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Techno-business strategies for enhancing guest experience in luxury hotels: a managerial

perspective Sonia Bharwani

Department of Management and Entrepreneurship, ISME School of Management and Entrepreneurship, Mumbai, India, and

David Mathews General Manager, Trident Bandra Kurla, Mumbai, India

Abstract Purpose – This research aims at understanding techno-based strategies deployed by the hospitality industry by exploring the emerging technological product and process innovations that are actively being used in the hospitality space to deliver enhanced guest experiences. It also aims at gaining perspective about the challenges of technology adoption faced by the Indian luxury hotels that have traditionally been driven by high-touch, unscripted and personalised service. Design/methodology/approach – This paper adopted a two-pronged methodology for data collection – in-depth semi-structured interviews with General Managers of Luxury Hotels in India and literature-based innovation output (LBIO). NVivo12 software was used to carry out a qualitative thematic analysis of the data. The primary data collected was then triangulated with secondary data gathered through literature review of academic papers, industry reports and studies on the use of technology for enhancing and co-creating customer experience in luxury hotels. Findings – The research brings in to focus the importance of technology and high-tech, state-of-the-art tools in facilitating the co-creation and delivery of experiences in the context of luxury hospitality. However, it also emphasises that the high-touch dimension is the core of hospitality in luxury and premium hotels and should remain the primary driver of this segment. Luxury hotels will have to fine-tune and tailor their services and provide the right mix of high-tech and high-touch, depending on the micro-niche segments to which they cater. Practical implications – Practitioners, researchers and educationists in the hospitality industry would find the implications of this study useful in context of the evolving technology imperative and the present customer-centric business environment where hotels are constantly striving to meet the exponentially rising bar of guest expectations. Originality/value – This study is the one of the few empirical explorations of the techno-based strategies adopted by luxury hotels for co-creating enhanced and high-value experiences leading to critical implications for both hospitality and tourism theory and practice.

Keywords Technology, Hospitality, High-tech, Luxury hotels, Guest experience, High-touch

Paper type Research paper

Introduction and context In the hospitality industry, and specifically with the luxury segment, a notable transformation is taking place – there is a gradual shifting of the core focus from a physical asset or product- based model to one which hinges on customer-centric experiences that are personal and customisable (Knutson et al., 2006). This shift has been driven by a fundamental change in the

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Worldwide Hospitality and Tourism Themes Vol. 13 No. 2, 2021 pp. 168-185 © EmeraldPublishingLimited 1755-4217 DOI 10.1108/WHATT-09-2020-0121

The current issue and full text archive of this journal is available on Emerald Insight at: https://www.emerald.com/insight/1755-4217.htm

global perception of value on the economic front. “Economists have typically lumped experiences in with services, but experiences are a distinct economic offering, as different from services as services are from goods” (Pine and Gilmore, 1998, p. 97).

Advances in communication, transportation and information technology have led to the emergence of the e-savvy, global traveller with an increasing need for hedonistic, unique, customised experiences and who demands fulfilment of these expectations for the premium paid. Today’s travellers progressively seek culturally immersive, highly customised and innovative experiences (Scott et al., 2009; Miao, 2011) where the level of experiential delivery is consistent across providers and platforms. The emerging experience economy has led to a competition-infused scenario where hospitality providers need to constantly innovate and create customised experiences to address the unique personal tastes and requirements of a guest (Bharwani and Mathews, 2016).

According to Porter (1980, 1985), to develop and sustain competitive advantage, business organisations must pursue either cost leadership or differentiation. For luxury hospitality, cost leadership, from an input cost perspective, facilitates greater profitability and hence may allow for more efficacious luxury pricing than a competitor, all the while protecting the bottom line. Hospitality organisations that adopt the strategy of differentiation are innovation-oriented and endeavour to offer new or unique products and services for which their customers are usually willing to pay a premium price (Bharwani, 2014). The twin goals of cost leadership and effective differentiation can be simultaneously achieved by using technological innovations in products, services and experiences. Thus, techno-based strategic management both enables and challenges managers to analyse and evaluate how technological resources can be put to optimum use and how they may be best integrated with a firm’s resources and capability structures towards the development of sustainable competitive advantage (Fahy and Smithee, 1999).

