Part 1
Read the documents provided in Part 1 of the ‘Materials’.
Analyse and critically evaluate the company’s current corporate strategy.
Your answer to this part should be around 1000 words (up to 10% additional words allowed).
Part 1 asks you to identify and analyse the company’s existing corporate strategy. You should start your answer by identifying the strategic choices that the company has made across the years, using evidence from the materials to illustrate specific approaches to corporate strategy. From the various aspects of corporate strategy, identify which ones are relevant to the case company. Some examples can be: diversification, vertical and/or horizontal integration, internationalisation, the use of CPA for internationalisation.
Proceed by discussing only the elements of corporate strategy which are relevant to the case company. Your discussion should offer an analysis of the reasons behind the specific strategic decisions, their advantages and disadvantages and the benefits they offer by using insights from theory and evidence from the Materials. To develop your discussion, you may consider following a reasoning like the discussion of corporate. Indicatively, if you have identified any instances of vertical or horizontal integration, you may consider the following: What were the drivers? What are any potential benefits and downsides the company might have faced while pursuing the type of integration(s) that you have identified?
These are some indicative examples of the steps you can follow to develop your discussion. A good answer will show that you have organised your thoughts into a logical order, that your argument is coherent and supported by evidence drawn from the materials, that you have considered the usefulness of the evidence and how it can be interpreted by the theory to support your answer. Doing so will demonstrate evidence of: 1) critical thinking, 2) understanding of the chosen theoretical concepts and 3) ability to apply these concepts to the case company.
Materials
Part 1
1 Internationalisation dynamics
Despite the significant impact of COVID-19 on our markets our review of the market is written for the long term and we remain excited about the potential. It is especially important in times like this to operate a vertically integrated model like we do; by owning all of the value chain, from developing and building the hotels right through to managing the brand, the operations and the direct distribution, we are best positioned to access the structural growth opportunities and continue to create value for our shareholders over the longer term.
The UK Market
In the UK, we are focused on continuing to grow and innovate with growth delivered through our existing pipeline. With our strong brand and winning customer proposition, we are confident that we will be able to continue winning market share.
Furthermore, the budget market in which we operate experiences higher growth than other hotel sectors and tends to outperform those other sectors in downturns. During this current COVID-19 crisis budget branded hotels have outperformed the market in every year since 2008, including a material outperformance during and after the financial crisis, and we are seeing evidence of that once again.
In Germany, we are focused on replicating our UK success, with the ambition to be the number one budget hotel operator. We have significant headroom to grow, both organically and through careful and considered mergers and acquisitions (M&A) activity
Germany presents an exciting opportunity given it has remarkably similar characteristics to the UK. Both markets are characterised by long-term migration from independents to budget branded hotels, and we have seen clear signs of distress and a weak independent segment decline. The COVID-19 crisis will likely accelerate the pressures on independents through demand weakness and increased cost pressures, and we expect this to worsen as Government support schemes are reduced. We also expect a decrease in new branded hotel supply, leaving an opportunity for Premier Inn to grow market share further.
The actions we have taken over the course of the year to protect our team, our guests and our business as a whole mean we are well placed to exit the COVID-19 crisis in a position of strength. The structural characteristics of the UK market remain, and we have ensured that Premier Inn is able to capitalise on the opportunities as a result of structural market changes, particularly the distress felt by smaller operations in the market as a result of the COVID-19 pandemic. There will inevitably be a constrained competitor set where there will be less opportunity for others to invest.
The UK is densely populated, which drives domestic short-stay travel, and post COVID-19, we expect the overall market to continue growing over the long term. Over the last decade, we have seen all consumer indices show an increasing expectation for value for money. We are seeing a generational impact, as younger people have a greater demand for leisure and travel in general. As a result, the UK travel market is a great core market for us to be in and Premier Inn is the clear market leader on every important measure.
The UK market remains highly fragmented from both a demand and supply standpoint, with around 48% of the supply provided by the independent sector. Whilst Premier Inn achieves high occupancy levels, we still represent a relatively low share of supply.
