I will discuss how hospitality operations might evolve resulting in potential changes to organizational structures and human resource practices such as selection, training, job descriptions, job specifications, and other related aspects.
Hotel Tech Report suggests that increasing flow of VC investments into hotel technology, the growth in the consumer-convenience technologies, and the ability to use APIs to integrate various software packages indicates a changing hospitality industry landscape.
A similar trend is noticeable in the restaurant space including the growth of online ordering systems and delivery apps, AI based automated inventory management systems, QR code menus, and contactless payment systems. These trends have been accelerated by the pandemic and its related challenges in labor markets dislocations, increasing wages, and the growth of hybrid work arrangements.
Commentators note that the top 10 technology trends of 2022 include a continued growth in artificial intelligence, big data analytics, the internet of things, growth of the metaverse, robotics, and blockchain. In addition, flex work, hybrid work, and work-from-home (WFH) arrangements are becoming more embedded.
For example, the Landmark London hotel is experimenting with a four-day working week for its chefs. Hybrid work arrangements mean transformation of consumers and their preferences for hospitality products such as lodging, business dining, or meetings and events. WFH will also impact employees’ preferences for their engagement with hospitality organizations. Much experimentation with WFH and hybrid work models are motivated by the ongoing labor market conditions. Increases in labor costs and the ongoing reconfiguring of industries suggest that technology solutions will gain increasing importance in managing operating economics.
Technology and Its Effects on HR
Advances in technology and its adoption in the hospitality industry will motivate several changes in HR practices. The effects of technology will differ depending on specific jobs/role – frontline operations positions such as a server, a housekeeper, or a front desk attendant or back-of-house operations such as accounts, finance, revenue management, and so on. The adoption of technology in hospitality will also be driven by the strategic orientation of the firm.
Technology and Strategy
Hospitality organizations offer various service levels – from economy to luxury – and how each responds to and adopts technology in its operations will determine the magnitude of change in its HR practices and systems. Service levels here refer largely to the extent of interpersonal interactions holding other aspects of quality such as physical ambience, location, and so on, constant.
In a recent article, I suggested four strategic positions based on two components: the level of technology visible to the customer and extent of the human interaction or ‘high-touch’ element. Visible technologies are those technologies that the customer will interact with during the service event, for example a self-check-in kiosk. Invisible technologies are those that a customer will not interact with but are nevertheless essential to complete the check-in process, for example, reservations systems.
Four strategic positions are possible: augmented luxury, traditional luxury, tech, and economy based on the extent to which a hotel company balances visible/invisible technology and employee interactions. As the economic, operational, and market benefits of technology supported hospitality operations becomes more apparent and entrenched, two very broad orientations will be adopted: organizations that select increasingly high-cost, high human interaction supported services and those that rely to a far greater extent on technology solutions, reducing human interactions. The speed of adoption of either will depend to a great deal on consumer preferences.
Trend analysis indicates that consumers and hospitality professionals are increasingly accepting of technology solutions in many aspects of hospitality. According to a report prepared by Amadeus (2021), about 25% of global hoteliers reported that they will keep or apply “technology that streamlines operations”, about 20% support “contactless delivery of food and beverage, room service and similar,” and 20% support ensuring minimal interaction between frontline staff and guests. Based on Everett Rogers’ model of innovation diffusion, these hoteliers are probably innovators and early adopters and more will adopt operational technologies once they have been ‘beta’ tested.
Consumers are increasingly more accepting of technology solutions especially if the technology supports their key expectations. I noted in another piece that service outcomes are composed of two components: functional and emotional. Briefly, the functional element refers to the bed or food service the customer is buying. The emotional components include the “the high touch” or the feelings and emotions the service causes in the customer.
The pandemic and the data provided by Amadeus have illustrated the extent to which customers are willing to forgo the ‘experience’ and simply receive the desired functional elements with a minimum of emotional component. The growth of dark kitchens and delivery services and the like is evidence of this attitude towards services. Customers are accepting of minimal housekeeping and front desk services in hotels. Golfers can order food via apps on the course and do not have to wait for a server to come by to order.
Taken together, the advance of technology, shifting consumer preferences, and economic imperatives suggest that the industry will in future be made up of a group of organizations that will lean heavily into technology and another group that will continue to deliver services through human interactions.
Earlier I suggested there are four possible strategic positions in future. Augmented luxury refers to firms that include a high proportion of high-touch interpersonal service elements. Most technology in these establishments will be invisible. These organizations operate at the highest levels of luxury operations. Hospitality organizations adopting a Traditional Luxury strategy will largely resemble the luxury markets today. However, a higher proportion of visible technology will be in evidence.
Organizations adopting the Tech strategy will have the highest proportion of technology interfaces to interpersonal interactions. Finally, the Economy strategy describes organizations that have low levels of both technology and interpersonal interactions. Organizations adopting this strategy, either intentionally or by default, will find it increasingly difficult to compete in technology mediated industry environments. Each strategy implies different HR practices and approaches.
Technology and Human Resources
Two aspects of HR will be most directly affected by the extent of technology adoption within the hospitality industry. First, the employee to guest ratio will vary depending on strategic orientation: augmented luxury will have higher employee to guest ratios compared to the Tech hospitality firm. This is because the Tech hospitality firm will install a higher proportion of both visible and invisible technologies and rely greatly on technology intermediation both in the front- and back- office operations.
Organizationally, reporting relationships will become flatter with some of the management roles being ‘outsourced’ to technology. The advance of technologies like AI may, for example, influence the job description of revenue managers. This key role linking marketing (demand side) and operations (supply side) will benefit greatly from AI decision support permitting managers in these roles to participate to a far greater extent designing organizational strategy.
The advance of Software as a Service (SaaS) might move unit level and onsite training programs to remote and cloud locations with implications for how unit training functions operate. As reporting relationships and job descriptions evolve, so will the associated role competences.
The second change is that employee roles will be redefined because of greater inclusion of technology and the consequent changing employee to guest ratios. Airline check-in processes are a good example: the number of staffed check-in counters has reduced with the introduction of the kiosk. A different employee role was created – an agent whose role is to assist those who need technology support. This resulted in fewer employees and implicit changes to the organizational reporting relationships.
This employee will be most effective with competences required for the expanded or altered demands of the job – the employee is no longer responsible for the check-in and issuing boarding passes. In the restaurant space, the use of the QR code in the place of menus hastened by the pandemic means servers’ roles have changed. The adoption of contactless and tabletop payment systems also contributes to changing the job description of a server. These serve to illustrate the extent of change that may be expected in the numbers, roles, and competencies of hospitality employees.
Associated HR processes including selection, training, orientation, and compensation are all bound to change. Organizations that anticipate their future strategic position and intentionally re-organize will gain a competitive advantage. According to some, the pandemic has offered an opportunity to rethink hospitality operations, organizational structures, employee competences, performance metrics, and compensation. It is time to carpe the pandemic!
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