the impact of technological innovations on hospitality

THE IMPACT OF TECHNOLOGICAL INNOVATIONS ON HOSPITALITY SERVICE Assoc. Prof. Dr. Velina KAZANDZHIEVA, Dr. Galina ILIEVA, Ph.D. student Hristina FILIPOVA University of Economics – Varna [email protected]; [email protected]; [email protected]

Abstract: Еvеry industry is undеrgоing а tеchnоlоgy-drivеn trаnsfоrmаtiоn, аnd thе hоspitаlity industry is nо diffеrеnt. Оnlinе bооking systеms, custоmеr rеlаtiоnship mаnаgеmеnt, sоciаl mеdiа аnd smаrtphоnеs аrе trаnsfоrming thе hоspitаlity industry аnd еnаbling а nеw lеvеl of custоmеr sеrvicе. Аdvаncеs in smаrt аppliаncеs will hаvе а grеаtеr influеncе in thе futurе. Lighting, tеmpеrаturе, blinds, аlаrms, TV, rаdiо аnd rооm sеrvicе will аll bе cоntrоllеd frоm а singlе tаblеt dеvicе, оr frоm а singlе аpp thаt guеsts cаn dоwnlоаd аnd lоgin tо frоm thеir оwn dеvicе. The efficiency and purposefulness of implementing each new technology depends on the decision of end users (employees and clients) to accept and use it. Dеspitе thе mаny chаngеs thаt аrе bеing brоught оn by thеsе tеchnоlоgicаl innоvаtiоns, thеy аrе thеrе tо еnhаncе, nоt tо rеplаcе, thе cоrе оffеrings оf а hоspitаlity businеss. The conceptual framework for studying the impact of technological innovations in hospitality service is defined on the ground of the model “Guest cycle”. Tоp quаlity custоmеr sеrvicе аrе thе fundаmеntаl pillаrs оf thе industry, but thе tеchnоlоgiеs cаn mаkе it еаsiеr tо cоnsistеntly dеlivеr а mеmоrаblе еxpеriеncе tо guеsts. Key words: Technologies, innovations, hospitality, customer service.

Introduction Technological innovations are becoming more and more widely used in the hotel industry. As a result, hotel companies enhance their productivity, increase the efficiency of the services they provide and win loyal customers. The service process is transformed in response to changes in consumer behavior, their new requirements and needs of modern technology before, during and after the hotel stay. Adaptation of technological innovation to the specifics of hotel services is a source of opportunities and challenges both for hotel managers and employees as well as for customers themselves. The purpose of this publication is: based on assessement of the role and importance of modern technologies in the hotel industry to define a conceptual framework for evaluation the impact of technological innovation on hotel services. In order to accomplish the defined goal, the following research tasks are carried out: presentation of the current and the most frequently used technologies in the hotel industry; defining the impact of their application as well as the effects on the behavior of service staff and customers. The field of tourism is constantly expanding and diversifying and it has become one the most sustainable growing sectors of the global economy (Dabeva et al., 2016). According to UNWTO (tourism highlights, 2016) international tourism represent 10% of world GDP. The number of international tourist arrivals has reached 1186 million for 2015. Many factors contribute for these results, one of them being the development and implementation of new technologies. They can be found in almost every aspect of tourism, including hospitality services. Their role for the development of the firms operating in this field is unarguable. On the one hand the use of technologies, increases the tourists satisfaction, by providing faster and more personalized service, on the other technologies provide customer data much needed by the owners and contributes to gain more profits and recognition for the firm.

