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Exclusive: Behind the automation boom coming to the hotel industry, from 24-hour check-in to texting for towels

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Behind the automation boom coming to the hotel industry, from 24-hour check-in to texting for towels

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For years, hotel operators have under-invested in technology, but persistent labor challenges are forcing a reckoning in the industry.

“The labor issue is a big driver for investments in technology,” said Mark Haley, a partner at Prism Hospitality Consulting, which specializes in hospitality technology and marketing. “You can’t hire enough people. … I would submit to you that to most hoteliers today, [labor] is a more profound and concerning issue than a pending economic slowdown.”

At the moment, hotel operators are reporting brisk bookings, even in the face of rising room rates. Thank leisure travelers. They seem so eager to get out and about that they aren’t flinching at the higher prices. Hotel revenue per available room, a key industry metric known as RevPAR, will likely top pre-pandemic levels this year, on a nominal basis, according to two industry forecasts.

The latest, released by STR and Tourism Economics at the NYU International Hospitality Industry Investment Conference this week, predicts that hotel occupancy will remain below 2019 totals but average daily rates will be higher by about $11 than the group’s prior forecast.

The outlook factors in the possibility of a recession, but doesn’t expect the economy’s slowdown to force the traveling public to alter their habits. And it anticipates that business travel will continue to ramp up heading into next year.

“It’s kind of a cold reality that even in a fairly deep recession, more often than not, 70-80% of the population isn’t seeing it. They’re still getting their regular paychecks and they’re still traveling,” Haley said.

Business travel has long been a key driver of hotel spending and its weakness continues to be felt. In April, the American Hotel & Lodging Association and Kalibri Labs projected that hotel business travel revenue will be 23% below pre-pandemic levels this year, which is a loss of about $20 billion from 2019. In 2020 and 2021 combined, the industry lost about $108 billion in business travel revenue, according the AHLA.

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In May, PwC projected business traveler growth next year will help offset any softening from leisure demand. It anticipates average daily room rates would be up 16.9% in 2022 from the prior year, prompting a 28.1% climb in RevPAR from last year. Then, in 2023, higher occupancy and room rates will help RevPAR rise 6.6% year over year, which would be 114% of the 2019 level.

Skipping the front desk, texting for towels

As guests venture back to hotels they likely will notice some big changes, hotel operators say. Among them is a greater reliance on technology, which is often being used to help ease the impact of staff shortages.

More guests should be able to skip the front desk, and check into their rooms using a kiosk or app on their phone. Oracle and travel industry trade publication Skift conducted a survey of 633 hotel executives this spring and nearly all — some 96% — were investing in self-service technology at their hotels. And 62% said they expect contactless experiences will be the most widely adopted tech over the next three years.

Marco Manzie, founder and president of Paramount Hospitality Management, which operates five resort and hotel properties in Orlando, Florida, said he sees the investment in technology as a must because it has the power to lower his costs over time.

“When we look at the leanness of the future economy, it has most hoteliers and owners of hotels taking a step back and revisiting ways to improve their bottom line margins because they’ve been eroded from the inflation that we’ve been hit with,” Manzie said.

Inflation hasn’t been this brisk since December 1981. Surging food and energy costs pushed the consumer price index up 8.6% in May, the Bureau of Labor Statistics said on Friday. Hoteliers are seeing these costs ripple through their businesses, from the food sold in hotel restaurants to the fuel that heats and cools buildings to the salaries paid to staff.

Manzie said he is in the process of rolling out contactless check-in and kiosks for food and beverage orders at some of the properties he manages. Since it is still a work-in-progress, he has yet to reap the benefits of lower labor costs.

“I can tell you that we budgeted the end of the year for some labor cost reductions, anticipating savings,” he said.

Accelerated timelines

Nitat Termmee | Moment | Getty Images

One reason is guests expect it. In their survey, Oracle and Skift also polled 5,266 consumers, and the vast majority (73%) said they are more likely to stay at a hotel with self-service options.

The responses suggested guests want the ability to order room service from their phone or text to have more towels sent up to their rooms. They also want to seamlessly connect to their personal streaming or gaming accounts with the in-room television without having to remember their passwords.

Also, consumers want the ability to “unbundle” hotel offerings and only pay for the services they use during their stay, Alt said. They are even willing to pay more for personalized choices such as selecting an exact room or floor, he said, likening it to options consumers have in booking airline tickets.

In the Oracle survey, 40% of hoteliers said the unbundling model is the future of the industry.

“This is a step-change from the way hotels recognize revenue today, so they need a more modern [enterprise resource planning] ERP system to be able to adapt to these changes,” Alt said.

He declined to provide specific forecasts for future spending but said hotels are making significant investments throughout the business.

