Transcript
Introduction
Hi, everyone. I love this time of year when it starts to slow down and we get a chance to reflect based on what did we think was gonna happen in this year, but what actually happened and what's the gap between those two points. But then also we have to put our budgets together for next year. And, you know, then we do a macro view of what are the big trends that are happening that we should be jumping into. And that's what this Matt Talks will be about. So really what are the four key areas that we've identified as major global trends that are gonna impact our industry?
And and what does that mean for you in the hotel world? So starting with looking back. So going into the year, we thought this was gonna be, you know, a really optimistic year. There was so much hope that we had going into it, but as you know, some of the wars have continued.
So we've seen, obviously, the war in Ukraine carry on. There's a war between Israel and Hamas that's going on. There are continuous cyberattacks happening from Russia against tech companies, and and and that really drives a level of uncertainty. And then you've got the political instability that is happening across the world.
Chapter
Positive trends in hospitality
So on the one side, there's the uncertainty, but then you look at the numbers in hospitality, it's been pretty good. We've seen a three percent to five percent RevPAR gain year on year. And it shows that people are continuing willing to travel, that post pandemic, that people chose that travel and experiences are really critical. That trend continues.
And hopefully, that will also positively impact next year as we look forward. So in this MAD Talks, what I'll do is I'm gonna take four pieces, which is the four major macro trends that we're seeing, and that we're thinking are going to really impact you in the hotel world. And I'll talk through each of the individual trends. I'll give some examples and possibly I'll give some insights from some of the industry leaders that we've seen for this.
Chapter
About macro trends
And I hope you enjoy this because I always enjoy this section so much because I love sometimes getting out of the detail and really stepping back and thinking what, what is actually happening and what are some of the trends that we should be jumping into as a hotel world? I hope you enjoy this.
So our first big bet, and it won't surprise you that this is the number one one, and I'm sure you're already thinking it, AI will help solve age old problems. As an industry, we've generally been stuck on legacy platforms for the last few decades. And that hasn't helped the way that we serve customers because it mends the platforms for bills for data entry by employees. And that's why our employees are always looking down at a screen, trying to capture as much information as possible, because we are required to capture passport data and credit card data. And we've never been able to truly leverage the information that we have in these systems. So whilst we've been collecting passport data, but also preferences, previous complaints, reviews that people have left, They're sitting in disjointed systems, and they have never been fully collected into a singular platform where you can leverage that amount of information and then make it consumable.
Chapter
How to improve staff productivity
And this is where large language models are coming in. They can read all of that data in a snap of a second and then consume it and then give it back to you at the right moments that's most relevant and hopefully start to create predictive actions based on that. So right now, what we've done at Muse, for example, we've introduced Muse Smart Tips. So we read everything you've given us about the guest.
So that's their previous stays, the profile notes, the reservation notes, if they have dietary requirements. And all of that data, we combine into a, a smart tip that we start to inject into specific spaces in the system. So for example, on check-in, on the check-in screen, we have now a smart tip that tells you saying this guest has these preferences, be aware of it, but it still requires a human to jump into that. I think the next iteration of this would be that we not only tell you what the guest is wanting, but we've already told housekeeping that this customer wants a feather pillow, for example, because they prefer feather pillows.
And that's a really exciting trend that we're leaning into as a company is that the baseline of service delivery will be heightened. And then we deploy humans to have real interaction with customers. We want our hotelier, employees to embrace the fun of hospitality. We struggled for years to attract new people coming into the business because people are like, yeah, I don't wanna stand at a reception desk and type and be screamed at by guests.
But actually, if we're automating the baseline expectation and really delivering on that, the really fun thing is getting to know our guests and capturing that information so that the AI can help you deliver even better experiences down the line. And that's what I think AI could be doing for our industry. And I looked at this amazing chart by McKinsey. They've done a study for, which industry would benefit most from large language model AI.
And they actually say that travel is at the top of this. They're expecting that travel will experience a hundred and twenty percent, hundred and twenty eight percent potential increased value through AI if leveraged in the right way. And it's because travel is really complex. And, you know, when you've got huge amounts of data, we can predict what guests will want.
And the most complex scenarios today require humans to be ready to respond to those things. But now actually AI can predict very well what potentially will be needed. And then we leverage the humans to really create these human interactions with you. And I think that's really the core of where we'll see the impact, making sure that hotels connect more of the systems.
So right now, we're dependent on what data you provide us. But you if you can imagine, for example, a review platform. So most of the time, what happens in hotels is that the guest will check out. And then, a review platform like a guest review contacts those customers and says, hey, would you like to leave a review?
They will go into TripAdvisor or Google, leave the review, but you never really know. You can never connect those dots back to the guest profile. For example, guest review have integrated that offer already a couple years ago. So they now feed the review back into muse.
