Why hotels need startups more than ever
With upcoming mega events like Expo 2020, Dubai is set to double the number of its hotels.
Hospitality Management Holdings, a dubai-based hotel management company, is looking to double its portfolio in the UAE and Saudi Arabia in the next five years, according to the GCC Hospitality Industry report conducted by Alpen Capital.
Capital investments in the sector is set to grow to 5.4% each year, until 2026 according to the same report. While this number seem positive, it is considered a minimum prerequisite for Gulf economies to become sustainable and ensure resilience, away from oil.
Hotels need to raise the bar
With higher demands for accommodation comes much higher expectation from hotel guests, and more sophisticated ones. This is why innovation must come on different levels and aspects, to cater to all guests. Innovation should touch the entire hotel experience, from having quicker check-in processes, more advanced in-room hardwares, guest apps, robot clerks, voice-activated rooms and more.
The hotel industry is indeed becoming more innovative worldwide, and startups are yet to play a key role in our Arab region as the need to innovate is highly demanded by both guests and hotels.
Luckily for many startups in the Arab region, Marriott in the Middle East and Africa has launched TestBed, an accelerator program that invites startups to test their solutions at a Marriott hotel in the MENA region for 10 weeks.
Unified Inbox is one of the startup that recently joined their program. It is a platform that allows guests to communicate with smart devices using their preferred chat apps, via text and voice
The move towards more innovation will contribute to making the hotel innovation process quicker. “The main reason why the hotel sector isn’t getting disrupted as quickly as it should is because the testing and sales processes take a lot of time, according to Hasan Haidar, partner at 500 Startups. “due to the long sales cycle and difficulty in getting products into usage at hotels, although we would like to see more investments in that sector in the region, it's not currently an area of focus for us,” he said.
What triggers the need for startup innovation in this sector is the rise of millennial travelers, who are tech-savvy and tend to spend more time checking hotel ratings, feedback and recommendations before making any booking decision, the Alpen Capital report highlighted.
The pool of opportunities for startups is endless and they need to cover the entire spectrum, from getting guests to certain hotels to making their stay a memorable one.
“A big room for AI and integrating more technology to improve guest experience and to increase hotels revenue,” suggested Hussein Al-Sakkaf, CEO of Go Ejaza, a website that offers travel packages. “The startups have the vision on how implementing new technologies can improve hotel guest experience. In this era people can find alternative and affordable prices accommodation; from guest experience and interacting with hotels, personal concierge services, improving and automating check-in in hotels, increasing customers loyalty and connectivity, add value services to the guest stay, eliminating the need for a phone call or going to front desk,” he added by hinting at a new undisclosed product they will be launching for hotels in 2018.
Another innovation component is the minibar system hotels use. Ever wondered how do hotels, when checking you out, know automatically whether you took out something from the minibar or not? Many hotels around the world use automated systems equipped with sensors, that can detect if an items has been misplaced over 60 seconds, then deduct its price directly from the guest’s credit card. Yet the system isn’t completely automated as guests might take out an item and not return it, hence the need for an employee to come and check the items manually. Coming up for a solution for such a problem might be an opportunity for regional startups.
Data analysis is a key element for hotels. Using the input they get from guests will help them understand how to keep them coming, despite the appealing alternatives.
Twistar is a vice that uses and analyses hotel guests voice to generate real-time insights. The startup was also one of the three startups that joined Marriott’s TestBed program.
Subhi Farah also relied on customer feedback to serve clients better. The cofounder and CEO of real-time customer feedback startup Kanari, spotted this challenge. His startup works with hotels to collect feedback received from hotels’ F&B and business events. Farah opted for a solution that fits their expertise instead of aiming at servicing a segment that has been largely governed by the big guys. “These guys have more specific industry insight, offer global benchmarking capabilities and are integrated directly with the various hotel reservation/booking systems out there.” he said to Wamda. “We should try to focus on industries and segments that are underserved rather than going up against big names or established players.”
Another reason why Farah preferred to stay out of the hefty part of the hotel segment, is hotel chains that purchase software at the corporate level. “So [...] Marriott’s head office would buy a hotel stay reviewing software for all their properties globally. As such, we would need to sell to their corporate offices, which is difficult to do from here [Dubai].” For now, Kanari is focusing on events and F&B because they are “locally managed and hotel chains rarely have global systems covering that aspect because it is a non-core function of their business.”
Beyond the real-time customer analysis they provide, Farah believes there is an opportunity for other startups to support hotels and build an Application Programming Interface (API) framework and an app marketplace for third-party players, “to plug into and build cool solutions on top of. Think Salesforce, but focused purely on hotels. A company like that might already exist, but I just haven’t heard of it.”
Fitness and technology go well together. In an effort to break the traditional hotel gym concept, membership startup FittPass in Dubai is also targeting hotels giving their users access to their packages. They are currently working with hotels like Marriott. “As we see the revenue numbers increase and we become solid partners to the health clubs, we will be adding more hotels in the near future to our platform,” said founder and VP sales and marketing Heba El-Daleel. “We allow our users to buy day passes, memberships and various customized packages to each of the hotels in our network depending on the business objectives and consumer needs that we see fit.”
On the luxury side, Beachill is the third startup joining the TestBed program. It is an eco-friendly, hygienic and solar-powered beach mattress that can charge guests’ mobile devices and keep their beverages cool.
Solutions that are yet to come
If you happen to be a frequent traveller, you will notice the long unjustifiable duration for hotel check-ins. And since not all hotels have a self-check-in and check-out service like the one provided by European company Clock Software, entrepreneurs are now more than ever required to step in and help hotels become more efficient. Perhaps a local solution could help hotels accommodate a larger number of guests, especially with the foreseeing influx of huge events like Expo 2020.
“There is a lot in the hotel industry that stands to be disrupted. I travel frequently, and I stay at least one night a week in a hotel around the region and the world,” said Haidar. “The whole check-in process is unnecessarily long and hopelessly outdated in this age of technology. Keyless app systems are a great improvement, however their implementation isn't consistent. Again, it's not about figuring out what is broken, but how you can get your product into a hotel.”
Startups may not need to reinvent the wheel but identify the cracks that need to be filled. Hotels on the other hand must facilitate the barrier to entry for startups. “The sector is dominated by a few large hotel chains and brands, and the sales cycle to get a product into a hotel is quite long and may be too much for startups to handle on short runways,” added Haidar. With more accelerator programs like Marriott’s TestBed, hotels and startups might finally understand that in order to innovate, they must cooperate.