Hospitality Industry and Digital Age



Most hospitality businesses have been propelled by digital disruption with most executives globally admitting that the transformative has impacted their business to a great extent. It is, therefore, crucial to identify digital disruption approaches and perspectives and to digital implementation across the hospitality industry which offers lucrative investment opportunities in Thailand.

Following weak business operations in 2020, hoteliers have continued to see depressed conditions throughout 2021. The first shoots of recovery would start to break through from the mid of 2022 and will regain pre-pandemic levels by 2023. Against this backdrop, Thai domestic tourism is recovering at a faster pace, thanks to relentless efforts and proactive policies set by the Thai government for stimulating demand. By the early half of 2021, the vaccination programs started to translate into a herd of foreign tourists restarting their travel, helped by a recovering economy and new entrepreneurs starting a business in Thailand contributing to the strong growth potential in Thai hospitality industry. 

In the post-pandemic world, hospitality players are moving swiftly to overhaul their business operations onto a more sustainable footing by adopting modern technology and developing their understanding of diverse and varied consumer needs and feeding this information into their advanced tech-driven models to offer their consumers customized travel experiences.

The hospitality sector in Thailand has a central role in its economy because it is among the most popular tourist destinations in the world. This is partly due to the world-class quality of hospitality the country offers to its tourists. As per The Travel & Tourist Competitiveness Report, 2019 by World Economic Forum, Thailand tops almost all the KPIs in the region as shown in the image above. The Thai hospitality sector has been the frontrunner in driving revenue for the country as well as offering business opportunities in Thailand to domestic as well as foreign players.

In addition, Thailand benefits from competitive pricing for accommodation and commute, offering a low cost of living for travellers as well as ex-pats. Beyond this, the Thai hospitality industry benefits from its comprehensive, extensive transportation network, national infrastructure that is being upgraded at a rapid pace, along with the rising number of low-cost carriers serving the domestic market. These factors have offered it an edge over its competitors. The Travel and Tourism Competitiveness Index compiled by the WEF ranked Thailand on the 31st spot out of 140 nations.

For hotel operators in Thailand, their main revenue generating source is room charges which account for approx. 65%-70% of their total revenue. The remainder is generated majorly from the sale of food and drinks.

Hotel Chains in Thailand

The Need for Digitalization Driven by Pandemic

It’s no secret that expectations from consumers are changing the guest experience fundamentally throughout the hospitality sector. Anyone who has travelled to Thailand in recent times can attest to the way the hospitality industry has changed dramatically over the last few years, largely in response to the pandemic and customers’ expectations. The restrictions due to pandemic together with customer expectations have heightened the ease and simplicity of technologies such as mobile, social media and cloud which have helped hospitality companies to deliver instant access and services to their customers.

Improving Guest Experience Through Technology

The notion of improving guest experience has revolutionized the use of technology and has changed business conversations at the strategic level. Companies are gaining enormous benefits from the data collated by all the smartphone apps, social media posts, lobby sensors, etc. However, companies must ensure that they focus on the vision that has been rebuilt around their guest. It’s all about knowing your customer and using innovative technologies to create a personalized experience for them.

Hospitality companies are establishing enterprise-wide digital business strategies for delivering the same.

Such technological and digital transformations have spawned foreign investment in Thailand and some fascinating shifts in the Thai hospitality space are listed below:

Personalization with integration

Your guests won’t think in terms of your line-of-business functions, so there’s no need of organizing information in silos. Putting your guest engagement first, however, requires businesses to understand their guest as an individual, making their systems integration crucial. For instance, most leading hotel chains in Thailand have integrated their restaurant food and beverage (F&B) and leisure systems with their hotel application. They have integrated that data as a key element in their digital strategy. Once that information is aggregated, it could be served as well as accessed by guests using their own devices, allowing them to book a spa treatment, a table at your restaurants or check out any time during their stay.

Mobile Devices and Apps

Mobile devices also play a significant part in enabling guests to personalize their experience with the help of their own devices. For instance, at some Thai hotels, guests can plug their own devices into the in-room entertainment systems so that they could easily access media of their own choice.

Data-Driven Consistent Guest Experience

Consistency remains one of the key challenges for Thai hotels and F&B operators when it comes to the customer experience. It takes a huge effort to create and manage any successful restaurant, so how do entrepreneurs repeat that success? The answer is the technology that does the work for you. Rather than storing all the business and customer-related information on an isolated on-premise point-of-sale (POS) system at every, hotels and restaurant chains are shifting to cloud applications that could be deployed and accessed from anywhere. 

It’s one of the major trends designed to improve the customer experience. The business could leverage better and centralized reporting for analysing all sorts of issues, from food costs to guest preferences. One restaurant chain, for instance, uses a cloud application for tracking and managing data on the vendors it uses globally. A restaurant’s brand reputation is based on how well it knows its own ingredients and where they’ve sourced from. Such centralization of information using cloud technology offers them a view of what’s happening in their supplier pipeline.

Brand Recognition and Direct Relationships

Brand recognition is the crux to customer loyalty, as hotels are using digital technology through improved loyalty programs and better guest recognition with the help of analytics, and guest-facing apps. By improving customer relationships, they also improve the chances of their guests booking rooms directly with the hotel instead of routing through Online Travel Agents. The guest engagement landscape is changing and would continue to do so over the coming years. A direct relationship with the customer becomes relevant to stay competitive. Ultimately, customers would gain big from this as they’ll see an even more range of services that are customized to their personal preferences.

Looking Ahead

To continue the momentum, the hospitality industry in Thailand would need to continue building on its digital strategies for reaching more customers and new markets, such as:

  • Continuing to improve digital channels through investment in brand websites and apps. Such investment would facilitate accelerated growth in direct bookings and attainment and retention of loyal guests.
  • Creating applications and expanding analytics for improving property operations, providing a profound focus on anticipating and being equipped with the changing needs of individual guests. Personalized customer experiences are vital in the hospitality industry, and digital investment could enable these capabilities while identifying areas where costs can be reduced.
  • Enhancing employee engagement as well as retention through an improved employee experience, fuelled by investments in areas such as Learning and Development. An engaged staff taking ownership of the business operations is likely to offer enhanced service that a guest demand.

Bottom Line

Technological advancements are having a large impact on the Thai hospitality sector. Along with a persistent commitment to low tax rates, stable currency, committed government, and sensible regulation, the Thai hospitality sector gearing up for a powerful comeback. Painful as the pandemic has been, huge opportunities await for start up business in Thailand and corporations alike for creating fresh innovation, as the Thai industry emerges from the pandemic. 

There are immense opportunities for starting a company in Thailand in the hospitality space or as a tech service provider to these companies. One thing is definite as Thailand is powering up as an innovation and technology powerhouse, the moment of digital reckoning for its hospitality sector has begun.

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Andy Aditya

As Business Startup Specialist, Andy is often hired as a Virtual Director/Consultant to assist Business Owners in Thailand. For total business information and consulting for doing business in Thailand - Pls check - startupinthailand.com

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