What Leisure & Hospitality Professionals Should Know About Cloud
Leisure and hospitality is a sizable market worth approximately $4,400 billion and is expected to experience high single-digit growth (c.7%) in 2023.* Although the unprecedented pandemic had a significant impact on the industry as hotels, airlines, cruises, restaurants, and many other venues experienced very low activity during lockdowns, the recovery has bounced back quicker than expected, primarily driven by high levels of pent-up demand. Consumer savings that were built up and retained during the pandemic have helped people replace “stay home” practices with revenge travel and socializing, forcing the industry to adapt to the new normal.
An increasing number of people are motivated to leave their homes and start traveling with even more passion than before, with brand-new expectations of convenience and brand experiences. A McKinsey study revealed that around 75% of consumers tried a new shopping behavior in the early years of the pandemic, and more than 80% of those intend to continue with this new behavior.
Following the flash-like technology advancements, particularly in recent years, both consumer expectations and how the leisure and hospitality industry operates have been evolving. Whilst some industry trends have led to massive cost savings for leisure and hospitality players, some have required them to rethink infrastructure investments, operational processes, organizational structures, and capability builds required.
Over the last decade, many organizations have tried adopting new technologies. While many leisure and hospitality industry players still work in traditional ways, handling data on on-prem servers and processing customer visits through legacy in-house systems, some of the businesses within the industry have adopted new technologies over the past few years and effectively driven the adoption of the cloud that enables cost savings, operational efficiency and flexibility, and enhanced customer experiences.
In this article, we will look into how the cloud addresses leisure and hospitality challenges.
1) Digitalization of the customer experience
Travelers now require changeless, contactless, timeless, and audienceless experiences, as per the Force of Change in the Travel Experience study by Accenture. Thus, the leisure and hospitality industry is working to create “frictionless experiences” for travelers by reinventing customer experiences at all levels of the value chain, from a customized welcoming to a swift and efficient departure experience.* To achieve this, leisure and hospitality organizations have been prioritizing the adoption of digital systems and tools for gathering better customer insights and using that information to build personalized and connected customer experiences at scale, increase customer satisfaction at every touch point and eventually drive retention.
The top three digitalization areas are analytics, front-office customer experience, and e-commerce. Some examples of digitalization include cloud-based tools such as restaurant apps for smoother reservations, back-of-house technologies to assist employee hygiene and safety, workforce management tools, concierge apps, and innovative offerings such as iPad-based POS, mobile check-in points, NFC, smart room keys, fingerprint-activated room entry systems, and infrared scanners. In addition, there is increasing customer demand for immersive experiences such as the metaverse, as many travelers are interested in virtual travel experiences, and this trend is likely to reshape travel content and virtual tourism going forward.
2) Increasing operational efficiency via robotics and AI/ML
Leisure and hospitality business leaders have recognized AI/ML as a game changer mainly due to its ability to predict guest preferences based on data patterns with improving accuracy and identify potential operational risks based on past learnings.
Many leisure and hospitality businesses have already embraced AI/ML at a corporate level to increase operational efficiency via automation, using tools such as virtual assistant chatbots, humanoid robot receptionists at guest touchpoints to reduce queue times and headcount requirements, robotic process automation (RPA) for back office operations and maintenance tracking, and post-trip sentiment analysis with NLP.
Global labor shortages in the post-pandemic world have accelerated the use of robots and automation in the industry, popularising innovative food service offerings such as autonomous delivery robots. Beyond that, various hotels, casinos, and catering businesses have taken up AI to improve data accuracy in their kitchens to increase operational efficiency. With the help of AI tools that help measure and prevent kitchen waste, businesses can achieve more profitable and sustainable kitchen operations with significant waste reductions at scale.
3) Capitalizing on the changing customer demand
With the emergence of “bleisure” – defined as combining business and leisure – working from home or remotely as a digital nomad has become a common practice across many businesses, while there is an increasing trend towards working during vacations or taking the family on a business trip. Therefore, the leisure and hospitality industry has pockets of opportunity to embrace and capitalize by tailoring their offerings to meet the demands of this new segment, such as offering extended-stay and home-sharing facilities.
This new model primarily requires a work-friendly infrastructure and keeping up with the latest technological trends. The leisure and hospitality sector could seize this opportunity by switching to smart, centralized, and integrated cloud-based hospitality and revenue management systems (that help effective distribution and make businesses more visible to millions of potential customers looking for accommodation) and smart room rate calculation algorithms that maximize sales and help achieve a better ROI.
4) Leveraging data to deliver on shifting customer expectations
Data and analytics capabilities are fundamental enablers for leisure and hospitality businesses to understand unique market needs, customize their value propositions at scale, and prioritize their investments in loyalty offerings and marketing expenses.
