Leading at a time of inevitable exposure to disruption requires a will to embrace continuous innovation as a way of life- as a philosophy of work
On June 14, 2022, as part of the Mediterranean Tourism Forum organized in Malta by the Mediterranean Tourism Foundation, the panel on disruption in the hospitality industry was one of the landmarks of the event. It brought together experts from different fields to discuss the disruption in the wake of COVID-19 and its aftermath, climate-change-induced economic and ecological upheavals, the Great Resignation and its impact on the morale of the workforce, and the radical shift towards a new economic model that takes into consideration new habits, new inventions, and new values- and how all of these tectonic shifts will impact and change the way hospitality operates in the present and in the future.
My take on the subject, as a speaker in the forum, is that all industries have been experiencing disruption for quite some time, but some are taking more time to incorporate it than others. Parts of the hospitality industry value chain will either embrace disruption or have it thrust upon them with even more cataclysmic impact than they imagine. Value chains like urban transportation, booking, low-cost airlines, individual accommodations, tech-based hotel management startups, and digital marketing and sales have already experienced deep and radical forms of disruption; yet, the industry, as a whole, is facing resistance especially from segments like crossborder regulations, investment, infrastructure, entertainment, classical hotel chains, and safety and ecological considerations.
The hospitality industry is therefore torn between aggressive private actors keen on using the technology to create the best tourist experience on one hand, and on the other, behaviors, generally emanating from public entities and classical private chains that are reluctant and sometimes even conservative (with few exceptions here and there) in their approach to the disruptions in the industry. Unless all the actors along all segments of the value chain adopt disruption as a way of life in a world undergoing the Fourth Industrial Revolution, hospitality will remain torn between forward-looking vanguard ideas and business-as-usual soon-to-be-outdated approaches.
The Disruptions that Are Shaping Trends in the Hospitality Industry
A few years ago, I wrote that Uber, Airbnb, Booking, Ryanair and Glovo/Uber Eats etc. are tectonic disruptors. They use artificial intelligence, geo-localization, available day-to-day assets (houses, cars, mopeds, food joints) to create needs, and then cater to those very needs at the same time. The disruption is not only in the use of technology, but in using day-to-day assets to provide for needs that have been updated to involve better service, easier access, quicker availability; armed with technology, disruptors take the need to a higher level, and respond to it by using the "existent" but in an innovative manner.
For instance, Airbnb uses tools for programming languages, open-source libraries for building interfaces, open-source web servers, key-value stores, cloud storage, cloud hosting, cloud database, and web-based query execution solutions etc. to provide a seamless transaction experience to both customers and owners alike. Normal homes become assets, and the technology is used to make owner and renter meet in a secure and reliable manner: the transformation is revolutionary.
Meanwhile, in marketing, for example, vanguard companies and organization are using social media and technology tools to:
- increase brand awareness
- build communities and market products and services
- manage generated data (both self-created and received through customers)
- track the customer experience and react in a timely manner should there be any changes in the trend
- monitor success of individual marketing measures
- help increase the power of marketing campaigns, create budgets, as well as support marketing activities
- use automated processes to make "distribution of content more efficiently
Companies that invest in these tools and recruit the talent to use them effectively and aggressively are embracing disruption in marketing, and using it to attract customers and keep them satisfied and loyal.
Trends Shaping The Industry
The disruptors everywhere are shaping the present and the future of the hospitality industry. By championing innovation in the sector through startup promotion and support for development (relying mostly on digital innovative tools and innovation incubators), Portugal, as a destination, was able to grow its visitor numbers– up to 27.4 million in 2018. But that is not the whole story: a multi-channel platform was also put together to promote the destination, reinvent the brand, create engagement, foster communities, and monitor experience.
The innovators tap into the public policy vanguard attitude to go digital: efforts coalesce into virtuous dynamics, synergies from which growth becomes tangible and sustained over the years. It should thus not come as a surprise if destinations would totally or partially abandon traditional venues for B2B and B2C meetings, like fairs and exhibitions, in favor of digital marketing and tracking of behavior and experience (a mélange of both is possible too); and the move has been paying off prior to COVID-19 for some destinations like Portugal.
The disruptors have pushed the industry to adopt new ways; of course, they triggered survival mechanisms, but they pushed most to innovate, to find new ways to make the experience worthwhile. These include dynamic packaging, the use of virtual reality to increase the experience before the travel, and the recourse to digital solutions to monitor the travel and to relive the emotions afterwards. Personalization, i.e. tailoring the experience to the traveler's needs, was on the rise prior to COVID-19; it is unlikely that it will subside due to fear related to pandemic-induced jams in airports as tourists scurried to go back home when borders were closing.
The new trends as of 2020 such as the rise of "bleisure" tourism, the use of automation and mobile booking, sustainable travel (the footprint imperative), transformative travel (making a difference in the lives of others as well as one's life), experience tourism (creating connections with other cultures or nature), solo traveling, and wellness- all of them denote a shift in the use of technology, but also show the rise of a more complex traveler whose experience requires constant monitoring that only technology can provide.