And then when that guest comes back to you, we will say last time there was a cleanliness problem in the room, and you can now anticipate that. So you could already tell housekeeping saying, please make sure that cleaning is done and just do something extra to make sure that this experience is better.
And we just need to connect more of these systems like CRMs, like systems like a revenue that starts to interact with customers, collect the data, and push it back into the PMS because we're at the forefront of communication with customers. So we need to be able to get as much information as possible. It doesn't need to be structured. You just dump in as much data as you have on a guest into the, guest profile, and we will structure it through AI.
And we will give it back to the right employee at the right time to generate these really special experiences. And that's going to be incredibly impactful. And you can only do this when you have migrated to a cloud for a solution that has leveraged large language models AI that feeds from all of the data sources that you have in the system. And you'll see a real shift.
So whilst AI has come in only two years ago, it's taken companies a long time to really catch up with, okay, so what are we gonna do with this? Part of the exciting bit for me going on top of this would be once we've captured all this information in the guest profile and you build a chatbot on top of that, that feeds from that data, it would get much better because the chatbots can today answer a number of questions just based on we're expecting you to ask questions about the parking, about the checkout times, etcetera. So it does that really well. But it could actually anticipate your needs much better if we know something about the guests.
And that's a really exciting integration. And most of those chatbots can already pull this data from use, but they're not. And I'm hoping that as we get into this year, more and more, we'll do a deeper integration with what our capabilities on the API side are so that we can build experiences where it genuinely improves guest experiences. And then we deploy humans to create these really, really remarkable experiences to not just say, was everything okay with your stay and expect a yes and then the guest leaves.
To say, what could we do better next time? Capture that in the system, and then we build experiences on top of that. So the the big trend here is AI will help solve agile problems that we've had. And this is genuinely one of those agile problems that we have had.
The second big bet that we have is that Staff productivity will rise. It isn't the most exciting bet, but we believe that this is where change is going to come from most significantly. We had I saw this Eurostat statistic where most industries in the last decade have seen consistent rise in productivity. And here you can think about agriculture, how suddenly they can be much more productive with the machines that they have.
You're looking at the IT infrastructure, whereas hotels have seen zero improvement of productivity, and that hurts. And unfortunately, we've struggled with staffing. So post pandemic, we've seen an exodus of staffing, and hotels have really struggled to replace the talents that they've had. So they might have been able to fill the role, but it might not been at the level that they had before.
We ran a survey earlier this year to find out what are some of the hardest roles to fill.
And the number one department, which is the hardest to fill is front office. These are generally if you have legacy systems, these are the most complex roles because you need to find people that get to know how a legacy system works, which is generally really complex. And on top of that, have to to try and bring great guest experiences forward. The second hardest role is housekeeping, which makes sense because that's hard labor.
But it's interesting to see that front office is so much harder to to recruit from. And this points towards a, an employer brand challenge that we have as an industry. And if we can truly leverage technology, which honestly, in the last decade, hoteliers have been very resistant to move into the cloud, they thought everything is fine. Every all of my systems are working.
I can check-in. I can check out. And whilst that is true, there was no gains in productivity because these systems just didn't get better because this is an on premise system that might get an annual update, but isn't infinitely better like what you get with a cloud system that can deeply integrate with other technologies and drive real automation. So what we've seen is that people are not excited about working with those types of systems because they become data entry analysts, basically, with a smile because they have to also serve customers.
Modern systems can truly drive productivity gains that can help drive automation that have an online check-in, a kiosk that is often much better at selling than the human. And hopefully that will allow you to bring the spark back. We need to get people excited about service delivery, about engaging with humans and really driving that experience and capturing what they're looking for. So you can only achieve that if we take care of the boring admin, and then we train people to drive service experiences.
And I think that's what we're looking for in a next generation of hoteliers. We're looking for those people. They might not have experience on a legacy system, but they are very excited about the human experience.
And that's an employer branding thing. How do we tell that story in a better way rather than saying, here's a job description and we need twenty years of experience of a legacy system to saying, we just want someone with the best personality, and we can teach you everything else along the way. And this is where I believe you'll see a shift because there's a real movement from legacy hotels moving into the cloud and adopting some of the innovation that comes with that whilst we look for a different caliber of person that can truly drive the impact. And then on top of that, you've got AI where, you know, you've got, for example, chatbots that you can deploy. They can really anticipate what guests will need, and guests are less embarrassed to ask for certain things to a computer than they are to a human.
I was really, I looked at this, analysis of the McDonald's kiosk. And the what you see change shift when they had kiosks deployed versus to human at the reception desk, that the order changed dramatically. They saw that men are often ordering two burgers, and the way that a menu is formatted is very different when you can format it yourself. And it showed that people were embarrassed to ask for that to the human, but they're not embarrassed to ask to computer.