The trouble is that some hotel technology systems are antiquated, especially at independent hotels. In an article published in Hospitalitynet, New York University professor Max Starkov said the hospitality industry can often spend less than 2.5% of net room revenue on IT, including staff and benefits.

Darin Yug, PwC U.S. hospitality and gaming consulting leader, also has seen a greater focus on updating back-office systems.

“There hadn’t been a lot of attention paid to the back office,” he said, adding that companies were having to play a bit of catch-up. But even this investment is also being inspired in part by labor needs, he said.

“The quest for talent is not only for people cleaning your rooms and hotels, but also running finance operations and it’s getting more and more difficult,” Yug said. “By putting better technology, better tools in their hands, it’s really about upgrading … the experience for their employees.”

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Scott Strickland, the chief information officer at Wyndham Hotels & Resorts, said the small business owners that franchise Wyndham hotel brands like Wingate, Ramada and Days Inn, have the benefit of using one of two standardized property management systems it offers.

“We made the foundational investment [to standardize], which puts us way ahead of our competitors,” Strickland said. It also means that some of services more commonly associated with high-end hotels are available to its more economy-priced hotels brands.

“For us to be be able to do it at the economy hotel and to roll that out at scale is something we’re very proud of,” Strickland said. He added that it means a bus full of kids coming back from a soccer tournament can arrive at a Super 8 hotel and use self-service check-in to speed their way to their rooms, which helps build loyalty.

Wyndham’s franchisees can also opt into its reservation system, which routes customers to a centralized call center to book a room. Wyndham said the 4,000 hotels that use the system see a 15% or higher premium on rates than non-participating hotels. Also, hotel operators are able to focus on the guests at their hotel or other duties like cleaning rooms, without a distraction, Strickland said.

Don’t forget to tip the housekeeper

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Strickland said the system makes it easier for guests, who often don’t carry cash, to be able to tip.

Many hotels are also considering chatbots, machine learning, artificial intelligence, facial recognition and other ways to run properties more efficiently and safely with less staff. These technologies are particularly helpful in handling more mundane requests, which then allows staff to focus on more meaningful one-on-one interactions, said Oracle’s Alt.

“These types of strategic technologies will be critical as the hospitality industry is still facing a labor shortage as we head into the busy summer travel season,” he said.

‘Flexy Time’ and road trip apps

Sharan Pasricha, the founder and co-CEO of lifestyle hospitality company Ennismore, said he has used technology as a key point of differentiation in his business.

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“The hotel industry runs on a very archaic technology stack,” said Pasricha, who explained that many hotels are only now switching over their property management systems to the cloud.

Pasricha’s approach has been to have in-house software developers and product engineers who can create bespoke applications. One of his focus areas was improving the booking system, where he drew inspiration from features in the e-commerce industry, which he sees as more innovative than the hotel industry.

“I couldn’t quite understand why we would accept a very traditional, boring, badly designed … cookie-cutter [third-party] booking engine, when we care so much about our physical experiences and everything in our hotels is so thoughtful and authentic and creative,” he said.

His efforts led to more bookings coming directly to the website of Hoxton, one of Ennismore’s boutique hotel brands. About 50% are direct, Pasricha said.

It also made it possible for the company to create Flexy Time, a feature that allows its guests to check in or out of a room 24 hours a day, rather than having to wait for a standardized time. Pasricha said the offering, which comes with no extra charge, means guests don’t have to “bum around the lobby for five hours” after arriving in town on a red-eye flight.

Flexy Time presents more of a logistical and operational challenge, but it has helped Hoxton stand out among other hotel brands. To make sure rooms are ready, it asks guests when they will arrive and depart when they book.

“Having the ability to control the technology allows you to have these iterations and innovations, which has for us, garnered a lot of loyalty with our guests,” he said.

Ennismore is in the process of expanding Flexy Time to its 14-brand portfolio, which includes the Scottish hotel Gleneagles, So/ and Mama Shelter, among others. The company is a joint venture with Accor, the French hospitality brand that owns the Fairmont and Sofitel hotel brands, among others.

Wyndham also looks for ways to stand out with its investments. Two weeks ago, it launched a road trip planning feature on its app that recommends routes and allows users to customize a trip itinerary. Also, ahead are investments it will make in electric vehicle charging stations, including a reservation system to book plug-in time, Strickland said.

Mobile apps are great for companies that want to build loyalty with their customers. The data companies can harvest allows them to better tailor future services and offers.

Although it’s too soon to say what impact inflation will have on the industry, the pandemic forced “a new level of appreciation” for modern systems, according to Alt.

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“While the pace of innovation may slow, hotels know there is no turning back on these new consumer demands and they must be able to adapt with the help of the right technology,” he said.

