1.
Executive
Summary
This paper
will explore about how technology has evolved the hospitality industry. It also
delves about how the importance of incorporating technology into business due
to the fast paced society the world has become. In the past when transportation
was not fully developed yet, guests were usually from the nearby geographical
regions. However, with the development of air transportation and cheaper air
flights, the hospitality industry is catering to guests that may come from all parts
of the world. The hospitality industry has transformed from relying heavily on
manual labour to relying on machinery to get things done. The implementation of
technology has mostly brought about positive impacts despite causing some
negative impacts too. Furthermore, this paper will discuss about the economic
and social implications of introducing technology into the sector. This report
will also delve into the possibilities of how technology will continue to shape
the industry.
2.
Why is technology in
hospitality industry revolutionary?
It is not uncommon to see computer technologies like centralised reservation
systems, time-and-attendance software, and automated phone services in most
hotels of today. Consumers may see these technologies as a given however, it
should be noted that computers have only been introduced in the hotel,
restaurant, catering and tourism sector in the last ten years. In the short
span of ten years there are so many dramatic changes to the structure and
organisation of work, job content, and skill requirements. Not only has the
introduction of new technologies been fast, but the emphasis on 'time-saving'
and 'labour-saving' technologies means that the pace of work is faster too.
Besides
that the way consumers use technology to plan their holidays have also changed
drastically. According to Think With Google's '5
Stages of Travel,' the average traveller visits about 22 travel-related sites
prior to booking a vacation and 70 percent of business travellers will check
into their flights and hotels via their mobile devices. (Vong, 2012) This is a
big change as consumers now need not rely on travel agencies to plan trips but
rather they can have the ability to choose their destination and the types of
activities that they do. Hence, technology has revolutionised the hospitality
industry. Hotels and restaurants around the world are increasingly being
accessible to the world.
3.
Introduction
The
hospitality industry is one of the fastest growing sectors compared to other
sectors of the global economy. It accounts for more than one third of the total
global services trade. Statistics have shown that international tourist
arrivals have grown by 4.3 per cent between 1995 and 2008.
Due to
factors like globalisation coupled with the constantly falling relative costs
of travel, the demand for travel has increased substantially. In the 2008, the
travel industry recorded 922 million international tourists’ arrivals a
significant jump from 25 million in the year 1950 (see Figure 1)
Since 1990,
international arrivals have increased by 4.3 per cent annually and the World
tourism organisation (UNWTO) expects them to rise by 4 per cent per annum over
the next 20 years. Moreover, in 2009, the international tourism receipts
amounted to US$852 billion dollars. This shows that there is a massive
potential in the hospitality industry and companies are making preparations to
ensure that they are in a strategic position to capture a substantial portion
of the market share. One aspect is to improve on the use of technology in their
daily operations to improve efficiency, cut down the need for manual labour and
customer experience. (International
Labour Organization, 2010)
Advancements
in communication technologies like video conferencing have allowed companies to
do business with their counterparts in the other parts of the world.
Therefore
it creates a more interconnected world. The ability to expand their business
partnerships to other countries, the companies can earn more revenue and its
employees enjoy higher incomes. (Global Sherpa, n.d)
In the past,
the hospitality industry relied heavily on manpower to ensure the operations of
companies. There was also a great reliance on paper work. For example, service
staff in restaurants would need to take down your order with a pen and paper.
Hence a longer time is needed to serve the patrons their food. Moreover in the
past, hotel guests needed to fill up manually personal particulars on paper
before check in.
However, that
has all change due to the rise of technology has helped to improve these processes
and there is a shift from labour intensive towards technology based systems. The
hospitality industry have benefited substantially as internal operations are
more efficient and guest service quality also increases. Guest service quality
often involves exceeding expectations in an attempt to increase the experience
of the guests and create a sense of brand loyalty so customers would come back
periodically. Technology is helping to build this brand loyalty as it gives a
competitive advantage. (as cited in Beck, 2011).
With the
proliferation of the internet, a whole new consumer market is now being opened
up. Through websites, hotels and restaurants have created a platform for
potential customers to get to know their products and service better. Online
reservations and booking can also be done in the click of the button. Better
systems have also been created to help facilitate the process of companies.