The New Normal, The Culture Of Care, And The Metaverse
Two big bangs have happened recently that are further reshaping the different value chains of the industry: the COVID-19 crisis, and the metaverse. The COVID-19 crisis has changed the sociology of who will travel, why they travel (their psychology) and their culture, i.e. how to travel. Milena Mikolova speaks of three characteristics that define the post-COVID-19 traveler profile: "the virtual as the new normal, hygiene as non-negotiable, and care as the new service." Combined, they mean a whole new breed of travelers that businesses should understand and cater to. The three new trends summarize the change: the rise of a new traveler who cares about safety, does not mind virtual reality, not as an alternative, but as an enhancer of the real experience, and who likes to care and being cared for. If there is a name to the socio-psychological change induced by COVID-19, it is the culture of care, and it does not matter if a part of that experience is virtual.
On a grander scale, the digital became a survival-must for the economy during COVID-19, after which it turned into the new normal. Epidemics are part of the new normal as well. More optimistic, Bill Gates thinks that outbreaks are normal; how to deal with their transformation into a pandemic is, however, preventable if we put the right contingency plan on a global level. What is sure is that the age of mass travel and the explosion of the airline industry will be associated with the spread of viruses, and their possible (albeit preventable) transformation into epidemics or pandemics.
The new reality is also that people will likely want to travel to where it is safe, green, and to where the digital plays an important part in living and reliving the experience. Part of this experience will be a metaverse version -a metaversion- of reality. DapRadar defines the metaverse (as) a collection of every virtual world built using blockchain technology. They can be gaming planets or non-fungible token(NFT) galleries, curated lands or digital streets. The metaverse is an open idea; it is there; it is the internet's next frontier, but its implications for the industry are huge.
For me, it is not a hype. The metaverse refers to both current and future integrated digital platforms focused on virtual and augmented reality. I see it as a significant business and financial opportunity for the tech industry, but also for other sectors such as hospitality. Metaverse versions of Marrakech or Malta will not depart from reality but will use blockchain to create new experiences out of an augmented, modified, or invented reality, wherein avatars act like normal and where you can have governance tokens that give you decision-making powers. The metaverse is totally decentralized but there needs to be a connection between all of these new realities for it to take some form or coherence, although it is totally possible that it may remain radically extended, and its future open to all kinds of possibilities.
New generations are looking at augmented reality and the world of avatars not as a fantasy but a reality. Visiting a metaverse version of Marrakech, Paris, Dubai, or the Red Sea is no alternative to the real thing (the physical visit), but the emotions and sensations involved in having your avatar make the visit to the metaverse version are no less "real" and no less intense. Today's youth, tomorrow's consumers, are already living in this augmented reality on a daily basis.
It is not impossible to see metaverse versions of monuments that are too old or too dilapidated to renovate. The Royal Opera House of Malta, heavily hit by aerial bombardments in World War II, was never rebuilt due to the controversy surrounding renovation plans. Transformed into an open air theatre, it recently saw the first hybrid performance of a dancer from the Ballet de l'Opéra National, Hugo Vigliotti, on a hybrid meta-ballet stage that is both real and virtual. Produced by Biborg, in collaboration with Epic Games and Movella Xsens, Nymphea Selenis is the first dance performance powered by the Unreal 5 engine in real time that was also open to the public. Merging art and gaming gave the audience a unique immersion of a real and a metaverse experience. The experiment opens innumerable possibilities in art, leisure, architecture, tours, museum experiences- all fundamental for the touristic experience.
Who Will Lead The Disruption?
Whoever masters the technology (artificial intelligence, big data, blockchain, the metaverse) is capable of hiring, training, and retaining talent, but also possesses a forward-looking spirit and an innovative attitude, will lead the way. The new normal is a safe, green, and augmented experience; those who will succeed are certainly those who will understand that part of the new experience and the new sensibility will be lived on the smartphone. Geographically, South East Asia will lead the way; their response to COVID-19 was the most technologically savvy and the most effective.
The promise is big, but the risks remain formidable. Zero epidemy is impossible in tomorrow's world; epidemies will be part of our lives; we need to learn how to live with them. Moreover, energy crises are making travel not as affordable as it was prior to COVID-19. On the other hand, I just hope the Global South will not be left out as usual; rich countries will be able to adapt more quickly and smoothly to the new realities of the new normal and the metaverse. This can lead to the digital gap between North and South becoming unfortunately even wider than ever before.
The role of governments and policy makers is to lead, to drive the vision, and to mobilize stakeholders and resources. Some form of regulation is needed, but overregulation will stifle creativity and innovation. Protecting personal data and private lives is a necessity in a world thirsty for information to build marketing and other decisions on.
But the most important role of governments, besides providing a safe and sustainable environment for a sustainable tourist activity, and besides helping with reskilling and training the Fourth Industrial Revolution workforce of tomorrow, is to fund wild ideas, to allow the opening of new frontiers, to project a future that is yet to build and construct years and decades from now. Todays' crazy idea is tomorrow reality. Let's all use technology to dream of a world that is fairer, more sustainable, and more livable in the not-so-distant future. The present and next generations deserve to hope for a better and more intense life- that could exist only at the tip of their fingers.
Source: entrepreneur.com