According to the Oslo Manual, “A technological product innovation is the implementation/ commercialisation of a product with improved performance characteristics such as to deliver objectively new or improved services to the consumer. A technological process innovation is the implementation/adoption of new or significantly improved production or delivery methods. It may involve changes in equipment, human resources, working methods or a combination of these.” (OECD/Eurostat, 2005, p. 9).

In the context of the hospitality industry, investments in technology can be a source of competitive advantage through value-added product and process innovations which lead to reduced costs, greater agility in speed of delivery and superior guest service (Bilgihan et al., 2011). Technology is also increasingly becoming the crucial fulcrum which allows a guest to instantaneously and dynamically stitch together his or her own unique canvas of desired experiences from the palette on offer.

Neuhofer et al. (2014) posit that technology undeniably plays a critical role in the enhancement of customer experiences in the context of the tourism industry. They have developed the experience typology hierarchy that puts forth four overarching levels of experiences in terms of the increasing role technology plays in the co-creation of consumer experiences. There is overwhelming evidence to support the fact that experiences in the hospitality world are changing on two fundamental fronts – consumers are now a critical element in the process of “co-creation” of their experiences; and the increasing role that technology now plays in actually “mediating” the experience (Neuhofer et al., 2014). The contemporary hospitality guest mindsets and preferences are continually and exponentially evolving to include authenticity, bespoke experiences, seamless and frictionless interactions and on-demand functionality, and technology plays a critical role as an enabler in curating and delivering guest experiences (Deloitte, 2017).

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The global proliferation of the internet, ubiquitous use of mobile technologies and the immersive character of social media has led to an increasing realisation that an explosion in the scale and intensity of technology-driven interactions now characterise the relationship between individuals and hospitality organisations in the sphere of value creation. Other key emerging verticals of the technology drive in hospitality which warrant consideration are – Recognition Technology and Wearable Technology for access control and in-house offer customisation, Robotics for service delivery, Chatbots for basic query-handling to free staff resources, the effective use of the Internet of Things (IoT) to customise a guest experience and economise on costs, using artificial intelligence (AI)-driven Big Data mining for better customisation of offers and curated experiences, Virtual Reality (VR) to offer a customer more effective buying knowledge through an immersive sales experience, use of Augmented Reality (AR) to intuitively layer the stay experience in a more personalised style and Blockchain technology for streamlining guest loyalty programs and hotel distribution strategies (Cognizant, 2017; Deloitte, 2017; Oracle Hospitality, 2017).

The rapid pace of technological innovation and proliferation has presented hospitality organisations with the conundrum of choice. Since the commitment to a new technology in terms of both purchase and integration costs are often significant, it is imperative that hospitality organisations carefully evaluate its guest comfort level with the adoption of certain type of technology and also how a particular technology will drive value in terms of guest experience enhancement, reduced costs and increased operational efficiency .

Hence, along with the new technological innovations that impact guest experience in the hospitality industry, this paper also discusses the various facets of the Guest Experience Trajectory that a hospitality company could consider when evaluating the efficacy of new technology. This is often critical in differentiating between a technology selected for its pure novelty value and a technology that has potential to enhance the hospitality company’s market differentiation or guest loyalty attractiveness on a sustainable basis.

Objective of the study In context of the evolving technology, imperative and the present customer-centric business environment hotels are constantly striving to meet the exponentially rising bar of guest expectations. This research aims at gathering insight about the various broad verticals in which technology can interface with, and be woven into, the fabric of dynamically customisable guest experiences. It looks at exploring the delicate balance between the inevitable adoption of high technology (and its possible reduction of interpersonal interactions) and the inveterate need for high-touch customised service experience which are the hallmarks of luxury hospitality. This study is an empirical exploration of the techno- based strategic product and process innovations adopted by luxury hotels in India for co- creating enhanced and high-value experiences leading to critical implications for both hospitality and tourism theory and practice. It also aims at gaining perspective about the challenges of technology adoption faced by the Indian luxury hotels which have traditionally been driven by high-touch, unscripted and personalised service.