And this is the same in hotels. When you leverage technology in the right way, you see that guests are actually much more openly asking for what they actually want, and hopefully driving the experience up. But you need to have the right technology to allow for that. And I think that's where chatbot come in.
I saw this amazing case study from the Oder Burger, hotel in Berlin. They deployed a chatbot via dialogue shift, and they've had about four thousand questions answered. And imagine just that, four thousand questions that previously would have been asked at a reception desk have now moved into a chatbot.
And they have a ninety seven percent accuracy. And sure, there is three percent that they didn't answer accurately, but ninety seven percent you can. And for those three percent, you have a team that can go above and beyond. And that's really what will drive this productivity gain, making sure that you cover the ninety seven percent through technology, and then you build experiences on top to drive those three percent to have extraordinary experiences.
Because those ninety seven percent, they're just asking the standard questions, But it's the three percent of customers who are likely to go and complain that you can actually do something to exceed those expectations, but also that drives excitement from your team because they don't have to answer the question about what time breakfast is or if the gym is twenty four seven. They get to do the really challenging work, which is thinking out of the box and making sure that they anticipate those guest experiences. So that move to the cloud will progress. And I think in the next two to three years, you'll see almost the majority of the hotels finally gain access to cloud solutions and truly leverage AI, leverage the integration layers that these hotels offer, and then start to see that productivity will start to rise in hotels.
But hopefully through that, we get people excited about coming back to hospitality that wants a job in hospitality because it's actually great fun to serve customers.
Chapter
Shifting away from OTAs
The third bet that we're placing on twenty twenty five is that hotels will move away from their reliance on the big OTAs. I know we've been saying this for a very long time that we're saying hotels should push direct bookings, and they've struggled with this for a long time. And as you saw the OTAs gain more and more power, that dynamic has actually shifted in the last year. So through the rise of AI, you're seeing a real momentous shift happening.
So on the one side, people don't turn to Google as their first platform to search. They would turn to an AI tool like ChatGPT or Claude and ask those AI tools saying, I'm going to the beach in the Netherlands. I'm looking for a hotel that allows for dogs. It has to be four star.
I'd like it to have a pool, in the vicinity of a nature reserve. And then it starts to surface you three or four recommendations that it sources itself through different tools online.
So where previously the starting point would have been Booking dot com or Expedia to start searching for a destination, now you start your search in AI. And that proves that obviously there's it'll be interesting to see how the dynamic between Google and the OpenAI, platforms will shift, but also what the impact of that will be on the OTAs and how they will leverage AI to help you plan your guest journey. But also, because of AI, you'll see more traffic come directly because they will say, here's hotel a and here's hotel b and hotel c. You go straight into their those hotel websites.
And often where we lose them is on the bad quality of hotel websites. I still find myself when I'm looking for whether a hotel has a gym. I go to the hotel website. I look for a gallery.
I can't find it. The wellness doesn't really say anything. And I'm like, right, let me just go to booking because I know exactly where to find it. So we definitely have to get better at building hotel websites, having a search tool, and really surfacing the right information to the right customer that's looking for it.
And also the way that you want your hotel website to surface will change through AI. You've got to have much more content that is relevant, that tells what the guest will experience on your website. And AI will take all of that information from your hotel website, but also from hotel guest reviews that is feeding information about your hotel. So if guests say a lot about, for example, the the kids' facilities at your hotel, and they said that over and over in guest reviews, then AI will know that if someone is looking for a children's friendly destination to surface your hotel in that location because there's just so many guests that are talking about this.
So we definitely need to think about what is a new strategy for your website. And Skift has predicted that more than fifty percent will start to shift in the next few years towards by twenty twenty, thirty, I think they said, more than fifty percent of bookings will start to come direct. And that's a really impactful shift, but it will only work for those hotels that are leveraging the technology, that really have a digital strategy, that understands what the impact of AI is and how to feed information into those algorithms and tell those stories. And we will still need the OTAs.
We still need to have a base occupancy coming from the OTAs because they have a reach that an independent hotel might not necessarily have. However, that power will diminish thanks to AI, but only to those hoteliers that truly understand and grasp this. I've done a few MET Talks around how do you leverage AI to build your website? How do you drive conversion?
Chapter
How loyalty programs are changing in hospitality
So I definitely recommend if you're interested in figuring this out, go into the MET Talks website and look at some of those, sessions because it will really help you rethink what you should be investing in next year. Another major shift in this reliance on OTAs is this move towards loyalty programs. So obviously, when you say loyalty programs, you think about hotels mostly, and you get points to stay with those brands. And those programs are fine, but they're not really driving true loyalty.
What you see much more is loyalty through banks nowadays. So in the US, some of the major banks see fantastic loyalty to the cards, and they've launched travel programs on those cards that can really stimulate customers to book through there. So there'll be a lot of movements also happening through loyalty programs that will drive direct bookings, that will drive bookings through different channels. And I think this is a good thing.
