Why Contactless Service Is Making Hotels More Profitable

The motivations for hoteliers to move to contactless service and automation are clear. In the post-Covid era, hotels need to be more efficient, often with fewer staff, so contactless service and automated processes give them the tools to do more with less.
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The number of hotels offering contactless service and a digital guest journey was already rising before the pandemic struck. The requirement for social distancing only accelerated the trend.

Now, in the post-pandemic recovery period, contactless service and automation in hotels continue to be as important as ever.  There are several reasons why.

The problem with traditional check-in

First, let’s take a quick look at what’s happening at a traditional hotel in the early evening. Good news! The hotel is busy. Not so good news. There is a line of guests waiting to check in. The hotel has been employing fewer staff because of Covid uncertainty, so there is only one receptionist.

She is staring into her computer, trying to find each guest’s name, make sure their booking is authorized, checking them in, creating their room key and taking their credit card details. This process is repeated again and again and the pressure is visible on her face as the line of tired and frustrated guests grows longer.

Commenting on this unfortunate scene that still happens in countless hotels across the world, Ulrich Pillau, founder & CEO of apaleo, says: “For me, this has nothing to do with guest service. Most of it is procedures that you can get done pre-arrival and get the guest to register and pay beforehand. Why should I wait in a queue to check in? It’s ridiculous in today’s world.”

Contactless is not just a young thing

Indeed, in today’s world, an increasing number of hotel guests prefer contactless check-in.

We already knew that younger generations of travellers use their smartphones for everything and prefer contactless check-in.  Millennials (25 to 40-year-olds) are the world’s most important generation for consumer spending growth and general economic prospects, according to research by Goldman Sachs.

But a consequence of the pandemic has been that it’s not just the young that favour contactless service. Now it’s customers of all ages. After all, who likes standing in line?

Matthijs Welle, CEO of Mews Hospitality Cloud, says: “We have seen growing demands for contactless service from demographics which have previously been more likely to favour traditional service, such as older travellers, who are motivated by health concerns. This has given hotels the chance to realise that automation can mean personalised, memorable experiences, not bad service.”

Reasons for contactless service

The motivations for hoteliers to move to contactless service and automation are clear.

In the post-Covid era, hotels need to be more efficient, often with fewer staff, so contactless service and automated processes give them the tools to do more with less.

The occupancy levels at which hotels can break-even vary in different geographical regions across the world, according to research by hotstats: 37.7% in the US; 34.5% in Europe; 33.2% in APAC; and 22.4% in the Middle East. 

There is considerable variance in the break-even occupancy level depending on whether the hotel is luxury, full-service or select-service. However, the research clearly shows that hotels across all categories are needing to find ways to be more efficient and contactless service enables them to break-even at much lower occupancy levels.

During the post-Covid recovery, there is the scope for hotels to be profitable even at low occupancy levels.

Growth in contactless service

As previously mentioned, the number of hotels offering contactless service and a digital guest journey has been rising but there is still further progress to be made. A survey of US hotels commissioned by software giant Oracle found that:

  •         76% of hoteliers are providing contactless payment options.
  •         36% of hoteliers provide self-service check-in.
  •         59% of hotels have digital messaging services to limit staff and guest interactions.
  •         42% are issuing smartphone-based bedroom keys.

Benefits of a digital guest journey

Let’s break down the various benefits for hotels that come from offering guests a digital journey:

  •         Automation of time-consuming admin frees up staff to deliver real hospitality and be ambassadors for the hotel and the destination.
  •         Keyless, paperless and contactless businesses are not only more efficient and have lower overheads but are good for the environment.
  •         Captures digital records of customer’s personal data.
  •         Increases health, safety and security measures.
  •         Delivers real-time statistics and analytics.
  •         Facilitates several opportunities for extra spend by guests during their stay thereby increasing overall revenues.

Customers will also experience the significant advantages of not having to wait in line at reception and they will receive all the details of their stay, including invoice, digitally.

Once hoteliers have established the necessary infrastructure for a digital guest journey, it is very easy to add in additional services, as easy as adding an app onto a smartphone.

Digital room upgrade solution

UpStay is a SaaS (software as a service) contactless and digital solution that helps hoteliers increase the value of their bookings and ancillary guest revenue. UpStay sends data-driven special offers to guests to make additional purchases prior to arrival and throughout their stay.

The hotel tech solution easily connects to all of the most commonly used PMS/CRS. Once installed, the guest receives a personalized email offer to upgrade his or her room to a higher profit category a few days before check-in. Guests choose, in their own time, how much they would like to bid for the room upgrade. Shortly before arrival, they are notified if they were successful in their bid for the upgraded room.

On average, UpStay results in 15 percent of room bookings being upgraded (three times higher than the industry standard) with an average extra spend of $247 at resorts and $141 at city hotels.

A 69-room resort in Switzerland uses the Upstay Upgrade Solution and earns a new annual passive profit of $30,000.  For an Israel-based hotel group, the software generated an extra $150,000 in one year.

Selling add-on services

Of course, guests are not only interested in room upgrades. According to the latest Phocuswright research into the US market, nearly two thirds of hotel guests would like to purchase extra services and products during their stays and one third would pay extra for more tailored experiences.

Amongst business travellers the findings are even more compelling. Across all age groups, eight out of ten business travellers are interested in paying for in-room dining and other pre-paid meals; parking; early check in or late check out; in room entertainment; golf, leisure and spa services.

However, the survey also found that only 10 percent of hotels offer add-on services and products to their guests in a systematic manner.

A new software category

This gap between what guests are looking for and what hotels actually provide is concerning, especially at a time when hoteliers need to maximise their revenue opportunities.

But the gap is easily filled by a software solution that requires no intervention by hotel staff. UpStay works automatically, makes the right offers to the right guests at the right time, straight to their smartphones.

These offers might be for special dining experiences at the hotel, last-minute VIP tickets to a top show or sport event in town, or an indulgent spa treatment.

Because the UpStay software is constantly learning from how different types of guests in different locations have reacted to previous offers, its data-driven intelligence helps hotels to increase their ancillary revenues by making only the most effective offers to guests.

In fact you could say that UpStay is an entirely new software category created for today’s specific challenges: a support system for hotels with fewer staff and low revenues that leverages data and automation to empower any hotel to identify and seize real-time revenue opportunities.

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Ben Walker has 20 years of experience in the hotel and travel sectors. He has worked as PR & communications manager for TRI Hospitality Consulting London, the creators of HotStats, the hotel market benchmarking, financial analysis, and performance reporting solution. He has also been the business editor of The Caterer, and communications manager and editor for the international professional body, the Institute of Hospitality.

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