The vast majority of our rooms are sold to domestic travellers, compared to around 60% for the total market. Domestic short-stay travellers have a higher frequency of visit and, as a result, a greater likelihood of wanting to stay with us again if we meet their needs. This domestic skew also means we are better protected from any structural changes and effects on international travel that will arise as a result of COVID-19.
We also have a good mix of business and leisure travellers. This balance ensures, in a non-pandemic world, that we achieve consistently high levels of occupancy at around 76%. Furthermore, our business customers include a significant proportion of manual trades workers (those that need to be physically present to perform their jobs), while our office-based workers are from a wide variety of sectors. This means we are less exposed to potential structural shifts in working patterns, such as permanent flexible working. Premier Inn also under-indexes on group business bookings and we have very limited conference facilities so we believe we are less exposed to those areas of business travel that may see a structural shift to virtual meetings.
Since 2010 we have increased our market share of rooms from 6% to 11%, achieved through an ambitious network expansion programme. The rest of the budget branded sector has increased its market share by a similar amount to Premier Inn. However, the budget branded sector growth has been fragmented, with a long tail of smaller competitors.
We see an attractive ongoing opportunity to continue investing in new capacity and win further market share gains. This means that we can continue to grow our total sales ahead of the market and our plans are not wholly contingent on short-term conditions.
With our strong network and value for money, only 1% of our customers book using online travel agents, reducing the cost of customer acquisition vs the rest of the market. We can also leverage our scale to find ways to improve our efficiency to partially offset the inflationary cost increases, whilst smaller operators will, of course, struggle to do that. Post COVID-19, the pressure on the independents will only grow, creating an ongoing structural opportunity, which we are best placed to capture. We expect our additional new, efficient and superior hotel capacity to continue to provide domestic short-stay guests with a superior mix of quality, service and price, therefore allowing Premier Inn to win share in the UK.
The German Market
We have materially grown our pipeline in Germany over the year, with 30 operational hotels and an open and committed pipeline of 72 hotels. This network now gives us a national footprint, with a presence in many major German cities.
The German market is around 42% larger than the UK, at almost one million hotel rooms. Pre COVID-19, RevPAR in the budget branded sector in Germany had also been growing at a faster rate to the UK, at around 2.3% CAGR between 2015 and 2019 vs 1.3% in the UK.
Furthermore, the German market is even more fragmented than the UK, with independent hotels making up around 72% of the supply, and more domestic travel-oriented than the UK at around 77% of the total. This high proportion of domestic travel is a long-term output of Germany’s geography and history.
Germany is significantly more regionally dispersed than the UK due to its history and federalised political and industrial structure. This geographic dispersion drives greater demand for short-stay travel, particularly business-led. Therefore, there is a greater frequency of travel by the type of customer that Premier Inn excels at serving.
Structural barriers to entry exist as a result of the nature of the property market. With limited large property financing structures, such as Real Estate Investment Trusts (REITs), and greater opportunities in the four- and five-star sector for asset-light models, there has been limited new capacity added in the budget sector, which is considered to be the hardest sector in which to earn a return. This has meant that the international asset-light operators have struggled to find franchisees to operate appropriate new hotel sites. In fact, the only hotel businesses that have delivered meaningful growth adopt a similar owner-operator model to Premier Inn. In order to add sufficient capacity in the budget sector, an operator needs to be willing to develop freehold, sign long leases or buy out existing operators.
Post COVID-19, these structural elements make the opportunity even more attractive to us over the longer term. Even in the depths of the pandemic, we have seen opportunities come our way. We announced an acquisition in December, where we were able to select 13 hotels in key German cities at an attractive price. Our ability to very carefully deploy capital, when others will be constrained, provides an opportunity for us to continue investing in or acquiring assets with attractive long-term returns. We are seeing real signs of distress in the German market and expect the independents to continue to fall out of the market, creating an opportunity for Premier Inn to fill the gap.
Source: Whitbread (2021, pp. 12-15).