Securities have also increased in the hotel industry.
4.
History
of the Hospitality Industry
The hospitality
industry has evolved radically from its centuries old tradition of Inn-keeping.
Up till the Middle Ages, people in different parts of the world built simple
infrastructures to cater to passing travellers. For example, the Greeks created
thermal baths in villages for people to rest. The Romans built mansions to
provide accommodation for travellers on government business. Around the year
1200, staging posts for travellers and stations for couriers were set up in
China and Mongolia.
The 16th
-17th century saw the start of the hotel industry. At the beginning
of the 15th century, the law in France made it mandatory for hotels
to keep a register of all their guests and the British also introduced similar
rules for inns around the same time. Guide books for travellers were also
published and signs about the restaurants cuisines were displayed.
The
industrial revolution which occurred in the 18th-19th
century resulted in the construction of many hotels in mainland Europe, England
and America. Hotels were also built in prime areas of city centres. Significant
improvements were made from just providing a simple bed for travellers to rest
to having a hotel that encompass facilities such as installing lifts and
providing electricity to its rooms. The Tremont House on Boston was the first
deluxe hotel in a city centre with inside toilets, locks on doors and an al
carte menu. In New York, the New York hotel was the first to be equipped with
private bathrooms.
During the 20th
century, many of the iconic tourist attractions like the Ritz and Savoy in
London and the Taj Mahal in Bombay were constructed. Moreover, there was also a
diverse concept of tourism as businesses try to create a competitive edge for
themselves. City and beach hotels helped
developed countries infrastructure and allow them to attract more tourist. In
the 1960s, new tourist resorts were also built around Mediterranean, Spain and
Greece. It was during the 1990s that technology started to make an impact on
the hospitality industry. With the implementation of computer systems,
reservation and check-in systems became more sophisticated and the method of
manually recording down information was phrased out. As the environment and
energy conservation becomes an important part of businesses, the technology is
brought in help. (http://ncba.ie/student_and_teacher_resources_files/The_Global_Hospitality_Industry.pdf)
5.
Current
Situation
A
recent survey done in 2013 by the Hospitality Technology magazine reveals
technology trends within the hospitality industry. The study found that mobile websites and
phone applications are a must have for companies in the hospitality industry. These
platforms allow customers to post their reviews for potential customers to read
and take reference from them. Moreover, this mobile technology allows customers
to make reservations, collect guests feedback and search for coupons.
Currently, restaurants are already investing in mobile websites and apps.
According to the study, 53 percent already have a mobile website and 29 percent
have a mobile app. 85 percent of restaurants expect to have a mobile website,
and 70 percent expect to have a mobile app by 2015. 76 percent of hotels have a
mobile website and 40 percent have a mobile app. By 2015, 91 percent of them
expect to have a mobile website, while 75 percent to have a mobile app.
(Whitehorne, 2013) (http://associationsnow.com/2013/09/technology-takeaways-from-the-hospitality-industry/)
The
introduction of technology has resulted in an increased competition in the
industry. Therefore, it is imperative that companies create a distinct edge for
themselves that allow consumers to identify them from the majority. This
section will look into the two main aspects of hospitality which is about (a)
hotels and (b) restaurants.
5.1 Hotels
Positive
Impacts
With the
introduction of cloud computing, certain IT functions can now be shifted
offsite and the need for technical staff is lowered. The hotels can also save
on large-scale expenditures. By investing in an expensive IT infrastructure,
hotels cannot make necessary changes to the system constantly and has to wait
for a long time before it has the capital funding to make such changes. (Mayock,
Jun 2013)This puts the company at a disadvantage as change is imminent in
today’s context. To keep up customer’s expectations, the company must be ready
to change and innovate current business practices. Hence, cloud solution solves
these problems as changes can be made through the system readily with little
cost.
Despite the
economic downturn in 2008, hotel operators understand the need to invest in state-of-the-art
technology as a way to differentiate itself and remain competitive in this
crowded and lucrative industry. Expectations of today’s guests are high as they
want to have a different experience, enjoy new services and conveniences. (http://www.hospitalitynet.org/news/4048071.html,
2010)
In a bid to
satisfy guests, companies use technology to ensure there is a greater variety
of choice. In addition, the overall hotel experience also increases.
