Pandemic Transforms Hotel Industry From Laggard to Innovator

BERLIN — The hotel industry is on the bleeding edge of business innovation and tech adoption, but panelists speaking during the International Hospitality Investment Forum said the pandemic has changed that, at least somewhat.

Talking during the "Can the Hospitality Industry Drive Innovation" panel, Brian Kaufman, managing director for The Blackstone Group and leader of its U.S. hospitality portfolio, said the COVID-19 pandemic was an "accelerant of innovation and an accelerant of our willingness and receptivity to embrace innovation and technology" because it changed the industry from almost every perspective.

"It changed the way that all of our operators had to work," he said. "It changed the consumer preferences. It changed what people care about."

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May 16, 2022 10:26 AM

2022 International Hotel Investment Forum

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He pointed to Great Wolf Lodge, which Blackstone owns a 65% stake in, as an example of that widespread change, noting the company "rewrote over 400 different operating protocols."

Norbert Speth, vice president of strategy and openings for Deutsche Hospitality, agreed, but put it more bluntly, saying the industry was forced collectively into embracing innovation by the harsh realities of the pandemic and associated economic downturn.

Earlier downturns were "like a little fight in the schoolyard. COVID was more like stepping in a ring with Mike Tyson, going 12 rounds, then getting your ear bit off," he said. "So digital transformation is a pure necessity, an absolute necessity."

Rami Zeidan, founder and CEO of Life House, said innovation has been more at the forefront for the industry, and that sort of deliberate focus is the only true way to make it happen.

"Innovation requires an investment and focus," he said.

Zeidan said a big part of innovating in hotels is recognizing that "the best innovation comes from outside the industry," meaning hoteliers shouldn't be looking for unique and tailor-made tech solutions for every problem.

"Some of the best products we've seen are industry-agnostic, and we kind of put a hospitality twist on it, whether it's an HR software or CRM or what have you," he said.

Kevin Edwards, senior vice president of commercial for Alliants, agreed, adding this is "almost a fixation within the hospitality sector that we can only work with products that fit hospitality."

"In reality, in most cases we have a use case across multiple sectors," he said. "So it comes down to looking to other sectors and bringing that on board."

Panelists said innovation is key in an industry increasingly hungry to protect profits, as technology will be a big part of driving a more efficient operating model.

Kaufman said things such as kiosks are increasingly important in the hospitality space.

"What we've seen is that's been able to streamline the customer experience, streamline labor efficiency and ultimately lead to greater guest satisfaction," he said.

Hubert Viriot, CEO of Yotel, said his company has been proponents of kiosks for hotel check-in throughout its existence, while many competitors proclaimed they were a negative because they took away from the human touch.

"It saves you from having a lobby, which is a very expensive piece of real estate," he said. "It makes the check-in process much more efficient. When you check in to one of our hotels, it takes less than a minute. I don't hear anyone complaining about that. The only potential issue is when [the kiosk] doesn't work, so it all goes back to reliability."

Jeff Coe, founder and general partner of Limestone Capital, said innovation is becoming increasingly important not just on the operational side of the business, but on the investment side, as well. He said being able to identify where you might be able to innovate and improve on an asset is key to getting a leg up when chasing deals.

"We're competing with everyone," he said. "There are hundred of funds, for example, looking for a hotel in Rome, so how do you get the best deal above and beyond your competitors, like Blackstone? So it's about using techniques and technologies."

He said innovation becomes a focus while "refinancing, restructuring" and making capital expenditures for a property.

"Then you have to use innovation and technology to build a cheaper but still sustainable and highly finished products, and then once you do that, you have to make sure that your brand is using the best-in-class technologies and then you have to use all those things to drive your branding and your marketing to bring in the customer and get them to pay the highest possible premium for your room," he said.

Coe said when considering technology, it's important to deliberately build a team in touch with your actual needs and not just assume your highest-level executives with the most experience know everything.

"How do you know what is a good tech stack or what's a good product?" he asked. "The best way is to hire accordingly to your team because there's no point sending, for example, a 65-year-old white man who had just done real estate and commercial building in Scandinavia to see what is the best way to communicate" with guests.

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