Accenture Strategy

Connected hospitality: Investing in IoT to own the stay

August 28, 2018

The Walt Disney once said, “Whatever you do, do it well. Do it so well that when people see you do it, they will want to come back and see you do it again, and they will want to bring others …”.¹

This is good advice for hospitality organizations in constant competition to win guest loyalty and grow market share. To effectively compete in today’s marketplace, hospitality organizations must constantly differentiate themselves—building stronger, more personalized offerings and deeper guest connections to increase loyalty, reduce price sensitivity and generate repeat visits. As revenue per available room (RevPAR) growth compresses, companies must look to emerging technologies such as the Internet of Things (IoT) to differentiate.

Recent Accenture Strategy research found that nine out of 10 organizations agree their growth strategy is technology driven.² For hospitality organizations, the sheer number of technologies is overwhelming, but the IoT provides an enabling foundation, which combined with capabilities around analytics and Artificial Intelligence (AI), can reinvent the guest experience.

Setting the goal: Defining the IoT-enabled vision

With the rapid adoption of new IoT technology across the marketplace, customer expectations are growing rapidly, and organizations must develop and pursue personalized experiences. Consumers are embracing innovation—our research shows fewer than a quarter of consumers feel overwhelmed by how fast companies are using new technologies to interact with them or deliver products/services.³

Leading organizations must understand which of these technologies are table stakes, which drive new revenue and reduce cost to serve, and which are simply fads. From both an experience and operational standpoint, some of the more compelling IoT opportunities exist in the areas of location-based services (LBS), real time personalization and emerging experiential possibilities. The key is to define the vision around what creates a compelling experience and value case versus what is just “cool”.

Our research found almost 30 percent of customers expect companies with which they engage to know more about them than ever before.

Location Based Services – LBS is one of the core capabilities needed to harvest the power of the IoT. LBS helps track guest movement to/from/on premise to help identify how and when to offer services. Applications integrated with beacons can send targeted promotions and enable delivery of guest services anytime, anywhere. However, these services must be compelling enough for guests to “opt-in” to being tracked. Furthermore, LBS can also be used to track and deploy internal resources, thereby enabling operational efficiencies.
Real Time Personalization – Organizations must also drive real-time, hyper-personalized services to increase guest satisfaction and drive repeat visits. Our research found almost 30 percent of customers expect companies with which they engage to know more about them than ever before.⁴ A personal touch goes a long way and the new wave of guests demand unique and authentic experiences.
Emerging Experiential Possibilities – These use cases are on the cutting edge of what customers expect or what is currently used operationally. The value proposition is less proven, but if executed correctly, these capabilities can create competitive advantage. One example is using IoT in combination with AI to create real-time, interactive experiences. Our research shows half of customers no longer care if they are interacting with humans or AI-enabled technologies and half of younger customers (18-34) believe new AI technologies can change customer experience for the better.⁵

Exceed expectations with extraordinary experiences

Making the vision a reality

To move from vision to execution, organizations must connect their business and technology strategies to ensure alignment and to determine how and where to move at speed. Specific areas of focus should include:

Achieving the value case. IoT implementations can be expensive as companies must combine IoT with other capabilities to be effective, necessitating executive buy in for initial and ongoing investment. Successful organizations will quantify the strategy and value case against five value levers: increasing prices, generating higher on-property spend, enabling cross/upsell opportunities, enhancing loyalty and reducing operational cost. High Performers will monitor the value creation across multiple levers to capture more value over time.
Creating the platform and operating model. Organizations must determine if they will build their digital platform and architecture to integrate IoT-enabled solutions or look to buy an existing solution to repurpose as their own. Furthermore, organizations must create (internally or via partnerships) a digital operating model to ideate, incubate, implement and support these new IoT-enabled capabilities.
Implementing the vision. While some progress has been made, the use of IoT to deliver the “connected experience” in the hospitality industry is still in the very early stages of implementation. Successful organizations will think big, start small and scale fast. They must also articulate a strong customer value proposition and then effectively market their solutions, so guests will “opt in” to the capabilities.

Owning the connected experience

A leading family entertainment company is already replacing hotel room keys, theme park tickets and credit cards with a single IOT-enabled wearable that supports capabilities like the upload of photos from theme park photographers to an individual’s online account. A major cruise line is introducing similar technology to help staff know a guest’s name and preferences, while recommending activities based on prior experiences. By executing a first mover strategy related to the IoT, leading hospitality organizations will position themselves to be the disruptor, and not the disrupted.

¹ “3 Principles Disney Uses to Enhance Customer Experience”, Harvard Business Review, February 2018

² Accenture Strategy 2018 Revenue Growth Research

³ Accenture Strategy 2017 Global Consumer Pulse Research

⁴ Accenture Strategy, “Exceed Expectations with Extraordinary Experiences”, 2017

⁵ Ibid