The hotel industry is still looking for ways to use technology to better serve its guests and, not coincidentally, to find ways to improve its revenue.
by Glenn Withiam* The hotel industry is still looking for ways to use technology to better serve its guests and, not coincidentally, to find ways to improve its revenue. In earlier times, the latest technological improvements in hotels included pipes for the circulation of cold water and radio signals in guest rooms. Although hotels have gone far beyond such modest innovations, one factor remains constant: guests' reaction to technology.Although we tell ourselves that our guests "demand" the latest in computerized devices, the reality is that not all guests feel comfortable with technological changes, whether at the front desk, in the rooms, or when trying to book a room. As follows from the above, the extent to which your guests embrace technology into their lives provides a simple way to differentiate those guests in several different dimensions.
The tool for creating market segments based on guests' reaction to technology is called the Technology Readiness Index (TRI). As explained in a new report from Cornell University's Center for Hospitality Research, the TRI index is a relatively simple, ten-point survey that guests can be asked to complete instead of the usual satisfaction sheet or as a special requirement by their front desk colleagues.
The TRI calculates guests' attitude towards technology in the following four dimensions: optimism, innovation, discomfort and insecurity. We usually think of technology-loving people in terms of their willingness to innovate, but the research underlying TRI also includes assessing whether people believe technology helps improve their lives (optimism). Against that is the point where people are confused by technology (discomfort), and if they simply don't trust that technological devices will work properly (insecurity).
If you like to use technology for yourself, you can download this report, complete with TRI questions, from the center's website chr.cornell.edu. There is no cost, although we request a registration. The report is titled "Segmenting Hotel Customers Based on the Technology Readiness Index" by Rohit Verma, an associate professor at Cornell, and Liana Victorino, Kate Karniouchina, and Julie Feickert, graduate students at the University of Utah.
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The TRI segments the market
The TRI was developed and validated by researchers from other industries. Looking at its use in other fields, Professor Verma and his co-authors applied tri to the hospitality industry. When the researchers tested the index at 865 U.S. establishments and hotel pleasure customers, they found that a fondness for or aversion to technology corresponded to certain characteristics, which echoed the findings of previous studies.
That's where the technology index contributes to market segmentation. Those who scored high on the TRI not only traveled with their computers and PDAs, as might be expected, but also tended to be frequent travelers (often on business), were regular customers of high-end hotels, and were willing to pay relatively high hotel rates. This group was relatively young, with higher education, and wealthier than the sample as a whole. So, when we talk about guests who appreciate technology, we are talking about a group of guests with particular demographic characteristics.
The authors suggest two possible uses for this information. Most obviously, as a hotel manager, you should consider the possible reaction of your guests to any technological innovation in your properties. If it turns out that your guests don't appreciate technological innovations, you can save money instead of installing automatic check-in kiosks or broadband in the rooms. On the other hand, if your guests show a high score in the TRI, they will consider your property outdated if it does not have some state-of-the-art technology.
Going beyond the potential guest response to high-tech innovations, however, it seems that knowing your guests' score on the tech index can give you an indication about their travel habits and personal demographics. Under this idea, hotels can differentiate themselves by using technology to attract frequent travelers willing to pay high-end hotel rates. On the other hand, guests opposed to technological development are not going to get very excited about having to pay high rates, regardless of the technology used in the rooms.
With the many levels of products in the hospitality industry, establishments can thrive by focusing on technology-loving guests or those anxious in front of it. The key is to know which group frequents your hotel before spending your money on the next big technological innovation.
*Glenn Withiam is director of publications at Cornell University's Center for Hospitality Research.