Data and Methods The set of research methods used to achieve the purpose of this study and implementation of set tasks include: organizing and systemizing information and data from specialized scientific publications, consumer surveys and research in hotel companies; evaluation and interpretation of primary and secondary publications on the topic. The online era has played significant role in the change of tourists consumer behavior. A “new type” of traveler is emerging. He is interested at the same time in global and regional products in order to satisfy different needs such as personal socialization, thrilling emotional experiences, entertainment, specific hobbies and interests. (Fyall, 2005). In order to achieve his goal he is using more and more the technical tools. They help him to travel and spend his vacations more efficiently. Millennials (or generation Y) are considered as the first truly global consumer group. They are born between 1980 and 2000. Millennials represent over 25% of the global population, and are becoming increasingly wealthy as they start to move up the career ladder. They are very tech-savvy (Euromonitor, 2015). As 4G becomes more widely available, and essentially free for travelers within Europe, the way the tourists use their phones is likely to change dramatically as they follow live maps, use apps as travel guides, and find and book hotels and restaurants with them (Munford, 2016). The “modern” tourist has the possibility to learn about his destination far more in advance. He can obtain detailed information about every aspect of his stay. Afterwards he can book his accommodation as well as his way of travel. With advanced technologies tourists can arrive at any time and enter their hotel rooms. During their stay they can buy tickets, on the spot, for different events, museums, theme parks and others. After their stay they can immediately rate the quality of the services they have received and leave a narrative for their experience with the help of social medias. In conclusion we can say that tourists use widely the new technologies in order to chose the perfect place and services, responding to their specific needs. Technologies play important part not only for the customers, but for the owners of hotels as well. They tend to use them for two main reasons. First trough technologies the managers are obtaining detailed data concerning their consumer behavior and second, they provide a better and more personalized accommodation and services for their clients. Identifying patterns of current and potential customers and servicing their needs is one way that organizations are attempting to use information as a leverage tool against competitors (Piccoli, 2008). The volume of data available to companies and its accessibility will grow rapidly with advances in smart technology on smartphones, wearables and the Internet of Things. Combined with artificial intelligence, travel brands will be able to deliver greater personalization to consumers, at greater speed (Euromonitor, 2016). Hotel managers can obtain customer data trough the main internet reservation platforms, social media sites, personal sites. They can also use technologies such as tablets, smartphones and other devices in order to obtain information from the tourists buy asking them to fill in questionnaires on the spot. These different means of gathering quantitative and qualitative data can play a huge role in the development of the company and its services and the creation of more loyal and satisfied customers. According to Euromonitor (2016) firms operating in this sector should focus on collecting data, analyzing data, using data for personalization and cooperating with tech players. Information regarding customers will continue to have a big impact on the future of the industry (Koutroumanis, 2011). Hotel companies are not only focusing on improving their online availability and marketing strategies to respond to changing traveler demands. An increasing number of hotels are implementing technological innovations and mobile applications, which have the potential to enhance the guest experience when staying in the hotel (Euromonitor, 2015).These tools can be introduced in various forms and places in the hotel. They can be seen and used by the guest in

every state of their stay. Technologies in tourism can include a large variety of personalized services. In recent years private rentals like Airbnb and HomeAway are getting more and more popular alternatives to classical hotels, especially preferred by the millennials. Therefore they pose a threat for the hotel firms. A good way to deal with this problem and attract more tourists is to offer the latest technologies in the accommodation areas. Implementing these tools is still difficult and sometimes expensive task, therefore big hotel chains are more likely to use them in their hotel services. The implementation of new innovations and technologies started with keyless entry in 2014 and has progressed to wearables (apps for smart watches), robots and virtual reality (Figure 1). Many hoteliers rely on internet and mobile technologies, but according to Euromonitor (2015) the newest trend is room alterations trough different means like: Custom coffee machines which can make coffee at a specific time, Digital mirrors, Smart floor tiles which can change colors, remote control for services such as blinds, alarm clocks, tv and. The role that technologies play in tourism services is constantly changing and evolving. Customers are getting more and more used to prepare and spend their vacations with the help of new technologies. Hotel managers are also implementing them in various creative ways in order to attract more tourists, gather data and improve their services. Technologies, if used right, can make travel even more comfortable and unique.