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Exclusive: Mystery rocket makes moonfall – TalkOfNews.com

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Hello and welcome back to Week in Review, where we recap the biggest stories from the week. If you want this in your inbox every Saturday, sign up here.

Greg Kumparak is still on vacation, but not to worry! He’ll be back at the helm next week to bring you our biggest stories. Until then, I’ve got you covered.

First for some quick business. TechCrunch+ is having an Independence Day sale, which gets you 50% off on an annual subscription. Need more? TC+ Editor-in-Chief Alex Wilhelm gives you all the reasons to take the plunge here.

Okay let’s go to the moon! Yes, the moon. Some space junk crashed to the lunar surface this week, causing some enthusiastic observers to scratch their heads. Was it from SpaceX? Was it from a rocket launched in 2014 by the China National Space Administration? We still don’t know, but Devin Coldewey had a chat with Darren McKnight from LeoLabs, which has built a network of debris-tracking radar, to get some more insight.

Image Credits: NASA/Goddard/Arizona State University

other stuff

Speaking of space: Ever want to stare longingly into the depths of the universe and actually have something stare back? This is supposed to happen in two weeks when the James Webb Space Telescope will release its first images. “This is farther than humanity has ever looked before,” NASA administrator Bill Nelson said during a media briefing this week. Maybe the truth is out there.

Tesla Autopilot layoffs: The automaker this week laid off 195 employees across two offices in its Autopilot division. Those who were laid off filled supervisor, labeler and data analyst roles. Questions persist about what impact the layoffs will have on Tesla’s wider advanced driver assistance system. The remaining 81 staffers on the Autopilot team will be relocated to another office, as the San Mateo office will be shuttered.

SPAC subpoenas: A New York-based federal grand jury sent subpoenas to the board of Digital World, which is preparing to acquire Trump Media & Technology Group, Donald Trump’s media group responsible for Truth Social. According to an SEC filing, the subpoenas are an effort to gather more information about “Digital World’s S-1 filings, communications with or about multiple individuals, and information regarding Rocket One Capital.”

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Deepfake job apps: The FBI this week issued a warning that deepfakes are being used along with stolen information to apply for jobs. A part of this even involves video interviews. “In these interviews, the actions and lip movement of the person seen interviewed on-camera do not completely coordinate with the audio of the person speaking. At times, actions such as coughing, sneezing, or other auditory actions are not aligned with what is presented visually,” the FBI said in a statement announcing the disturbing news.

Party pooper: Welp, that 2020-era indefinite ban on unauthorized parties at Airbnbs is now permanent. This means no open-invitation parties and no parties whose attendance exceeds 16. The company said in a blog post that since they instituted the ban 2 years ago, there was a 44% year-over-year decrease in the rate of party reports. There will be no partying on, Garth.

Human And Artificial Intelligence Cooperating Concept

Image Credits: DrAfter123 / Getty Images

audio stuff

Over on the TechCrunch Podcast Network, Christine Tao, founder of Sounding Board, joined Darrell and Jordan on Found to talk about difficulties she and her co-founder faced while fundraising and how they established the customer type that made scaling possible.

And on the Wednesday episode of Equity, Natasha Mascarenhas asked a question inspired by a recent post penned by TC’s own Rebecca Szkutak: What’s in the fine print for term sheets these days, and what does that tell us about who is going to be in control during the downturn?

Check out our full roundup.

added stuff

Want even more TechCrunch? Head on over to the aptly named TechCrunch+, where we get to go a bit deeper on the topics our subscribers tell us they care about. Some of the good stuff from this week includes:

The SEC rejected bitcoin spot ETFs again. Now what?
The SEC’s decisions aren’t a first for the industry; the government agency has denied over a dozen bitcoin spot ETFs in the past year alone while approving several bitcoin future-based ETFs, Jacquelyn Melinek reports.

Disclose your Scope 3 emissions, you cowards
Tim De Chant takes on the companies that claim they’re serious about carbon emissions. In short, if they’re serious, then they’ll estimate their Scope 3 emissions and not undermine attempts to make Scope 3 disclosures standard.

Pitch Deck Teardown: Wilco’s $7 million seed deck
Haje’s back with another pitch deck teardown, this week from Wilco, a company whose funding he covered last week. He is pretty excited about Wilco’s deck, as, he says, it’s 19 slides that tick all of the boxes.

Image Credits: Wilco (opens in a new window)

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Exclusive: Kohl's says a real estate sale is on the table after scrapping deal talks – TalkOfNews.com

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People walk near a Kohl’s department store entranceway on June 07, 2022 in Doral, Florida.

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Kohl’s might not be selling its business after all. But it’s now looking to sell some of its real estate, reversing its prior stance.