Research methodology This paper adopts a two-pronged methodology for data collection – in-depth semi-structured interviews with seven General Managers of Luxury Hotels in India and literature-based innovation output (LBIO). The initial intention was to primarily conduct an exploratory study to collect primary data from the general managers through qualitative, semi-structured, personal, in-depth interviews to capture their views on the technological innovations adopted by luxury hotels for enhancing and co-creating guest experiences. A consequent corollary was

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also to gather an understanding of any existing or anticipated barriers to the aforementioned technological innovations being introduced.

According to the Oslo Manual (OECD/EuroStat, 2005), data on technology-based product or process innovations can be collected using two main approaches: the subject approach and the object approach. The subject approach is an input-based approach with explores the various activities (for e.g. R&D), their costs and factors that influence innovation output by directly collecting data from the management of a company using surveys or interviews. The object approach takes a prismatically opposite perspective, collecting qualitative and quantitative data about specific innovation outputs of a firm based on the opinion of experts or new product announcements in trade journals or through press releases (OECD/Eurostat, 2005).

The subject approach entails gathering data about product and process-based technological innovation in a company by directly collecting data from its managers using surveys or interviews. While it gives first-hand insight into the characteristics of the innovation, the business motivations behind the introduction of innovations and their beneficial impact on the company, this methodology is fraught with its own challenges. Review of literature shows that researchers adopting this methodology, which relies on company representatives for data, may come across “secrecy and non-response biases; issues related to construct validity and self-reporting” (Kander et al., 2019).

The in-depth interviews conducted with the luxury hotel managers in the course of the research caused the authors to pause as it was evident that, while the respondents all accepted the indisputable impact technology would have on guest experiences going forward, their responses were fettered by some pertinent constraints. Firstly, the universe of reference was limited to the respondents’ personal experience. Further, this inadequacy was also ringfenced by the breadth and intensity of the respondent’s organization’s level of adoption of technology. Research shows that Indian hospitality organisations lag behind in technology adoption in contrast to their western counterparts (Sharma, 2016). Therefore, another constricting factor in the experiential narratives of the general managers was the fact that their canvas of corroboration was largely in the Indian context.

A robust method to overcome some of the above-mentioned challenges is the LBIO methodology. According to Coombs et al. (1996), LBIO methodology originated in the US (Edwards and Gordon, 1984) and later in The Netherlands (Kleinknecht, 1991). Here, researchers gather data about innovations from the “new product announcement” sections and editorials of technical and trade journals of an industry. These articles detailing the latest innovations are not paid advertisements by the company. LBIO assumes that the editor objectively selects important industry innovations in an unbiased manner for inclusion in the journal and hence an “LBIO sample tends to capture notable industry developments” (Kander et al., 2019).

The focus of LBIO in terms of the unit of observation is the innovation output rather than the innovating firm which may often be the case while gathering data through surveys or interviews. “Moreover, the LBIO indicator captures actual innovation output rather than input to the process, e.g. R&D” (Zach et al., 2018). Coombs et al. (1996) highlight the benefits of LBIO as: currency of information (along with the longitudinal data, the news of the latest innovations is also captured), objectivity (data is collected from a reliable, neutral source), and comprehensiveness (as innovation data is gathered about a wider range of small and larger firms from the across the industry).