Robots

Virtual Reality

Room Alterations

Wearable apps Keyless Entry

Fig. 1. Evolution of new technologies in hotels since 2014 (adapted from Euromonitor, 2015)

A recent report by Oracle Hospitality surveyed almost 3,000 US and European travelers in order to better understand the importance of technology for a hotel guest experience (Carter, 2017). Results show that 64% of U.S. hotel guests think that it is “very or extremely important” for hotels to continue investing in technology to enhance the guest experience”. Innovation will enable hotel operators to standout from the competition, fulfill every guest’s expectation and attract new custom. A positive experience will not only impact a guest’s stay but it will also influence their behavior and online reviews after their trip. Hoteliers believed that through power of mobile they would be able to create a conversation between the hotel property and the guest, which can all be used to build a personal relationship and increase guest loyalty. A lot of personalization is not just about offering a service that someone wants, but offering it in the way they want to receive it – and when they want to receive it. This may include room attendants having access to necessary guest preferences so that they can personalize the in-room touches more effectively for each guest, or management being

alerted automatically when a VIP or very loyal guest checks-in so they can greet him personally. The following examples show the impact of the technology on the guest experience and company efficiencies:  Technology to improve efficiencies. Many hotel operators are committed to environmental sustainability programs and reducing energy. Starwood’s environmental goals were launched in 2009 and pledge to cut energy use by 30% and water use by 20% by 2020 globally. Starwood Hotels & Resorts Worldwide uses “daylight harvesting” to adjust indoor lighting, based on the amount of natural light coming in from outside (Soule, A., 2015). Thanks to motion sensor technology, lighting can be turned off automatically or temperature reduced when a room is unoccupied.  Online bookings. The emergence of more and more travel sites like Expedia, Kayak, Booking and of course Airbnb are making it even easier for consumers to find the very best deals, the best adventures and the greatest experiences. These sites are great news for travelers but presents tiff competition for hotel operators, who are turning to technology to innovate and differentiate themselves.  Automating check-in and check-out. In an effort to improve efficiencies, hotels are looking to automate the check-in (and check-out) process. Mobile hotel check-in and check-outs may well become the norm soon, enabling staff to focus more on guest experiences. Andaz West Hollywood has combined its front desk staff, bellmen and concierge functions into “hosts,” who greet guests as they enter the lobby and sit with them on comfortable couches to check in using an iPad with a credit card reader. The hotel has places additional kiosks at elevator banks so guests who have problems with a key card during their stay to be able to get a replacement without walking back to the front desk. Hyatt, which already offers both a kiosk option and a traditional front desk to check in at most of its Grand Hyatt, Hyatt Regency and Hyatt brand hotels in major cities, is testing a different method with some of its Hyatt Gold Passport loyalty program members. The guest receives a card with a chip in it and checks in online, and the staff is able to code that card to act as the guest’s room key. The Hilton hotel is leading the charge for keyless entry. Having already introduced the Hilton Digital Key app back in 2015, Hilton now aims to install keyless entry service in 2,500 hotels by the end of 2017. However, according to Oracle report “nearly 60% guests still prefer talking in person with hotel staff at the front desk or concierge office” (Carter, 2017). That is why the hotels will need to work hard to strike the right balance between technology and personal interaction.  Wearable tech. With the rise of IoT (internet of things), guests have greater access to technology. In-room automation is an easy way to make the guest stay more comfortable when the need for human interaction isn’t expected or required. Tasks such as turning off the lights or alerting the staff to hold off on cleaning the room are areas where guests want simple and immediate results without having to interact with another human. IoT solutions can also help hotels reduce their overall energy consumption by automating energy usage states for unoccupied guest rooms. These solutions are now being powered by Smart TV platforms where the integration costs and complexity can be significantly reduced.  Smart Watches. Another type of wearable technology recently popularized by the announcement of the Apple Watch is smart watches. One of the best-known examples of a hotel using smart watch technology is Starwood Hotels & Resorts Worldwide. In 2017, Starwood Preferred Guests announced the release of its Apple Watch app, which, among other things, lets guests forgot about room keys. Of course, there are other ways hotels can utilize smart watches. Hotels around the world are already making devices like iPads available to their guests during their stay. Take for example again Starwood Hotels & Resorts. Over the next two years the

