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No vacancy: The disruption (and solution) facing the hotel industry

Key takeaways

  • Only 27% of CEOs in the hospitality and leisure space are very optimistic about future growth.
  • With hotel rooms commoditised via online options that preference price, hotels are struggling to retain their customer niche.
  • Technology, humanity and an emphasis on experience will provide the loyalty hotels need, if they’re done well.

Hotels are finding it harder to connect with customers. 

Once, not that long ago, the quality of the hotel one chose — its amenities, breakfast buffet, pool or distance from the town centre — was a deciding factor not just on where to sleep but to the success of a vacation itself. In a disrupted world, however, where third-party sites such as, and play an increasingly large part in booking a hotel stay, price (backed up by reasonable reviews) has become the differentiating factor.

To the dismay of the industry, hotel rooms have been commoditised; a bed is a bed, regardless of its housing. 

These are the findings from this year’s PwC Global CEO Survey, and they are affecting the confidence of hospitality and leisure CEOs in their ability to grow. Compared to the confidence of CEOs in all industries surveyed, those in hospitality remain pessimistic, with just 27 percent saying they are ‘very confident’ about their revenue growth in the next 12 months. 

But the obstacles of revenue and brand-loss to third-party booking services can be overcome by providing distinctive destinations, forging a bond with travellers to a brand that will overcome the desire for the lowest price.

May I take your bag?

Most people still want to stay in hotels, according to PwC’s 2019 Global Consumer Insights Survey, but the marketing that hospitality once relied on is not enticing compared with the ease of using a third-party aggregator. In a digital world, consumers want modern touches that go beyond the bellhop. 

Instead of an extra toothbrush or hair dryer delivered to their room, some hotels are offering guests exercise equipment in their room for a private workout. Mini-bars customised to personal snack preferences, automated hotels where check-in, lights and room service are operated by voice assistants and facial recognition, elevator cocktail waiters and choose-your-own plant decor are just some of the ways that hotels are personalising their guests’ stay. If they sound over-the-top in terms of luxury it’s because they have to be. With the likes of Uber Eats and Foodora delivering local and often cheaper food to guests, a room service menu and complimentary slippers won’t cut it anymore. 

There are two approaches to enhancing services. The first is to unbundle services, so that guests are only paying for the improvements and facilities that they desire (rather than raising the price for everyone) or partnering with local companies and services — such as spas, gyms, workspaces or restaurants — to provide discounts or special services for guests, who could turn into longer-term customers. 

The personal touch

While some hotels are turning to robots for their staffing needs, they may well take note that it’s often humans who bring the most value to guests. The concierge or receptionist who goes out of their way to provide information, pleasant conversation and friendliness often has the ability to make or break a holiday. 

According to PwC’s Consumer Intelligence Series, the human element still matters. Asked if, as technology improves, their feelings regarding dealing with humans or automated customer service (such as robots, chatbots, voice assistants) would change, 74 percent of the global audience said they would want to interact with a real person more than they did today. With only 26 percent being open to automated customer service (with Brazil, China and Japan being the notable exceptions – where this number rose to 32 percent, 34 percent and 47 percent respectively), there is still a way to go before humans go away. 

This means that high-performing, customer-centric staff is critical for hospitality and leisure companies. Yet that’s often easier said than done. Sixty-three percent of the CEOs in this group said they have difficulty hiring workers — and in part, they thought this was a result of industry reputation and working conditions. 

Paying higher wages will of course help with recruiting dedicated long-term service staff, and it will be necessary, as hotels must increase the number of front-end, customer-facing employees. They are too critical for guest impressions to skimp on. Cross-training staff — and instilling in them an attitude of proactive and personal customer attention, regardless of job title — will also go a long way to managing and exceeding customer expectations.

It’s time for tech to check in

Some hotels have begun automating their services, but too often it has been with a view to reducing headcount, rather than freeing up employees for higher-value work. Most emerging technologies are not even in mind yet for hotel CEOs — only 25 percent believe AI will significantly change their business in the next five years. 

Data systems, such as customer relationship managers (CRMS) which collect and store guest interactions and help manage email marketing seem disparate. They are often underwhelming, ignoring the needs of staff and customers alike and thus technological failures instead of the possibility for greatness they could be. As many who have received an email from hotel chains can attest, they are often generic, despite how much ‘personalisation’ you may have entered for the prize of complimentary wi-fi. 

When combined with artificial intelligence however, the analysis could go a long way to building customer loyalty. Anniversary gifts or personalised services to known customer preferences or history is an easy way to show that a person is more than just someone occupying a bed for the night. 

One more night

Like all industries facing the realities of a digital world, the answers are not always easy, nor as simple as offering the same things that disruptors are. What hotels do have, however, is an advantage that they can play to — a place that travellers rely on for a unique experience, personal care and a welcoming face at the end of a long plane ride. 

Those that treat this opportunity as the loyalty opportunity that it can be, who embrace innovation and invest in the technology and staff to enable it to be fulfilled, will find that connection can trump commoditisation.

For more information on the outlook for the hotel and leisure industry download the Hospitality and leisure trends 2019 cut of PwC’s 22nd Annual Global CEO Survey.