2 History of Whitbread
For an overview of the History of Whitbread see TMA1 Materials Part1.
(Source: Whitbread, 2022d).
3 Business model and strategy
Our unique ownership business model provides us with a competitive advantage in a challenging market, and has enabled us to become the number one hotel operator in the UK, and to expand our presence in Germany.
Our unique vertically integrated model sets us apart
Our vertically integrated model, which combines the ownership of property, hotel operations, brand, and inventory distribution has enabled Premier Inn to grow at a significantly faster pace than competitors, deliver a consistently superior customer experience and generate a strong return on capital for shareholders over the last 15 years.
We have a proven strategy which is highly compelling
Whilst the impact of COVID-19 will be material on the hospitality sector, our strategic priorities are consistent with our proven plan to create sustainable shareholder value over the long-term. We expect to achieve long-term growth in earnings and dividends, combined with strong return on capital through disciplined execution in three key areas:
- GROW AND INNOVATE IN THE CORE UK MARKETS
We will continue to grow and innovate Premier Inn, by leveraging the competitive advantages of the Whitbread operating model, including the strength and the Premier Inn brand and market-leading direct distribution and capitalising on enhanced structural opportunities.
- FOCUS ON OUR STRENGTHS TO GROW IN GERMANY
The German market has the same characteristics as the UK, making it a highly attractive market for Premier Inn’s international expansion. In a market with high levels of fragmentation and no market leading budget hotel brand, Premier Inn has the opportunity to replicate the success of the UK model here.
- ENHANCING THE CAPABILITY TO SUPPORT LONG TERM GROWTH
Property backing and a successful efficiency programme help provide financial flexibility and the ability to invest in growth when others will be constrained
Source: Whitbread (2022c).
4 Focusing corporate strategy with a demerger
Whitbread’s £3.9bn sale of coffee chain Costa is a double triumph. The price vindicates chief executive Alison Brittain after two years that left investors uninvigorated. And it proves the UK can sell consumer products to Americans more mainstream than trenchcoats and Peter Rabbit tea towels.
British coffee might once have described a brew made from dandelion roots. No longer. Costa is a mass market café chain and coffee brand that has bested Starbucks in the UK.
It is a good buy for Coca-Cola. Health campaigners are squeezing the market for sugary drinks. Coffee is a prudent diversification. In the US, Coke can put Costa dispensers into sites already hosting its vending machines. The Atlanta giant has the muscle to help the café chain succeed in Asia.
Ms Brittain struck the sale directly with Coke boss James Quincey. News of the talks therefore did not leak. The shares leapt 16 per cent on Friday. Even so, there should be upside.
Activist investor Elliott chivvied Ms Brittain, a wisecracking Northerner, into announcing a demerger in April. Back then, Lex estimated Costa’s enterprise value at £2.4bn. Coke is paying a 62 per cent control premium, by that measure. The multiple of 2018 ebitda is a zingy 16.4 times.
Premier Inn, the budget hotel chain that will become Whitbread’s only business, should be worth £6bn-£7bn. Whitbread’s market worth on Friday of £8.5bn looked correspondingly low. Shareholders should expect a payout of about £2.8bn, after Whitbread has covered a pensions deficit and repaid some debt.
Ms Brittain even has a post-sale growth strategy to promote: a push into Germany’s fragmented budget hotel industry by Premier Inn. After lengthy deal negotiations, only one thing may stand between her and the good night’s sleep that is Premier Inn’s signature promise: any demand for a higher price from Elliott.
Source: Financial Times (2018)
Part 2
Based on the analysis that you conducted in Part 1, give advice about potential strategic choices at the corporate level and provide two clear strategic recommendations for the company.
Your answer to this part should be no more than 800 words (up to 10% additional words allowed).
In this part, you should formulate two recommendations about the company’s corporate strategy, based on the theories and appropriate evidence from the case study materials. Your recommendations should be informed by and built on the analysis you conducted in Part 1.
Indicatively, in preparing your answer you may consider the following points:
- If your recommendation is to continue to pursue an existing corporate strategy you should explain why that is your recommendation and support the discussion with a solid theoretical grounding and reference to the module frameworks and concepts.