company has stated that they will invest $100 million to upgrade its amenities, including making iPad room-service menus available to its guests.  Smart TV. Once inside the hotel bedroom, guests are already able to access in-destination activity choices thanks to hotel Smart TV. Hotels can collaborate with local businesses to provide a guide to the best dining locations, shows, and other popular places for the guests to explore outside of the property. Hoteliers should look also to utilize the in-room TV screen as an advertising platform to promote all the amenities and services that they can offer – from in-room dining, spa services, restaurant reservations, etc. Samsung HMS technology even takes this a step further by offering in-room control of HVAC, lighting and other amenities, which provides a great guest experience as well as better, cost saving energy management for the hotel (Tanenbaum, 2017). In addition, to enhance the personalized guest experience, the Smart TV can be used to access reservation-management features such as quick checkout. Using the TV, guests can check out of their hotel room and review any charges on the screen, saving time and allowing for maximum interactivity not possible with the usual printed sheet under the door. For international travelers, hotels can completely customize their approach by presenting content in the guests’ native language. Hotels can track and monitor how their guests utilize these services to make each returning stay even better. Hoteliers should recognize technology as a vital tool in increasing guest satisfaction and brand loyalty.  The robotics trend in hotels. On the Americas Lodging Investment Summit, were made predictions for the growth of hotel robots to deliver guest amenities and clean rooms (Carter, 2017). If predictions become reality, the guest might just find Maidbots cleaning his/her hotel room in the next five years. Investment into these types of technological innovations are fuelled by decreasing technological costs, which at the same time provides hotels with the opportunity to reduce operating costs. Hospitality Technology’s 2017 Lodging Technology Study made a survey between hotel operators to reveal according their opinion which emerging technologies have potential for real application in hotels (HT's Research Brief, 2017). HT divided the hotel operators to those that identified themselves as innovators and to normal ones. The results show that both innovators and the rest hotel respondents are consentient about the top three emerging technologies. The differentiation is in the importance innovators place on them. Interactive displays take the next two spots with interactive walls and interactive bathroom mirrors both getting 54% of innovators’ vote respectively. Innovators differ from their less innovative counterparts in the importance they place on robotics. About one out of three (31%) see possibilities in robotics compared to only 23% of all respondents. Augmented reality and virtual reality came in lower on the list for innovators with 23% with artificial intelligence (AI)/Voice-enabled devices trailing that with 15%. With more hotels already having success with such technologies as AR/VR and Voice-enabled devices, they are quickly becoming less “emerging” and more established. Many innovative companies have already invested in such strategies, which explains why less innovative companies are still focusing here – in an attempt to “catch up.” Examining what hotels identify as top challenges paints a better picture of an organization’s objectives and mission (HT Research Brief, 2017). For innovators, delivering technologies faster is the greatest challenge, followed by keeping pace with guest expectations. Having identified that the experience is what will set hotel companies apart, innovators are more likely to feel pressure to keep pace with the digital guests’ needs, desires and expectations.

Research Findings The effectiveness and expediency of implementing of any new technology, including hospitality depends on the decision of end users (employees and customers) about its acceptance and use. This decision is a subject of theoretical researchs for the success or rejection of a certain technology. Among the studies highlighted by a high degree of practical applicability are: Innovation Diffusion Theory (Rogers, 1995), Theory of Planned Behavior (Fishbein and Ajzen, 1975), The Unified Theory of Acceptance and Use of Technology (Venkatesh et al. , 2003; 2012) and the Technology Acceptance Model (Davis, 1989). The most commonly used Technology acceptance model (TAM) is based on Theory of Reasoned Action. According to it, each individual has specific intentions and his actions are guided by his personal attitudes and subjective norms regarding to a particular behavior. Individual expectations, beliefs and motivations, which interact with and have influence on the behaviorare also added. The essence of TAM is that the choice of consumers to use a particular technology is exposed to the influence of various factors (Davis et al., 1989). Their impacts determine how and when technologiesare applied to customer service. TAM is the first to identify, that the acceptance and use of computer technology by users with a wide application in tourism and hospitality, is subject to the influence of psychological factors (Varol and Tarcan, 2009). According to the model perceived usefulness and perceived ease-of-use of new technology are essential and determine the attitude of staff towards it, the intentions and options for its use in providing basic and additional services in the hotel industry. In 2000, the original model was further developed (TAM 2) by adding the perceived technological features that directly affect the individual intention to use innovations (Venkatesh and Davis, 2000). Social influences as a subjective norm accounting organizational innovativeness have also been added. The latter is defined by willingness to perceive new ideas, including technological ones as a direction from company culture, and consequently a basis for successful innovation. The innovativeness based on the positive attitude of the individual towards the usage of technology, the search for new ideas and the ability to deal with tasks in precarious situations exerts a particularly strong impact on perceived ease-of-use. The development of technologies and the expansion of e-commerce lead to a new enrichment of the model (TAM 3), by adding the effects of trust and perceived risk from the usage of new technologies (Venkatesh and Bala, 2008). The conceptual framework for studying the impact of technological innovation on hotel services is determined on the basis of the Guest Cycle model (Figure 2). It is an integral set of relationships and interactions between staff and guests during their stay at the hotel. It covers four main stages: pre arrival; arrival and accommodation; occupancy; departure. During each of the stages, specific technological operations and procedures are implemented, forming the technological process of service in connection with the provision of basic and additional services (Lukanova, 2017, p. 38). The complex influences of technological innovations are determined by their diversity by the implementation of the hotel organization, the specific risks and opportunities of their use by customers and service staff. Discussion To improve the hotel service and customer satisfaction, specialized information and communication systems are used. They help the efficiency of technological operations to be increased. Expert systems remind and inform responsible employees and managers about assigned tasks and monitor their implementation. Through such systems are easier to manage, to

deal with documents and prepare hotel reports. The productivity is increased and problem areas are detected and analyzed. The application of information systems in hotels stimulates visits from regular customers, facilitates management decisions, builds and maintains a strategic competitive advantage (Koutroumanis, 2011). Technological innovations, whose software products are designed to improve service in hotels, are particularly effective. The technologies are used to create and maintain a guest history data. Expert systems assess the needs and wishes of customers and generate data for: inquiries; types and numbers of rooms; period and time of stay; special requirements; service staff, etc. By storing such information in a guest's personal file, the expert system may foresee queries, generate a significant share of recurring visits, and increase the recommendations of previous customers. Specialized systems are adapted and used to improve and accelerate the concierge service at the hotel. Such systems provide information 24 hours / 7 days. TECHNOLOGICAL INNOVATIONS IN HOSPITALITY INDUSTRY – TYPES THREATS & OPPORTUNITIES

i m p a c t s

CLIENTS Attitudes and expectations Experiences Attitude and behavior Satisfaction Quality of service Loyalty

ARRIVAL

PREARRIVAL

technological operations

„GUEST CYCLE” IN HOTEL SERVICE

OCCUPANCY

DEPARTURE

STAFF Perceived usefulness Perceived ease-of-use Personal innovativeness Experience and qualification Attitude and behavior Effectiveness and efficiency

i m p a c t s

HOTEL COMPANY Оrganisational innovativeness Company policy Economic outcomes Training Marketing strategies

Fig. 2. Conceptual framework of the impact of technological innovations in hospitality service

The accumulated data in hotel information systems have an impact on marketing strategies and support research and analysis, including targeted towards new customers, adjusting loyalty programs, exploring sales and current trends. The capabilities of these systems to collect, process, and gain access to significant information increase the competitive advantage, improve service, monitor employee performance, and the development of customer satisfaction. The diverse data retrieved and processed, thanks to the technology, help identify the marketing strategies in the hotel industry, which include: create direct-mail campaigns; plan seasonal promotions; plan the timing and placement of ad campaigns; create personalized advertisements; define which market segments are growing most rapidly; determine the number of rooms to be reserved for wholesale customers and business travelers (Magnini et al., 2003).

