The need for hotels to develop more innovative solutions to drive more direct business in the digital age (especially given the rise and consolidation of OTAs and meta-search engines) was a long-running and dominant theme at the WIT Hospitality conference in Hong Kong.
Leading tech entrepreneurs Fritz Demopoulos, CEO of Queen’s Road Capital, and Morris Sim, CEO and Co-Founder of Circos Brand Karma, each offered their insights on what key lessons tech startups could offer the hospitality industry.
1. Take risks, experiment
Risk is the name of the game when it comes to startups, according to Fritz as he states, quoting “solutions are not obvious and success is not guaranteed”. Fritz argues that larger organisations seem to be too hesitant to take these risks, potentially at fear of a greater loss.
However, he emphasises the necessity of risk-taking and the need to encourage others to do so as well. Morris’ experience as an advisor for hotel companies on their digital strategy found that hotels were far too quick to give up on a strategy if it did not yield immediate and tangible results, instead of adapting and responding to the problem with alternative solutions.
2. Understand that a lack of success is not the same as failing
The two men perceive failure in slightly different ways, however they both ultimately agree that it is not a cause for giving up. Fritz argues that by taking a risk and knowing that there is no guarantee of success, it enables start-ups to adapt and reassess in the face of disappointment.
Morris, on the other hand, says that a failure is not only a key learning opportunity but can be critical in aiding your next step. He cited AirBnB’s founding story, wherein a unsuccessful fundraising attempt to sell cereal boxes caught the attention of American start up fund, Y-Combinator, who later invested $20,000, serving as an allegory for how their perceived failure was actually the tipping point of their success.
3. Stop focusing too much on immediate ROIs
Both Morris and Fritz agree that one of the reasons why hotels potentially lack the innovative ability of startups is because of the ROI-driven attitude that drives much of their ‘experimentation’. Morris argues that, instead, investment must be regarded as learning, not purely as an ROI.
Hotel groups may even benefit from an ‘experiment fund’ of sorts to encourage innovation and experimentation within the business. Fritz concurs as he argued that larger companies focus on a “resolved goal” while startups focus on a “process goal”, wherein there is an inherent faith that a relentless drive in testing different things will eventually yield results.
Morris said there was a belief held by hoteliers that after spending vast quantities in building and developing the property that somehow they were “done with the investment”. Then it’s up to sales to fill the rooms and get the returns, and very little investment is actually spent on marketing and more spent on sales and distribution.
He said hotels had to embrace digital as core to everything they do and “not as an appendage”.
Fritz Demopoulos, CEO of Queen’s Road Capital at WIT Hospitality, Hong Kong
On an ending note, Fritz and Morris cited the valuable lessons tech startups could learn from the hospitality industry. Morris believes that successful hotels are those that have a “distinct, tangible and concrete value” that endures through time. “Hotels create real value. Startups need to be clearer about the value they are creating.”
Fritz described hotels as “a bundle of services” with the ability to provide “consistency, attention and discretion”, characteristics that startups must embody. He suggests that startups should consider “a wider range of talents” that need to be pulled into their world beyond software engineers, to broaden their abilities.
Hotels were the masters of mutli-cultural management, he observed, citing the case of Dubai where often hotels have employees of more than 60 nationalities. Add to that the international guest mix and hotels are truly experts at managing global workplaces.