- Consider the different growth strategies, ranging from vertical integration, to product diversification and internationalisation. For instance, if you want to propose a recommendation on internationalisation, you should think about possible markets that can be targeted for entering or exiting in the next few years. For each recommendation, explain why you made the recommendation with a solid theoretical grounding and reference to the module frameworks and concepts.
The above are just indicative and a good answer will show that you have clearly defined the recommendations, making good use of the theoretical frameworks and concepts and of evidence on the case company provided in the Materials Part 1 or 3 (there is no separate part 2 of Materials). Evaluating critically.
Part 3
Read the documents provided in Part 3 of the ‘Materials’.
Considering one of the industries in which the company is operating, first, analyse the current business strategy it has adopted in that industry and, second, provide two strategic recommendations that can ensure business success in that industry in the future. Finally, consider consistency between your strategic recommendations at corporate and business levels.
Your answer to this part should be no more than 1200 words (up to 10% additional words allowed).
There are three parts to this question, and you should give them equal importance.
In the first part you need to analyse the company’s business strategy in the UK Hotel industry using Porter’s generic strategies framework. The first step is to identify the current business strategy pursued by the company. You can look back at the cost leadership definition and its sources of advantage, at broad differentiation strategy and its characteristic, and at focus. Having done that, you need to discuss the pros and cons of the strategy chosen by the company. Revising the risks of cost leadership and broad differentiation would be helpful.
The second part of the question asks you to make two strategic recommendations that can ensure business success in the future. It is important to explain both what your recommendation is and to discuss why it is appropriate. Your answer needs to combine the evidence from the materials on the case company with theoretical concepts of cost leadership and differentiation and focus strategies. You may demonstrate your recommendations with the aid of the diagram:
A good answer to this part will combine a good analysis of the current business strategy with the strategic recommendations.
Finally, in identifying your strategic recommendations at a business level, you should also consider the corporate level recommendations you made in Part 2. The strategic recommendations at the business level should be consistent with the ones at the corporate level.
Materials
Part 3
1 Premier Inn, Hub and ZIP
Premier Inn has an integrated business model that delivers an unrivalled mix of quality and value to millions of customers and offers a significant competitive advantage in the budget, domestic, short-stay market. This, alongside our strong fundamentals, conservative capital structure and disciplined capital allocation, provides a strong platform for long-term growth and will ensure we exit the COVID-19 crisis as a leaner, stronger and more resilient business.
Source: Whitbread (2021, pp. 12).
1.1 Premier Inn
With over 800 hotels across the UK and beyond, we really are everywhere. Sleep in a comfy kingsize Hypnos bed, enjoy Freeview TV, an en-suite bathroom with power shower and so much more. From booking to bed, we’re here to help you rest easy.
At Premier Inn you’re guaranteed exceptional, all-encompassing comfort and outstanding quality in every one of our 77,000 rooms.
Source: Whitbread (2022n)
1.2 Premier Plus rooms
Not all stays are standard, so neither are our rooms. Treat yourself to even more comfort, convenience and connectivity by choosing one of our Premier Plus rooms. Our enhanced rooms are perfect for business trips, special occasions – or whenever you fancy a little more from your stay. Enjoy an improved workspace with a large desk and adjustable chair, air conditioning, a comfy armchair, ultimate Wi-Fi offering a stronger connection and a handy USB port by the bed. All Premier Plus rooms come with a mini-fridge a Nespresso machine with coffee pods and an iron and ironing board.
Source: Whitbread (2021o).
1.3 Hub & ZIP by Premier Inn
We have innovated to develop two new hotel brands to cater for different market segments. Contemporary style combined with great connectivity makes hub by Premier Inn the UK’s most space-efficient digitally-advanced hotel. Meanwhile, at ZIP by Premier Inn, our idea is simple. Do the essentials brilliantly, then take away everything else. You get a small room, a simple stay and, best of all, a price to match.