There is a
greater variety of choice which technology provides. Technology has helped
bridge the gap between guests and the hotel. With the use of information and
communication technology being rampant these days, there is real customer engagement as people gather and share
information. The vast amount of information on the Internet allows the
consumers to make informed choices. Hence, reviews of past customers can act as
a reference for potential customers. Websites of the hotels would allow the
customers to have a look at the ambience of the place. Moreover, there is a
choice of doing online booking instead of having to go through travel agencies.
Online bookings are fast and efficient as with a click of the button, guests
are able to select the dates and view the available rooms for that period. (http://www.hotelschool.co.za/2013/06/technology-driving-innovation-in-the-hotel-industry/)
Computerised
systems allow guests to spend lesser time at the reception counter to check in.
This shortens the waiting time and there is higher efficiency. The use of self-service check in kiosks also
shortens the waiting time. This reduces the number of traditional check in
counters needed and also free up more service staff. This self-service
technology provides an alternative to repeated travellers who do not want to
spend time queuing to check in. (http://www.hotelnewsnow.com/Article/2652) (Mayock, 2010)
Technology
can help speed up services for guests. Guests may loan an ipad from the hotel
which has maps and suggestions of local restaurants and sightseeing for the
tourists. (Weed, 2013) Besides that, some hotels have launched a GPS-like
way-finding system to help guests easily locate the different facilities. Another
example would be the Mondrian Hotel in New York
City's Soho neighbourhood provides each of its 270 rooms with an iPad
specifically for guests to use as a means to order food, plan their travel and
coordinate transportation. (Vong, 2012)
The proliferations
of smart phones are so wide that by the end of 2013, there will be more
smartphones than human beings in the world. Therefore, hotels are capitalising
on this to connect with their guests. A new application called Fingi presents a
revolutionary new generation of mobile applications used to connect their
guests with their hotel services. Some hotels uses this technology to replace
the room key and allows free telephone calls and internet messaging guests and
the hotel both on-site and off –site. http://www.hotel-industry.co.uk/2013/04/revolutionary-in-room-tech/
Negative
Impacts
According to
a recent study by Forrester Research, Wi-Fi is
the top amenity that customers want. 90% of consumers wish hotels had Wi-Fi and
34% will not book a hotel stay without it. Hotels provide guests with
free Wi-Fi service for their guests to stay connected with their work or their
families. However, hackers can set up a fake
hotspot with a generic name like “Hotel WiFi.” Once the user connects to it with his
laptop or mobile device, he is connecting to the Internet through the hacker’s
computer. Everything the user does online can be captured – including user
names, passwords, and bank account and credit card account numbers. (Legnitto,
2013) (http://www.privatewifi.com/hotel-customers-want-wifi-but-most-ignore-the-risks/)
5.2 Restaurants
Positive
Impacts
Moblie
applications can be downloaded and recommendations can be made as to where good
food can be found. Moreover, reservations for seats at restaurants can also be
done through the application on the phone. This removes the problem of an
overload in the call service of the restaurants and eliminates the frustration
that patrons experience when they call to make a reservation but cannot get
through due to a busy phone line. Therefore, the significant convenience that the
mobile apps bring helps improve efficiency.
PDA phones
are used to take down orders and system would send them to the kitchen. This
saves time and the food can be prepared faster. An example would be Marche
where customers are issued cards when they enter. The price of food that the
customer eats gets credited into the card. At the end, the consumers then head
to cashier with the card to pay for their meal. Customers can enjoy their meal
and do not need to go through the hassle of having to pay multiple times at the
different stalls. The patrons experience greatly increases with the
implementation of such technology.