However, some researchers have argued that the data generated from LBIO may be skewed towards innovation output from smaller firms which are reported in journal editorials as larger firms may use their own channels to communicate their innovations (Acs and Audretsch, 1990; Santarelli and Piergiovanni, 1996). Kander et al. (2019) also

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caution for controlling bias in the selections of the journals by cross-checking the innovation by “the reading of two or multiple journals”. Meanwhile, Zach et al. (2018), in their hospitality industry focused study, have extended the data sources used for LBIO to include press releases by companies, announcing new innovations, as a useful data harvesting methodology for identifying hospitality innovations. They contend that press releases help overcome editor selection bias and any important innovation information that may have been overlooked by the trade publications (Zach et al., 2018). Thus, this research paper has used an amalgam of methodologies to triangulate the data from in-depth interviews and secondary research data with LBIO data.

Literature-based innovation output data set A combination of two online hospitality technology journals (hospitalitytech.com and hoteltechnologynews.com) and innovation-related press releases of four major global hospitality firms (Marriott, Accor, IHG and Hyatt) was deployed for gathering the LBIO dataset (Appendix) to address and overcome the bias in selection of journal, as well as the editor selection bias, discussed in the methodology section.

At the outset the researchers identified pertinent keywords to ensure judicious selection of articles related technological product and process innovations which had an impact on guest experience in the hospitality context (Zach et al., 2018). The primary keywords included: “innovation”, “novelty”, “new product”, “new process”, “new technology”, “smart technology”, “high-tech”, “digital”, “guest experience”, “guest journey”. This list of keywords was further augmented based on the review of literature (Cognizant, 2017; Deloitte, 2017; Oracle Hospitality, 2017) to include some emerging technologies impacting and shaping guest experience in the hospitality industry, adding “artificial intelligence”, “recognition technology”, “chatbots”, “robotics”, “wearable technology”, “virtual reality”, “big data”, “internet-of-things”, “blockchain” as additional keywords.

The aim was to identify adoption and development of as many completely new technology product and process innovations as well as incremental innovations which had an impact on guest experience in the global hospitality industry context. A manual check was conducted to eliminate articles which matched keywords but were not relevant for the study or innovations which did not impact guest experience directly. NVivo12 software was used to carry out a qualitative thematic analysis (Boyatzis, 1998) of the LBIO data. The “articles” from the online hospitality technology sites and press releases of four global hospitality chains were used as unit of analysis. The coding unit used throughout the coding phase was “sentences”. A theory-driven coding scheme was deployed, and emerging technologies identified through literature review were used as coding themes. The qualitative data was thus analysed using deductive pattern-seeking as a methodology for scientific reasoning to identify the various broad technology verticals by that were actively being used by hospitality organisations to curate and orchestrate superior guest experiences.

Guest Experience Trajectory Hospitality customers are looking for high quality, innovative yet consistent guest experiences especially in the context of luxury hotels. With diminishing differentiation in hospitality products and services there is a need for unique value-added innovations which are more personalised and experience focused (Bharwani and Mathews, 2016).

The Guest Experience Trajectory in the hotel industry has three distinct stages – pre- stay, in-stay and post-stay stages (Radde, 2017). Each of these stages offers several touch points or moments of truth which independently and synchronously influence guest

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experience. The pre-stay stage for the guest encompasses inspiration, search, booking and may also include paying for the hospitality stay and experience. This is the stage where expectations are formed. During the in-stay stage, the guest interacts with the hospitality environment and the actual customer service delivery happens and experiences are staged. Finally, in the post-stay stage the guest evaluates the overall experience, forges memories, forms opinions and may/or may not give feedback about whether or not the expectations, set in the pre-stay stage, were met or not (Knutson et al., 2010). Technology is increasingly playing an instrumental role in “mediating” the guest experience at each of these touch points (Neuhofer et al., 2014).At each of these three stages, the hospitality organisations need to carefully curate the guest experience and decide on the symphonic roles humans and technology would play in orchestrating the experience.