The retailer on Friday announced it terminated deal talks with The Vitamin Shoppe owner Franchise Group, confirming CNBC’s reporting from Thursday evening. Instead, Kohl’s said, it will continue to operate as a standalone public company.

Kohl’s for months has been pressured by activist firms including Macellum Advisors to consider a sale of the company, in large part to unlock the value tied up in Kohl’s real estate.

Macellum has argued that Kohl’s should sell some of its real estate and lease it back as a way to unlock capital, particularly during tough times. Kohl’s, however, has been resistant to so-called sale leaseback transactions, at least at such a large scale.

The company did complete a small sale-leaseback deal earlier on in the Covid pandemic, according to Peter Boneparth, chair of Kohl’s board. It recognized a gain of $127 million by selling and leasing back its San Bernardino e-commerce fulfillment and distribution centers.

On Friday, though, Kohl’s explicitly noted in its press release that its board is currently reevaluating ways that the retailer can monetize its real estate. Franchise Group had been planning to finance a portion of its Kohl’s acquisition by selling a chunk of Kohl’s real estate to another party and then leasing it back. This likely gave Kohl’s an idea of what sort of value it could fetch for its owned bricks-and-mortar stores and distribution centers.

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“Now you’ve got an environment where financing has changed so much that it may in fact be more attractive to use real estate as a monetization vehicle,” Boneparth told CNBC in a phone interview.

“When you combine that with what we think the levels of the stock are, it becomes a much different exercise than it was in a previous financing environment,” he explained. “It’s no secret that Kohl’s has a very big asset on the balance sheet: Real estate.”

As of Jan. 29, Kohl’s owned 410 locations, leased another 517 and operated ground leases on 238 of its shops. All of its owned real estate was valued at a little more than $8 billion at that time, an annual filing shows.

Pros and cons

Proponents of sale-leaseback deals argue it’s a convenient way for companies to come up with funds to put toward future growth, so long as there is a buyer for the real estate. But it also leaves the seller with having to meet lease obligations since they would be renting the property they just sold.

Those leases could become much more difficult to break and rents can fluctuate across markets. Kohl’s said in its annual filing that a typical store lease has an initial term of 20 to 25 years, with four to eight five-year renewal options.

In 2020, Big Lots reached a deal with private-equity real estate firm Oak Street to raise $725 million from selling four company-owned distribution centers and leasing them back. It gave the big-box retailer additional liquidity during near the onset of the Covid-19 pandemic.

Also in 2020, Bed Bath & Beyond completed a sale-leaseback transaction with Oak Street, in which it sold about 2.1 million square feet of commercial real estate and netted $250 million in proceeds. Mark Tritton, the Bed Bath CEO at the time, touted the deal as a move to raise capital to invest back in the business. Now, though, Bed Bath is facing another cash crunch as its sales slump and Tritton was ousted from his role earlier this week.

Oak Street had been planning to offer financing to Franchise Group in a Kohl’s deal, CNBC previously reported, according to a person familiar with the discussions. A representative from Oak Street didn’t respond to CNBC’s request for comment.

Kohl’s on Friday reaffirmed its plan to conduct a $500 million accelerated stock buyback later this year. It reduced its revenue guidance for the fiscal second quarter, citing a recent softening in consumer demand amid decades-high inflation.

“Clearly the the consumer is under even more pressure today,” Kohl’s CEO Michelle Gass told CNBC in a phone interview. “We’re not immune to that … but Kohl’s stands for value. And at times like this it’s more important than ever to amplify that message.”

She added that Kohl’s partnerships with Amazon and Sephora remain in place and part of the company’s longer-term strategy to win over new customers.

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“The conclusion of the board process was absolutely the right answer,” she said.

Kohl’s shares ended Friday trading down nearly 20% and at one point touched a new 52-week low of $27.65. Shares of Franchise Group ended the day down 7.5% and also touched a new 52-week low of $31.67 during trading.

Macellum didn’t respond to CNBC’s request for comment.

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Exclusive: Travel Smarter This Summer with This Rosetta Stone-Highlighted Bundle – TalkOfNews.com

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Travel Smarter This Summer with This Rosetta Stone-Highlighted Bundle

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Disclosure: Our goal is to feature products and services that we think you’ll find interesting and useful. If you purchase them, Entrepreneur may get a small share of the revenue from the sale from our commerce partners.

Summer is here, and you may be gearing up for all sorts of leisure or business travel. But unless you’re the type of person to spend millions to eat lunch with Warren Buffett, you have some concerns about globe-trotting. It’s not cheap to see the world, so you owe it to yourself to find ways to save money and make sure you get the absolute most out of every travel experience.



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