Source: Whitbread (2021, pp. 3).
1.3.1 Hub by Premier Inn
Discover hub – smaller rooms, big locations
Smart, stylish rooms across London and Edinburgh at great prices. Slick touchscreen room controls, completely free Superfast Wi-Fi to stream your favourite shows, snazzy 40″ Smart TVs, high-powered Monsoon showers and luxurious Hypnos beds. Change your room’s lighting and temperature to suit you without even getting out of bed, using state of the art touchscreen controls. Recharge and unwind on our luxurious Hypnos double beds. Enjoy high-powered, monsoon showers in our en suite bathrooms, and free tea or coffee 24/7.
Source: Whitbread (2022p).
1.3.2 Discover ZIP by Premier Inn
Our idea is simple. Do the essentials brilliantly, then take away everything else. You get a small room, a simple stay and best of all, a price to match – from £19 a night. Now open in Cardiff, with more coming soon.
BASICALLY BRILLIANT ROOMS
The flexible rooms can be made up as a single bed, twin single beds or pushed together to make a double. As well as a TV, there’s a small bathroom with a power shower, body wash and a towel, plus handy overhead storage and hangers.
EAT. WORK. CHILL.
Whatever you need ZIP for, we’ll help you get it done. There are drinks and light snacks at the bar, workstations and booths plus free WiFi throughout. There’s also a chill-out area with table football and TV for all the big games. And every morning we serve up breakfast, for just £3.95.
ZIP IN. ZIP OUT.
At ZIP, we make your stay as quick and simple as possible with a no-frills approach. Here’s a bit more info on what to expect:
Source: Whitbread (2022q)
2 A good night’s sleep guaranteed
Source: Whitbread (2022q)
At Premier Inn we’ve thought of everything you need to have a great night’s sleep. From our super-comfy Hypnos mattress, to a choice of firm or soft pillows, we’re always on the lookout for ways to make bedtime better.
In fact, we’re so confident you’ll have a great night’s sleep that, if you don’t, we’ll give you your money back. Just speak to one of our friendly reception team. This is our Good Night Guarantee.
Source: Whitbread (2022r).
2.1 Sleep Tips
If there’s anything we’re experts in, it’s sleep. We’ve teamed up with Sleep Wellbeing Expert Natalie Pennicotte-Collier to bring you top sleep tips and wellbeing advice to help you rest easy.
2.2 Book yourself in for a sleep MOT
As part of our mission to help the UK sleep well, we’ve decided to to offer some incredible sleep MOT sessions hosted by the wonderful Natalie Pennicotte-Collier!
The exclusive 30-minute sessions will give you the chance to have your everyday bedtime routines, sleep environments and late-night habits reviewed during a bespoke one-on-one Zoom call with our sleep expert. These sessions are completely free and available for one day only on World Sleep Day 18th March.
Source: Whitbread (2022s).
2.3 Premier Inn takes counting sleep digital
A new study commissioned by Premier Inn, has revealed that the average person delays bedtime by 36 minutes a night due to streaming videos online, creating 17 full hours of possible extra rest a month that is being missed out on.
Bad digital habits appear to do everything but aid a good night’s sleep, with 17% of Brits admitting that some programmes they watch stimulate their mind before bed, and 13% citing scary or thrilling shows as making it harder to sleep.
When it comes to traditional sleep-inducing techniques, 13% of Brits admit to counting sheep to help them sleep, even in the digital age, though only 4% say this works for them.
Premier Inn takes counting sheep digital with launch of ‘ewe-nique’ video streaming platform ‘Ewe Tube’ to help Brits rest easy before their summer holiday, by teaming up with the Yorkshire Shepherdess, Amanda Owen – and her flock – to launch the brand’s first-ever video streaming platform, www.Ewe.Tube dedicated to encouraging sleep by digitally counting sheep. Supported by our resident sleep expert as a tool to help Brits get to sleep, Ewe Tube brings counting sheep into the digital age. Jam-packed full of woolly video content, the platform includes popular movie greats as you’ve never seen them before. From 2001: A Space Odysheep, Zooland’baa to The Queen’s Lambit, there is a whole host of baarilliant content that is not only entertaining – but will actually help Brits to get the rest they need.