Drawing from the interviews with the general managers and from the review of literature, the researchers posit that the guest experience architecture is based on five key building blocks – exploring guest needs, engaging guests, empowering them to co-create their experiences, exciting them with wow moments and empathising by listening to guest feedback. As the guest transitions through the three aforementioned stages of the Guest Experience Trajectory, technology can be harnessed to play a pivotal role in actualising each of these five foundational dimensions to create a highly personalised and differentiated experience for every guest as discussed below:

� Exploring – Exploring, learning and collecting information about guest needs and preferences are the cornerstones of delivering superlative guest experience. The luxury hospitality industry thrives on use of technology for mining data to create personalized profiles for each guest based on stay history and individual preferences (Peterson, 2011). Predictive analytics, based on the unique insights from the data gathered, can then be used for generating marketing leads and curating a hyper-personalized marketing mix to target the right customer, with the right message for the customized service offerings through appropriate channels. At a more macro-level, technology can be used for understanding emerging trends in the hospitality industry as a whole and tailoring service innovations to match customer demand to create superlative guest experience.

� Engaging – While technology plays an important role in guest acquisition and retention in the pre-stay and post-stay stages, with the increasingly digitally savvy customer, the role of guest services technology in engaging with guests during their hotel stay cannot be over-emphasized. The main focus is to use technology to ensure that the in-stay hotel and room experience is efficiently seamless and frictionless throughout. Smart IOT-based room technology, self-service technology, virtual concierges, mobile-based technology and robotics are being increasingly used to enhance guest engagement during their stay and improve guest comfort and satisfaction (Cognizant, 2017; Oracle Hospitality, 2017).

� Empowering – Technology has empowered hospitality guests to evolve from being passive consumers of experiences to being active co-creators of experiences. This has led to the emergence of a “prosumer society”, reflecting the notion of consumers being actively involved in both the process of consumption and production (Prahalad and Ramaswamy, 2004; Ramaswamy and Gouillart, 2008; Ritzer and Jurgenson, 2010). Through the use of technology, hotel guests are playing an increasingly active role in co-creating and shaping their experiences along with the hotel hosts instead of simply consuming staged hospitality experiences (Neuhofer et al., 2012).

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� Exciting – The emerging experience economy has led to a competition-infused scenario where hospitality providers strive to constantly innovate and create customized experiences to address the unique personal tastes and requirements of a guest, exceed their expectations and delight them with unexpected wow moments (Torres and Kline, 2013; Bharwani and Mathews, 2016). According to Knutson et al. (2010), customer service during the in-stay stage is the most important part of the overall guest experience in the hospitality industry. Technology-supported customer service innovations can play a critical role in elevating the overall guest experience especially during the in-stay stage (Enz, 2011) and may even lead to an exceptional customer service incident that might completely override many other less than satisfactory variables of a guest’s experience (Landahl, 2015).

� Empathizing – Technology can play a pivotal role in empathizing with guest feedback and listening to them. During the guest stay tracking guest journey with the help of technology and real-time data analytics can help hotels anticipate complaints and prevent service failures and implement expeditious service recovery. At the post-stay stage AI-based predictive analytics can be used to identify detractor guests with a high churn risk. Proactive action can be taken to address the guest issues to move guests back from detractor/neutral to promoter territory to ensure continued guest loyalty and retention.

Emerging technologies shaping guest experiences In the context of the hospitality industry “technology is a critical catalyst in creating a differentiated experience” (Oracle Hospitality, 2017, p. 18). Hospitality organisations are weaving technology ecosystems as enablers into the fabric of dynamically customizable guest interactions to create frictionless, value-added, high-impact guest experiences. Based on the interviews and a qualitative thematic analysis of the LBIO data using NVivo12 software, the emerging technological product and process innovations that are actively being used in the hospitality space to deliver enhanced guest experiences can be categorized into five broad verticals based on the type of technology used. These are discussed in the following sections.

Wearable technology Wearable technology refers to an application-enabled computing device that can be integrated into accessories or gadgets that could be worn “on the body (like a smart patch), around the body (like a wristwatch or a headband) or in the body (like an identification sensor embedded under the skin [. . .])” (Kurwa et al., 2008, p. 2).