Negative
Impacts
Restaurants
that rely too much on technology may cause their patrons to lose the personal
touch and customers may not feel that they have good service. An interview with Jonathan
Segal, owner of The ONE Group, reveals
that perhaps in the next 2 generations people who are accustomed to technology
will prefer using electronic order system. However, he believes that there is a
need for human interaction. The idea of dining was to create social interaction
which may be lost if technology replaces waitresses. (http://www.leadersmag.com/issues/2012.2_apr/Hospitality/LEADERS-Jonathan-Segal-The-ONE-Group.html)
6. Future Considerations
6.1 How does the introduction of
technology affect countries economically and socially?
For countries
that face labour shortages like Singapore, the implementation of technology in
this industry is beneficial as there are economic benefits that can be reaped. Technology
helps as they take over the manual labour of the job freeing up more human
resource for service related work that needs people. Moreover, the use of
technology would ensure that there are few mistakes as compared to when a human
does it. Therefore, the efficiency level increases. Tourism contributed $22.3
billion to Singapore’s economy in the year 2011-2012. An estimated 13.2 international visitors
visited Singapore last year. Hence, to cope with the rising level of tourists,
the hospitality industry is setting up the necessary infrastructure to cope
with the future income.
Although the
implementation of such technology is not cheap but the developed countries have
the capital to do so.
For
developing countries, they are unable to fork out heavy capital to invest in
such state of the art technology therefore, they are at a disadvantage.
However, when overseas companies invest and install such technology, the lesser
manual labour needed hence, there will be a labour surplus. Some employees
would have to be retrenched. However, if one looks at it at a different
perspective then there also may be benefits to the introduction of technology. More
human resources would be available to cater to the growing sectors of the
developing countries.
Hotels and
restaurants have benefited economically from this as productivity level
increases and the need for manual labour decreases. Therefore, there is higher
revenue earned. However, the initial capital outlay to build the technology in
is very high. Since lesser labour is used, this poses a problem to developing
countries and under-developed countries. In such countries, the skill sets of
their labour are low and only few have higher knowledge. Therefore, the
introduction of technology in the hospitality industry in such countries would
result in people losing their jobs.
In the hospitality industry, new technologies have allowed many
labour-intensive, time-consuming and so-called 'menial' tasks in food
preparation to be contracted out. For example, new pre-cooked
food/vacuum-packaging technology has meant that agribusiness corporations have
taken over most of the food production and preparation process.
De-skilling and a decline in the quality of many kinds of jobs in the
hospitality industry have also resulted from those technologies which have
allowed greater labour flexibility. Workers no longer need to have specialised
skills, but must have more generalised qualifications that enable them to do multiple
tasks, and constantly move from one to the other.
The excessive
use of technology in hospitality may reduce social interactions between people.
Lack of personal touch may cause customers to feel alienated and the idea of
improving customer service may backfire.
6.2 Future of tourism
Technology
also helped hotels and restaurants to reduce their carbon footprint and be more
cost efficient. A 2012 report by The Travel Foundation and Forum for the Future
found that 75% of consumers want a more responsible holiday. (http://www.sustainabletourism.net/resources.html) Hence, there are an increasing
number of travellers that are looking for ways to reduce their carbon footprint
when travelling.
Due to greater awareness about sustainable
tourism, travellers are more concern about how their actions would impact the
environment. The use of energy saving bulbs would help the hotels and
restaurants save electricity. Investing in technologies aimed at decreasing
carbon footprint is hence beneficial for the hospitality industry. Despite
increasing a destination’s attractiveness to tourists and business travellers,
it also saves money too.
7.
Conclusion
The hospitality
industry has undergone lots of changes over the years but the speed at which
change is occurring now is the fastest due to the introduction of technology.
The rise of smartphones, social media invokes changes that the hospitality
industry has to adapt to. Overall, the hospitality industry has benefited
greatly from the use of technology despite some negative impacts it brings. The
main benefits would be improved efficiency and creating a better customer
experience.
Currently,
there are some problems for example the widening of the income gaps between the
developed and the developing countries when technology is used. The workers
that lose their jobs to technology should be given opportunities to re-skill
and learn new knowledge so that they are able to take a higher level job.
Moreover, there is the problem of social alienation if there are no waitresses
in the restaurant or when there is no reception desks in a hotel. In the
future, companies should think about how technology can be used without
removing the personal touch that a receptionist brings.
Bibliography:
