Technology-driven innovation boom hits hospitality industry at HITEC

IHG CTO Blanchard advocates empowering your teams to deliver, which creates value and creates truly loyal customers.

CHARLOTTE, N.C. With temperatures soaring at the HITEC conference in North Carolina, it was perhaps only natural to think about ice cream.

But Dan Blanchard, chief technology officer at IHG Hotels & Resorts, made a larger point, sharing a story from early in his career when colleagues complained that by the time the idea for Rocky Road ice cream was launched, the product had become so bland that you'd be lucky to find a speck of vanilla bean in it.

Blanchard recalls that the experience stifled his creativity, but whetted his desire to pursue further innovation if the opportunity arose and the technology was there to help him achieve it.

You need people with ideas. You need a culture of innovation.

Dan Blanchard

The time has come. Blanchard's presentation, while necessarily limited to the lessons learned by one company, captured the conference's unspoken theme: While travel companies marveled at the burgeoning potential of artificial intelligence, a walk through the Charlotte Convention Center's massive exhibit halls offered countless examples of how companies are applying those advancements.

“Today's technology allows you to package things in different ways with a lot more flexibility and functionality that wasn't possible before,” says Klaus Kohlmeier, chief evangelist at IDeaS, a provider of hospitality revenue-management software. Everyone is moving away from these monolithic software systems to ones that are much more agile and flexible.

For IDeaS, this shift has helped open up opportunities for smaller hotels to take advantage of revenue-boosting strategies previously only available to larger establishments, while for cloud-based property management system provider Mews, technology is literally opening the door to a more human approach to hospitality.

A recipe for travel innovation

Blanchard's presentation, “Leveraging Cloud, Digital, and Innovative Technology to Increase Bookings and Loyalty for the Next Generation of Travelers,” shared his secrets for achieving the success he felt eluded earlier in his career: Start with a foundation built on cloud-based infrastructure. Mix in a product funding model that lets you fail fast and cheap. And throw a culture of innovation into the mix.

Blanchard calls IHG's latest cloud-based environment Gen 2, because the company has long operated without relying on local servers. With 18 hosting locations around the world, the company can now provide a fully automated infrastructure for its critical guest-facing systems.

The result is faster speed to market.

Most of the applications they now deploy don't take long to set up, he said. Instead of the rest of the company waiting for technology to release new products, Blanchard's team now waits for approval from finance and governance, which he said was beyond their decision-making capabilities.

But the flexibility that speed enables is meaningless without an environment that reduces the fear of failure. Blanchard spoke specifically to finance team members in the audience about developing a product funding model that is less focused on short-term outcomes.

“I don't know what they're going to do. I know it's scary,” he said with a laugh. “I don't know what they're going to do beyond next quarter, but I do know that we need that capability. It gives us a lot of flexibility, and that's going to be really important as we talk about meeting the needs of the next generation.”

We don't know what they'll do beyond next quarter, but we know that we need those capabilities. It gives us a lot of flexibility, which is very important as we talk about meeting the needs of the next generation.

Dan Blanchard

This approach removes barriers to innovation, either because they prevent you from working quickly or because they prevent you from working in a way that might not be successful.

Blanchard said his team doesn't take on projects because members fear they will be fired or laid off if they don't complete them. Instead, the team does research.

Even if it is [about] Learning things you've never done before creates a culture of willingness to try new things, he said, adding: “You need people with ideas. You need a culture of innovation.”

As he described the company's efforts to reduce the number of clicks required to book a room on mobile from 18 to three, Blanchard gave examples of innovations that could happen along the way, including wish lists that loyalty members could create on the site. The product didn't reduce clicks or immediately increase revenue, but the team developed it anyway.

There was no business case. They just made it. It was so cheap, he said. We could see this being a big thing. People love to create wish lists and places they want to go, and it's become so ingrained. People create wish lists and then book them later.

We didn't create a program that said, “Let's create a wish list.” That was someone's idea. Now it's become a huge hit with our customers.

Using technology to make hospitality more human

One of Waltl's motivations for founding Muse 12 years ago was the idea that hotels should contribute more to the guest's journey than just a place to sleep, but a big stumbling block for him was always that first impressions were cold.

Checking in is essentially a process. [credit] “It's a card. Give us your ID and we'll give you a key card to get into your room,” he said. “One of the things we've been very keen on is we want to change the experience of coming to the hotel from checking in to welcoming you, because that's what's human and natural.”

That's why he's excited that hotels can now offer digital keys, allowing guests to enter their rooms directly upon arrival without going through the front desk. Walters is more excited about technology than the opportunity to replace the exchange of passports and credit cards with heartfelt conversations, at the guest's convenience, about the area's best restaurants, activities and other services the hotel offers to its guests.

“It's about elevating hospitality to a trusted resource. And right now I feel like that's what's missing in hospitality,” he said. “These very standard processes don't build trust. It's five precious minutes where I have to actually tell them how we're going to do everything in our power to ensure the best experience.”

Democratizing Revenue Management

Evidence of technology-driven change in hotel revenue management was apparent throughout the Charlotte hotel the IDeaS team stayed at. When the hotel was selling day passes to non-guests for pool deck access, VP of Global Marketing Mike Chuma couldn't help but investigate.

My message to you is to build that foundation and create that environment. [thats] Fully automated, fully cloud-based, and agile. Put yourself in a position where you have some flexibility in your funding model. Create an innovation environment where it's OK to explore, it's OK to try things through your innovation programs.

Dan Blanchard

They said they're watching booking patterns — because it's a business hotel, Saturdays and Sundays are usually off-peak — so they're opening up the pool deck so Charlotte-area residents can take a dip in the pool.

A data-driven approach is something IDeaS has preached for decades, and it's made even easier with AI-powered analytics. Advances in technology are making more sophisticated revenue management software accessible to smaller venues.

A few years ago, most of IDeaS's business came from larger hotels with more complex needs and bigger budgets. Today, more than a third of the 30,000 hotels it serves use a product released three years ago that targets smaller hotels with simpler needs.

“We call it the democratization of revenue management. We're making the same AI that was previously only available to the largest hotels available to the smaller budget hotels,” Kohlmeyer says. “Now we can make this disaggregation happen because of the capabilities of the technology.”

“You want something on your phone with the same back-end capabilities as our flagship product? We can give you an app to look up prices for 100 motels,” he said. The app is built for the general manager or owner who's on the go and has 100 other things to do, and it does everything it's supposed to do in the background.

Bringing travel's big ideas to life

Blanchard ended his presentation with metrics that help prove the value of innovation. He noted that half of IHG's digital bookings are now via mobile. Downloads, revenue and loyalty sign-ups all point in the right direction to meet the expectations of the modern traveler.

“My message to you is to build that foundation,” he said. “Build that environment.” [thats] Fully automated, fully cloud-based, and agile. Put yourself in a position where you have some flexibility in your funding model. Create an innovation environment where it's OK to explore, it's OK to try things through your innovation programs.

And then let your team do the work. Let them make it happen. Because they're going to find ways that work. They're going to try different things, and some of them are going to not work, but the majority of them are going to work. And that's where you create value, that's where you get really sticky customers.

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