As the pandemic propelled travelers to shift their expectations, leisure and hospitality professionals have been in need of the guidance of data more than ever. Travel companies can experiment and customize offerings by leveraging the cloud and data to create new loyalty propositions and redesign booking flows and customer care experiences both to recover and power future growth.
“Data can supercharge the travel industry by enhancing customer experience and unlocking new revenue streams and sustainable cost savings. This is the era of the data-powered travel company, and the ability to get value from data is a crucial competitive differentiator. Data can help companies capture additional value by better understanding customers, creating new revenue streams, improving operations, mobilizing new business models, and building ecosystems with partners.”
Source: Building a data-driven travel company | Accenture
5) Top-notch IT infrastructure for tech-empowered innovations
Leisure and hospitality businesses need to grow cost-efficiently and often with limited resources. Cloud streamlines growth by boosting efficiency, agility, and data-driven and customer-oriented innovation, facilitates new technologies, and accelerates offering new products/services to market at speed, which would otherwise not be possible.
“Technology will play a crucial role as an enabler and accelerator of recovery in the travel industry. It will be an important and welcome tool for travelers, offering guidance and extra peace of mind for all their travel decisions. For travel brands, however, the stakes are much higher. Creating the right technology foundation for recovery and new growth will mean accelerating a journey of incremental transformation. It’s a journey with agility, innovation and resilience at the heart. All supported by the cloud.”
Source: The Force of Change in the Travel Experience | Accenture
OTAs, non-traditional travel businesses which sell online, benefit tremendously from the cloud as the cloud enables higher speed and lower response times to generate more traffic and increase conversion rates, as well as improved uptimes and reliability with the help of auto-scaling architecture, which is the backbone to support seasonal fluctuations and peak demand periods.
The world’s leading bedbank Hotelbeds has partnered with Google Cloud and migrated its legacy on-prem infrastructure to the cloud to support its API partners with blazing response times and improved conversion rates.
“An ever faster response time is one of the most important metrics for our API partners – and indirectly for our hotel and ancillary supplier partners as this helps deliver improved booking conversion. We achieve this with reliable partners like Google Cloud, who offer us security, scalability and reliability on a global scale. We are now able to deploy our workloads at an incredibly efficient speed on Google Cloud, deploying infrastructure as code and platform as a service – and thereby helping fuel the recovery of our partners everywhere.”
Simon Matthews, CTO at Hotelbeds
6) Built-in security and business continuity features
Cloud provides advanced built-in security capabilities such as advanced firewalls, data encryption, event logging, etc., and helps leisure and hospitality businesses protect their data and systems and avoid data breaches and cyber attacks more effectively than they would with on-prem servers. Since cloud systems include various managed services, they have automated software and service updates, top-notch monitoring options, security improvements, as well as disaster recovery and redundancy options.
Travelers increasingly seek (and are even willing to pay more) leisure and hospitality brands that show genuine environmental consciousness and sustainability efforts; greenwashing is no longer good enough. Travel brands clearly need to prioritize sustainability as a strategic imperative, as today’s customers do not compromise on eco-consciousness and prefer brands that reduce wastage over others and have transparent targets and roadmap for sustainability. Major cloud service suppliers already have sustainability policies in place, and they state their approaches with clear and tangible goals.
Google Cloud states: “Google is carbon neutral for our operations today, but aiming higher: our goal is to run on carbon-free energy, 24/7, at all of our data centers by 2030. Plus, we’re sharing technology, methods, and funding to enable organizations around the world to transition to more carbon-free and sustainable systems.”
The leisure and hospitality industry and technology have an interwoven relationship since leisure and hospitality is one of the most customer, service, and experience-oriented sectors, and technology provides the means to offer better customer services via innovation and sustain tourism development. While the leisure and hospitality industry has been one of the slowest industries to adopt cloud technology, we see a clear shift towards cloud adoption, followed by acknowledging that long-term success is very much dependent on it, and the benefits of the cloud are quickly seen.
Kartaca paves the way for you to embrace your digital capability and pioneer the leisure and hospitality industry by helping you better understand customer preferences and needs, leverage customer data in decision-making, and incorporate next-gen cloud technologies in traditional operations. If you work in the Leisure & Hospitality industry and require advice, direction, and help with developing your strategic approach to cloud solutions, please check our Leisure & Hospitality sector expertise, cloud experience, and contact us.
Kartaca is a Premier Partner for Google Cloud in the Sell and Service Engagement Models with “Cloud Migration” and “Data Analytics” specializations.
What were the factors that helped the leisure and hospitality industry recover after pandemic?
Why do the leisure and hospitality industry digitize the customer experience?
What are some examples of digitalization in the leisure and hospitality industry?
How can robotics and AI/ML increase operational efficiency in the leisure and hospitality industry?
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