Digital Transformation in the Hospitality Industry in an Emerging Country

Digital Transformation in the Hospitality Industry in an Emerging Country

Kanitsorn Terdpaopong (Rangsit University, Thailand)
DOI: 10.4018/978-1-7998-2799-3.ch012

Abstract

Emerging technologies have an undeniably significant impact on the hospitality industry. Hotel owners and general managers face many challenges to compete in an ever-increasingly competitive market. Many hotels are quick to adopt some of the emerging technologies to maximize brand visibility, gain operational efficiencies, and enhance customer experiences. The digital transformation is well underway. Hotels need to keep up with technological changes; otherwise, they are taking risks being left behind. This chapter encompasses the digital transformation of the hospitality industry to examine the impact of it on operational competence and organizational performance in an emerging country like Taiwan. Five case studies are used in this chapter. In-depth interviews with the executives of the leading hotels in Taiwan are a source of rich information and reflect the gradual transformation of technology in the hotel industry of Taiwan.
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Introduction

Hospitality is a general term that refers to a segment of the service industry that includes hotels, restaurants, entertainment, sporting events, cruises, and other tourism-related services. The hospitality industry is essential not only to societies as a whole but also to a country's economy as well as customers and employees. The hospitality industry generates revenue for local economies directly when tourists spend money on hotels, restaurants, and entertainment venues. It also helps economies of countries indirectly due to tourist spending on retail goods, foods, souvenirs, and crafts. Besides, tourism can stimulate the demand for services such as tour guides, translators, and operators, restaurants and entertainment services, and infrastructures such as airports, roads, and public transportation. Also relevant are the jobs created by the industry. World Travel and Tourism Council recently published an article detailing the economic impact of the tourism industry. In 2017 the hospitality industry accounted for 313 million jobs worldwide. It translates to 9.9% of total employment and 20% of all global net jobs created in the past decade (World Travel & Tourism Council, 2018). Hospitality also supports jobs in the arts and culture industries, helping and supporting the growth of the entertainment industry.

The benefit of the hotel industry is covering to sustain the country's economy. In IHG Annual Report and Form 20-F 2018 mentioned that in 2018, the global hotel industry is an USD525bn industry. The 54% of rooms are affiliated with a global or regional chain, up from 50% in 2012, and 46% are unaffiliated or independent hotels. The top five hotel groups, namely IHG, Marriott, Hilton, Wyndham, and Accor, account for 25% of market share, rising from 19% in 2012, and 58% of the global development pipeline of hotels in planning or under construction. At a country level, in the United States, for example, there has been a significant rise in occupancy rates. Using statistics from Smith Travel Research (STR), Sheel (2017) reports that the year-to-date occupancy increased 0.6% to 67.4%, relative to 66.9% for the same period in 2016. The year-to-date average daily rate, or ADR (September), grew 2.0% to $127.14.

Zhukova (2018) stated about the challenges experienced by the hotel industry regarding the changing priorities of the modern consumer that:

….the use of mobile payments, the changing priorities of the modern consumer, the environmentally friendly thinking of the consumer, the individualization of services in hotels, the presence of chatbots, the creation of smart and wellness rooms with using voice activation and Internet commands, installation in hotels of digital kiosks, self-check-in and check-out of a guest using information technologies, digital equipment polar fund hotels, use of a mobile phone as a lock to the number, availability in the hotels of interactive social networking innovations, the use of SMS-notifications in the loyalty program, the active use of internet marketing. The hotel industry is already actively introducing and involving modern innovations in its business practice (Zhukova, 2018, p. 62).

There are several metrics for measuring hotel industry performance. RevPAR1 is an essential indicator of the value guests ascribe to a given hotel, brand, or market and increases when guests stay more often or pay higher rates. Rooms supply is also significant because it is reflective of the attractiveness of investing in the hotel industry and is influenced by the assumed profitability of a brand or market. Driven by strong economic fundamentals, the global hotel industry has seen growth in both RevPAR and rooms supply over the past decade. It also plays a vital role economically, accounting for every 1 in 10 jobs around the world (IHG, 2018, p. 8).

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