The world is currently facing multiple significant crises, each with the potential to bring about global impacts. Simultaneously, we’re grappling with a full-scale war, an escalating food crisis, rising inflation, the ongoing pandemic, and political upheaval. In the hospitality sector, this turmoil translates to mounting challenges: the increasing cost of debt and supplies, talent acquisition and retention hurdles, inflation, energy, and fee cost hikes. All of these factors create a perfect storm that may leave hoteliers feeling overwhelmed. However, dwelling in this sense of despair and inaction can lead to stagnation and uncertainty, detrimental to business.
The key is to focus on the inherent strength of the hospitality industry and draw optimism from it to propel us forward. This spirit of optimism was recently exemplified at the Phocuswright Europe Conference by Fernando Vives, CCO of NH Hotel Group. He expressed pride in how the industry has weathered the past couple of years, emphasizing the positive changes that have emerged.
These challenges force us to embrace different approaches as we adapt to the evolving landscape, akin to the mindset that prevailed during the intense period of the Cold War. During that era, a philosophy called VUCA emerged, denoting Volatility, Uncertainty, Complexity, and Ambiguity.
Volatility: This aspect of VUCA refers to the rapid emergence of unexpected challenges. Consider the unpredictability of a full-scale war in Europe just a few months after it was unimaginable. Likewise, the global lockdown in response to the pandemic, with most of the world staying indoors, was a surprising and swift transformation.
Uncertainty: Volatility leads to uncertainty, making it difficult to predict and forecast. Factors like surging inflation, labor shortages, stagnant wages, and the prospect of a recession create ambiguity around future costs, revenue, and decision-making.
Complexity: Rapid changes and uncertainty give rise to complex decision-making. Hoteliers are faced with numerous questions, from when to reopen properties to pricing strategies, floor reopenings, and technology choices.
Ambiguity: The culmination of volatility, uncertainty, and complexity can create ambiguity, rendering decision-making difficult. This state of ambiguity often leads to inertia, impeding growth and stifling innovation. In essence, businesses become reactive to each crisis, losing control and failing to drive decision-making.
The Catalyst for Change
Ironically, this environment of uncertainty becomes a catalyst for positive change. It presents an opportunity to adopt habits of flexibility, speed, and agility, driving positive trends and innovations. The pandemic era saw the rise of the QR code and automated check-ins, and an explosion in direct booking channels. Innovations like Duetto’s upselling integration with Oaky have demonstrated the potential of personalized offerings. The industry has embraced customer-controlled automation routines, combining the best of technology and human interaction to cater to the evolving market.
The foundation of this flexibility and adaptability rests on several core tenets:
- Multi-tenant Cloud Environment: Leveraging a multi-tenant cloud-based environment enhances adaptability and agility.
- Data-Driven Decision-Making: Utilizing data-driven insights allows businesses to understand and respond to market needs.
- Combining Human and Machine: Integrating human expertise with machine capabilities through cloud-based Open Pricing fosters agility and adaptability.
Spinning VUCA on Its Head
Embracing VUCA can be transformative:
- Vision: By driving a compelling vision, businesses can transform the volatility of the marketplace into a clear direction for product integration, services, human interaction, and automation.
- Understanding: Deepening the understanding of the business’s functioning, especially in relation to customer needs, can eliminate uncertainty.
- Clarity: Establishing clarity about product and application focus can simplify complex decisions.
- Agility: Agility sidesteps ambiguity, keeping businesses and employees moving forward in a direction that makes sense and delivers positive outcomes.
Historically, the hospitality industry has faced numerous crises, from 9/11 to the pandemic. Yet, every crisis has driven adaptation and innovation, ensuring the industry’s resilience. The ability to pivot, learn, and move forward has been a hallmark of the sector.
To thrive in the face of global challenges, embracing change is imperative. The industry can create agile and flexible hospitality models, shaping the rapidly changing needs of customers. Success lies in recognizing and understanding key market trends like sustainability, digital transition, data fluidity, and agile working practices, and placing the customer journey at the forefront. By doing so, the hospitality sector can not only meet but also lead the charge in adapting to the evolving needs of the market.
In times of global turmoil, the hospitality industry has a history of resilience through adaptation and innovation. The concept of VUCA provides a framework for navigating through these challenges and transforming volatility, uncertainty, complexity, and ambiguity into positive change and agility. Embracing change, understanding market trends, and prioritizing the customer journey can empower the industry to lead and thrive in an ever-changing landscape.