Source: Whitbread (2022t).
2.4 Buy Premier Inn mattresses, beds, pillows and bedding
Now, you can enjoy a Premier Inn sleep at home by buying your own super-comfy Hypnos mattress. With a thousand pocket springs supporting a pillow-top mattress you won’t just be waking up on the right side, but the right bed.
Everyone loves feeling snug in a super-comfy bedding at night, so why not treat yourself to some hotel-quality pillows or a duvet to enjoy in the comfort of your home? Choose the best bedding for you – the same bedding that you’ve come to know and love in our Premier Inn hotels- get it delivered to your door, and look forward to a luxurious sleep every night.
Source: Whitbread (2022u).
3 Compelling structural growth opportunities
See TMA3 Materials Part 1 for characteristics of the UK and German markets and growth opportunities, including commenting on specific markets, such as the ‘budget branded sector’.
4 Strong brand
Premier Inn is consistently rated as the strongest hotel brand in the UK. Unlike the majority of other large-scale hotel operators, who operate franchise models, ownership of the Premier Inn brand enables the provision of a consistently high-quality customer offering across the entire Premier Inn hotel network (Whitbread, 2021; for a YouGov survey see TMA2 Materials Part 3).
4.1 Broad customer reach
See TMA3 Materials Part 1 for characteristics of customer base.
4.2 Direct distribution
Premier Inn’s direct digital distribution model, with only 1% of bookings delivered through third party online travel agents (OTAs), is industry-leading and ensures that Premier Inn’s gross RevPAR (RevPAR: Revenue Per Available Room) is similar to net RevPAR achieved after cost of sales, unlike independents or most other brands, which pay high commission rates to third parties. Direct distribution also provides complete ownership of the customer relationship driving significantly lower acquisition and retention costs.
Source: Whitbread (2021).
4.3 Rest easy from booking to bed
From booking to bed, Premier Inn are here to help the nation rest easy. And we’re not just talking about getting a great night’s sleep in our beds. We’re talking about taking the worrying out of booking because you know exactly what you’re going to get. Then there’s the knowing that you can have both choice AND flexibility and the same, consistent top-quality experience as ever, where people are happy to greet you. And then there’s you sleeping soundly knowing that time and time again our hotels are cleaned to the highest of standards, and that we genuinely care about you.
And what better way to show you how we’re doing it than with a new [2021] TV ad! That voiceover is our beloved Sir Lenny Henry of course!
Source: Whitbread (2022g)
5 Consumer Preferences
How important are amenities when choosing a hotel for a leisure trip?
USA Statista Online Survey, 18-22 of May 2017 based on 1,038 respondents within the 18 – 65 age group. Survey question: How important are the following amenities to you when choosing a hotel for a leisure trip?
Source: Statista (2017)
5.1 Taking the pulse of modern guests
The concept of having intimate knowledge of, and 24/7 attention on, the guest experience (GX) is realized in a different way today. The imperative of the GX remains as critical as ever. Collecting information about guests is fundamental to delivering exceptional GX, and today’s guests are more willing than ever to provide it via a variety of means. The issue hoteliers face now is not just to collect that data but to also make sense of the data and know how to apply those insights based on situational nuances. This is compounded by the fact that guest expectations are continuing to rise. This is leading hotel guests to expect that the information they have shared will be put to good use, consistently. Today’s guests expect hotels to deliver on more than what is promised, and what is implied is that guests are now expecting hotels to go beyond.
Over the last few decades, hotels were able to differentiate with sustainable practices, notable facilities, amenities or signature products, public spaces, and food and beverage. Now, many guests often expect the availability of such things. We represent these elements as the new basics.
It is widely acknowledged, inside the industry and beyond, that engaging guests meaningfully and creating lasting, positive impressions is the path to obtaining and retaining guest loyalty and advocacy. But with guest expectations higher than ever and previous “differentiators” now serving as the cost of entry, how can hotels continue to elevate their game?