Wearable technology allows for seamless interface, communication and management of data (Çiçek, 2015) and can play an important role in enhancing the guest experience from the backend of operations as well as on the frontline. On the backend, urgent guests requests can be seamlessly and discreetly routed to the appropriate and proximately located service staff on their GPS smartwatch wearables, who can respond with a discreet tap, acknowledging to guest as well as to the rest of the service team that the request is being attended to. The employee can handle the request with agility, reducing response time and accelerating speed of service. It improves the communication efficiency with the guest as well as the within internal staff team ensuring real-time handling of requests and tasks. It can also generate rich task management data to allow for powerful analytics for more efficient management of operations through optimum allocation of human and material resources within the hotel.

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On the frontline, the erstwhile Starwood Group created SPG Keyless powered by the SPG app which could be downloaded by their preferred guests on their wearables (smartwatches) or mobiles to enable them to have a smooth and seamless check-in and unlock their hotel rooms with a simple tap on their smart gadgets at the Aloft, Elements and W brands of the group.

Walt Disney World Resorts’ Magic Band is a waterproof wristband that epitomises the power of wearables in creating a frictionless, interactive and memorable guest experience through the use of technology. The Magic Bands arrive by mail even before the guests embark on their magical adventure of a lifetime. If guests sign up for the “Magical Express” experience, the Magic Band replaces all the details and hassle of paperwork and becomes the ubiquitous master key for the entire duration of the trip. The guests’ bags get tagged right at the home airport and will smoothly arrive to their rooms in the Orlando hotel. Travel and access to all the parks and rides, meals and other purchases throughout their stay are integrated and facilitated by simply swiping the Magic Bands. The sensors in the band allow the Disney employees to pinpoint the guest location and gather data points about the quality of the guest experience in the park. A negative event like an extremely long wait in the line can be immediately mitigated by emailing a free ice cream coupon or a pass to another ride thus recasting the experience into a positive memory. The “magic” of wearable technology can play an instrumental role in allowing hospitality employees to “move past transactions, into an interactive space, where they can personalize the experience” (Kuang, 2015).

Virtual reality and augmented reality VR uses technology to immerse the audience into a computer-generated audio-visual digital environment. VR can be experienced through VR headsets that are connected to a computer (Oculus Rift) or a gaming console (PlayStation VR) or though standalone devices (Google Cardboard) using 360 video technology on a smartphone with a headset (The Guardian, 2016).

Several luxury hotel groups such as Marriott, IHG and Accor are increasingly using 360-degree 3D and VR presentations and virtual tours on their websites or other social media sites as an immersive sales and marketing tool to allow potential corporate and leisure guests to virtually explore and experience the various event facilities and room options available at their hotels without leaving the comfort of their respective offices or homes. It also helps synchronise and integrate all the marketing material of the group at a central hub and showcase the unique characteristics of each of their properties allowing for a quick comparison. To make a compelling sales pitch, several Accor Hotels in Europe including Fairmont Le Montreux Palace, Sofitel Munich Bayerpost, Raffles Europejski Warsaw use VR to conduct virtual show rounds of the hotels for prospective clients and even upsell to them by allowing them to virtually compare the different room categories by clearly demonstrating the difference.

IHG’s “ViveZone” uses VR to offer gaming and entertainment in a fully immersive digital generated environment in its hotels in Beijing, Shanghai and Sanya in China. The hotel guests also have the flexibility to experience the Vive line of VR content through Viveport application in the comfort of their own rooms. Marriott Hotels launched VR Postcards, a series of immersive travel stories that guests could view on Samsung Gear VR headsets. The headsets can be ordered by the guests through “VRoom Service” which allows guests to enjoy these inspiring VR experiences within the comfort of their hotel rooms.

While VR substitutes the real-world environment with a virtual one, AR uses technology to enhance the real world environment in real time by superimposing digital components on

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