is the only way they will compete in the 21st century with competitors like AirBNB, to your point.

  5. Love it! I totally agree w/ digital disturbing the hospitality industry, although I’d argue that SPG is the leader in leveraging technology to deliver the highest levels of service. Having spent probably close to 500 nights at a combo of SPG, Marriott, and Hilton the last 2 years, I’m one of those people who wants efficiency AND service. SPG is fundamentally a digital brand, bringing technology into its service element via its app.

    I think SPG initially announced Keyless back in 2014 for rollout in 2015, I remember using it in 2015 at the NYC W properties. Ws tended to be among the more tech first subchains I’ve encountered. The SPG ambassador service (the highest service level for 100+ platinums) gives you a personal SPG assistant that can be reached via the app directly, phone, or even text. I’ve also seen Westins, Ws, and St. Regis properties use apps like WhatsApp to directly engage w/ the front desk or concierges. SPG also recently integrated loyalty earning schemes w/ Uber and Delta, trying to create a vertical alliance from Plane to hotel.

    One area which I think would be great to expand which i don’t believe anyone is doing is in ordering and late checkout requests. The ability to order food from my phone or device either from the gym at the hotel or on the way back to the hotel would be great. Also, requesting a late check out or morning call, or extra shampoo all still require a whatsapp or call downstairs, if we could do this via the app that would be great.

  6. This is a great post Ranj! I have to agree with you that the hospitality industry is much behind on the curve of digitization. Having worked first hand on implementing a CRM tool for Starwood hotels, I can completely understand how technology is viewed by this industry. As you can imagine, with the arrival of keyless check in or robots to deliver room service or deliver your luggage, a lot of hotel jobs are at risk. One may argue that the core strength of a hospitality business is in the high touch personalized service and hence those jobs are here to stay. However in my view, I don’t think that a lot of people will necessarily lose their jobs but in fact there will likely be a change in the nature of some jobs. The jury is still out and only time will tell.

Leave a comment