Guest satisfaction scores across the hotel experience (satisfaction scores refer to how satisfied guests report themselves to be, based on a scale of 100) (Deloitte, 2018).
Source: Deloitte (2018).
5.2 Getting to know you
Knowing their guests is what can allow hotels to deliver on the other experiential elements, from the functional to the sublime. For example, to deliver on delight me, the hotel might have learned some information about a guest’s behaviors and preferences while traveling on business, such as an after-work glass of a specific Cabernet Sauvignon. To delight that traveler on one of her business trips, the hotel has a note and a half-bottle of that wine in her room waiting upon arrival—but not on every trip and not the same gift every time. That same guest, traveling on leisure to a resort with her family, has a different mind-set, with different expectations, needs, and concerns. Perhaps a delivery of the family’s favorite snacks and drinks to pack for their scheduled adventures might be more meaningful. Our research substantiates the belief that knowing more about your guests positively impacts their satisfaction.
Loyalty programs have historically been a great source of guest information, behaviors, and preferences. Guests with higher loyalty status indicated they were 75 percent satisfied. Knowing your guests outside of their specific stay-patterns, like tracking when they visit your restaurants and bars, spa, and events—or even those of your competitors—will tell a more complete story.
6 Next-generation guest experience
If the challenge of GX starts with guest knowledge—but then depends upon the actions that arise from that knowledge— what is the path forward? Many hotels will find it involves the intersection of two key themes: an embrace of cognitive capabilities and the development of a partnership ecosystem.
6.1 The cognitive advantage
We live in a cognitive world, in terms of how data and technology operate. Today, workers can amplify their intelligence with cognitive capabilities. With those capabilities, they can create smarter insights to help improve core operations, build new assets, and enhance decision making. In hotels, the cognitive capabilities can enhance the guest experience by enabling the hotel to better serve them.
Opportunities include facilitating repeatable tasks using automation in order to free up hotel teams to engage guests by delivering meaningful recommendations based on guest-specific insights. We group these concepts into three capabilities: robotics and cognitive automation, insights, and engagement.
6.2 Robotics and cognitive automation
Think about the laborious task of blocking rooms. Using automation, we can allow a trained machine to take on this task with confidence and free up the front desk agent to proactively reach out to arriving guests to ensure their every need is met.
6.3 Service recovery
When something has gone less than perfectly in a guest’s experience, the hotel has an opportunity to shine. Take, for example, the ability to report an issue via a variety of means (text message, voice, in-person, etc.) and to get a fast, helpful response regardless. Not only does this technology structure the data capture regarding the incident, but it also establishes a channel to enhance follow-up.
6.4 The partnership ecosystem
Fueled by cognitive insights, the new world of data-driven guest experience can also enable the development of a partnership ecosystem powered by digital engagement.
Guests with computers in their pockets can self-create experiences that involve the hotel but do not begin and end with what the hotel offers. Our survey found that 85 percent of guests used digital devices during at least some part of a hotel visit and 41 percent used their devices to stream entertainment while they were there. This change—from a hotel offering pay-per-view movies to a hotel providing free high-speed Internet that enables guests to manage their own entertainment content—is only one example of the larger trend toward the hotel as “enabler” of a “partnership ecosystem” that extends beyond its walls.
Today, guests want the benefit of local knowledge and resources but still want to maintain some semblance of control. The hotel’s role is to identify how best to help and make the process easier.
In a partnership ecosystem, hotels can use new business relationships and mobile technology to help give their guests access to for example, a boutique fitness experience in the neighborhood. This partnership ecosystem has benefits for all types of hotels, as it helps them provide the experience guests want while reducing hotels’ total cost to serve. For “asset light” hotels in particular—those with limited food options or a limited fitness center—a partnership ecosystem helps them to compete more effectively. They are creating a portfolio of assets that they do not own and do not have to maintain, helping drive a diverse set of experiences without the big capital outlay.
Source: Deloitte (2018).