It means we're diversifying our business mix because we have been too reliant on those two big OTAs that we see it across Musa Tales, fifty to sixty percent of occupancy is filled by the two OTAs. And that's scary because if something changes in the algorithm and you drop off that first page, you'll see a real change in your business mix. So if you have less reliance on two parties and you move that to three to four parties, that means you have a much healthier business mix that can sustain. Even if something happens with one of those partners, you can replace it with a different business mix.
So diversifying the business mix, leaning into AI and rebuilding your websites and the integrated services that drive more people to talk about your hotels online will all have an impact in diversifying and moving your your reliance off the OTAs and more to direct channels.
Chapter
Diversifying accommodation types
And the fourth big bet that we're placing on next year and obviously the following years is hotels will diversify their portfolios with new types of accommodations.
So where traditionally you think about hospitality and hotels, you think about booking a room per night. COVID has been an accelerator of some alternative accommodations. And obviously there have been players in the part hotel segment or in the extended stay segment for the last few years. But really, COVID was an accelerator of a different type of traveler, the hybrid traveler, who might want to stay for several months in a destination before they move on to the next destination. Maybe someone who will stay for a couple of weeks, but wants to blend their leisure with their business in some way. There's a blending of students with local culture, but also senior citizens have seen a differentiation in the accommodation that they, they, they access.
So some of the major acquisitions or changes we've seen obviously in the last year is that Hilton acquired graduate hotels to get access to a new generation of traveler, the Gen z traveler. So Hyatt filled a gap with the Appo leisure acquisition. You saw that Wyndham launched a Wyndham Residences. Accor now has a a part hotel category or extended stay category. Every major brand is investing into longer stays.
And that's really exciting because it means that you could get customers for a longer time. You can really build experiences with those customers for an extended period of time, but you've also run into technology challenges that you have to solve for. And that's really where Muse comes in, where obviously we, we do per night stays for a hotel, but we've introduced different types of spaces. So you can very quickly shift between per night stay to month long stays or weekly stays or hourly stays, for example, as well, if you just want to book a room for a day for a meeting room, for example.
And that's allowed us access to a very different profile of customer. And one of those amazing customers is, for example, the social hub, which is a European portfolio of, you know, they started out as the student hotels, which was very focused on student living, extended stays. And then they started figuring out, hey, when the students go home for the summer, we should turn those rooms around and sell them for short stays. And they've now morphed into a much more open policy of the social hub, accessing different groups of targets, target customers that they're blending throughout the year.
And not only are they thinking about the rooms, but they're thinking about the lobby as as well. A traditional lobby makes no revenue. So why don't we put coworking space in there? And that's literally what they did.
And they started blending the hybrid travelers, making sure that they have coworking spaces and gyms and restaurants that they can that they can use. And it's working. And it's a really exciting concept. And they're getting incredible funding.
They're they're growing faster than most concepts. And we'll see most of the industry start to really think about this type of accommodation, a room that has maybe a basic kitchen in it that gives you the flexibility to to stay longer, but you're not necessarily living there long term. And this is one of those things where technology will have to catch up because it is complex to serve a customer who stays for multiple months. You have to think about how do I do billing that isn't per day, but that is per month.
And how do we do automate that recurring? But these are things that Muse loves. We love the complexity, and we love to think about those challenges, obviously, proactively so that we started building this already a couple of years ago. Right?
In COVID, we started seeing this trend and we started doubling down. But what you've seen in the past year is that the major brands have now put bets behind those brands and are really growing that segment because they've run out of space in the the three, four, five star category. And this is a new category, that they can access to continue their incredible growth path. So I believe we'll see a lot more of this going forward.
That's the the four major trends, and I just wanna run through them at top level and just make sure that you've got a checklist here. The first one was AI was help solve agile problems. And I'd say, are you already trying AI today? Do you have a chatbot, for example, or do you have AI deployed across your systems?
And if you haven't, make sure that you start there. Does your tech stack allow you to get the most out of this? So are you in the cloud today? And is that cloud first with an open API?
And can you find that API on the website? Because that means that's the most open platform that you can find. And and once they have that open API, you can start to work with any of these partners, but you should definitely be thinking about AI to help solve some of these really old service problems that we have to drive excitement from customers. The second trend is staff productivity will rise.
We will see hotels move into the cloud, leveraging the automation that is available in the cloud and technology to make sure that we care take care of the admin for you, and hopefully reignite excitement from team members to deliver service. And ultimately, if you get a really engaged workforce, at the same time, you've gotta think about the automation. Those things combined will lead to real productivity because engagements of employees will drive higher productivity.
And on top of that, you match that with the automation that you've got that will help drive real improvements in your workforce.