With the pace of today's technological change, we tend to think of our age as the most innovative ever (Polimenov et al., 2015, p. 641). Despite the undeniable benefits of technological innovation, human factor is key to customers and indispensable in the hotel service process. According to the Oracle Hospitality report, room cleanliness is still very important for overall guest satisfaction. Technology can help operators in this area if they are willing to invest. 35% of guests said they would like the ability to schedule room cleaning, and 26% said they would like to receive a smartphone notification to show if their room was being cleaned” (Yasuda, 2017). It seems many travelers feel that technology is very effective for serving guests. In Japan, robots in hotels are not just a novelty but a reality. Henn na Hotel opened in 2015 and is the world’s first hotel staffed by robots. The top initiatives, which guests would like to see in hotels according to the Oracle Hospitality report are:  capability to select specific room locations (45%);  means to share information about in-destination activities (41%);  the check-in/check-out process (39%);  ways to make service requests (36%). The attitudes of respondents are positive for the use of mobile applications to interact with hotel staff about: information and recommendations for visiting nearby places and attractions (53%); providing additional room amenities (47%); reservations for dining in and out of the hotel (44%). During the stay, customers have a need for technology to be available in their room. The share of WiFi users is high (82%), but 33% are dissatisfied with the service, and 66% want easier and faster connection. Respondents are interested in technological devices to control the light and temperature in the room via a tablet (32%), a smartphone (27%), or a voice control system (25%). Nearly 3 out of 4 respondents use in-room devices for entertainment, and 28% confirm that technological innovations contribute significantly to the quality of service and the overall experience during the stay. About one-quarter of respondents have a positive attitude towards the ability to view videos directly on their mobile devices. In order to offer personalized service it is necessary to know the profile and the behavior of the customer. But the individualization of hotel service, with the help of mobile technologies, can be implemented even without the availability of much customer data. Business customer require more technology. For their service, hoteliers should direct the investment in technological innovations that allow: online check-in and check-out; access to tourist information about local sightseeing, attractions and events; to unlock the room with a smartphone. Such investments are especially necessary for business hotels, since business customers appreciate the use of technological innovations more than leisure and holiday visitors. Conclusions The strategic goals for hotel operators technology investments in 2017 have two clear priorities. More than half of operators (52%) are focusing on improving digital customer engagement. Their second priority is a continued focus on payment and data security (40%, Freed, 2017). The main purposes of technological innovation in hotel services are to facilitate the work of the staff and the stay of the guests, to optimize costs, to impress customers with unique experiences and emotions, to create a unique atmosphere. The application of modern technology enhances the hotel service if:  provides more freedom and opportunity for customer to control the technology connecting with his stay as: capability to select specific room, individual check-in and check-out via mobile application;

 adds functions for check-in and access to the room via non-contact communication technologies;  directs individual offers and proposals to the guests, provides additional facilities and amenities;  builds and reaffirms the advisory role and functions of the employees providing information about the destination, the objects and the activities in it;  creates and maintains relationships with customers through personal advice and recommendations to diversify the stay at the hotel and the destination;  helps and improves the work of employees, along with increasing service quality and enriching customer experience;  increases the efficiency of hotel services and others. The relationship between the hospitality industry and technology should be balanced and harmonious. Technology adds value, creates amenities, personalizes the stay, but overtaking them can destroy the human relationships that guests are looking for and appreciating. Increasing customer satisfaction with new added value, convenience and comfort by investing in technological innovation should be carefully thought out and analyzed. Its realization should stimulate consumer loyalty and the competitiveness of hotel companies.

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