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10/12/2021

Hotels Committed to Digital Transformation Will Succeed

It takes buy-in from management, agility and the power of the cloud, says David Peller of AWS.
Michal Christine Escobar
Senior Editor (Hotels)
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When it comes to digital transformation, hospitality is one industry that has been growing by leaps and bounds due to the effects of the COVID-19 pandemic. For those hotel brands that were able to react and adapt quickly, the pandemic has actually allowed them realize more efficiencies within their operations while also implementing a better guest experience. David Peller, Managing Director, Travel & Hospitality, Amazon Web Services, Inc. (AWS) believes that these companies share a few key common traits: During the pandemic they quickly shifted their business strategies, they quickly shifted their management styles, and they’re taking full advantage of cloud computing. To learn more about this, check out our interview with Peller in part one of our two-part series.

How has COVID-19 altered hospitality companies’ business strategies?

We're in an incredibly extended period of business disruption, and while disruption is not new to travel and hospitality companies we certainly recognize that the breadth, the scale, and the duration brought about by the pandemic is leading to a sustained shift in the way travel and hospitality companies plan, manage and operate their businesses. I think, as you deal with that change and you deal with that uncertainty, many companies are reconsidering their strategy and thinking about how they engage their customers and their broader stakeholders. So maybe in the hotel business that could be franchisees, finances, hotel operators, marketing organizations, distribution partners, whatever it may be, how, and when you look at that, I think technology basically is at the heart of business strategy today.

In fact, there probably isn't a business strategy without a technology strategy. Case in point: We recently released the findings of a survey that interviewed a thousand leaders from across the travel and hospitality industry around the world from every different travel segment. What we found was that 91 percent of survey respondents said that digital transformation was a very or somewhat important priority for their business. But what's compelling is that number is up from 78 percent from last year.

How has COVID-19 altered the management style of hotel leaders?

Also, perhaps one of the greatest impacts of the past 18 or so months, is not just this digital transformation but it's the level of executive commitment to digital transformation and the pace of innovation that follows from that level of executive attention. And so, what this period's really shown us more than anything else is just how essential re-invention is for travel and hospitality companies. Last year, Andy Jassy, Amazon's new CEO, gave a speech at AWS re:Invent where he described the eight keys to reinvention. The two that make the most sense here are: leadership's will to invent and reinvent and speed.

When you think now about travel and hospitality companies and where they're at in terms of embracing digital transformation throughout this period, I think it's been both about survival, but it's also been about reinvention. And I think a lot of that has come because leadership has been more engaged than ever in the work of the digital and related technology teams. But also, customer teams or commercial team sales, marketing, distribution, whatever it is, have been engaged in that way and aware of the need to move quickly because of the uncertain operating environment that we're in. And I'm absolutely convinced that the technologies that are born at this time are going to stick around and improve the way we experience the world.

How has COVID-19 changed travel in general?

Consumers’ needs have always evolved quickly, but the pandemic certainly showed us just how fast passenger and guests expectations can change. And frankly, their travel patterns and requirements have changed as well. For instance, before COVID-19 airlines always spoke about safety but now they’re having to prioritize cleanness because customers won’t make a reservation with an airline now unless they’re convinced it will be thoroughly cleaned and sanitized for their use. Before COVID-19, cleanness was never in the top five customer necessities but now it’s No. 1 priority. Additionally, COVID-19 has created a demand for flexibility when it comes to reservation cancellations. This ability used to be a premium service, but it’s now quickly becoming standard. And finally, self-service and automation as a way to improve the customer experience. Brands are trying to find new ways to stimulate and engage with customers and those are the ones that are going to stand out from the crowd.

Why is cloud adoption becoming so prevalent within the hospitality industry?

There are four core reasons why the hospitality industry is adopting cloud. First, agility because the cloud enables customers to move fast. Second, cost savings because it allows customers to trade the traditional capital expenses that used to go into buying the servers, the networking infrastructure, and running a physical data center for a variable expense of just paying for what you consume through the cloud. Third, elasticity which allows hoteliers to dial back on expenses when revenue goes down and then when business rebounds bring capacity back online and only pay for what they are consuming at any given time. Fourth, the cloud allows companies to really “go global” in moments.

How are some hotels leveraging AWS cloud solutions to solve problems caused by COVID and to innovate in other important ways?

Deploying contactless technologies is one good example. We've seen a number of customers fully embrace it. IHG Hotels and Resorts, for example, launched the IHG Studio Service that enables guests to entirely manage the in-room experience through their own mobile device, which is phenomenal. Also, Wyndham Hotels and Resorts launched contactless technologies last year as part of their whole cloud migration program to AWS. Those technologies include automating check-in and leveraging AWS partners to deliver customized offers during hotel stays, such as recommendations on local attractions, restaurants, and entertainment. Wyndham was also able to launch a housekeeping application in just a few weeks’ time to provide hotels with an updated checklist of protocols for cleaning staff. Meanwhile, G6 Hospitality is another brand that has been using AWS to innovate during the pandemic. Robert Palleschi, CEO, G6 Hospitality LLC, said that their brand was able to benefit from the agility, scalability, and flexibility of cloud computing so as to be able to really innovate during the pandemic.

[You can here what Robert Palleschi has to say in this video testimonial hosted by Amazon.]

Stay tuned for part two to be released on Thursday.