10 Trends and emerging IT

LEARNING GOAL

• Understand the role of five novel technologies in hospitality

OBJECTIVES

Become familiar with the following technologies:

1. blockchain

2. biometrics

3. big data

4. robotics

5. augmented reality (AR) and virtual reality (VR)

and their applicability to hospitality

There has never been a more exciting time to discuss the application of IT to the hospitality industry. Newer technologies are being developed and they are constantly integrated within hospitality business. While not all businesses adopt technology at the same pace, there are some businesses that are innovative and understand the value of novel technologies. The deployment of such technologies within business applications reflects significant trends. Such trends are followed by a multitude of other businesses. When a large enough number of businesses conform with these trends, the trends become industry norms, and make room for other trends to shape the industry. In this section, the discussion focuses on several critical trends that are relevant to the hospitality industry during the present time. They illustrate examples of applications that have been deployed in hospitality. Some of these trends are significant enough to potentially cause disruption in today’s value chains.

Blockchain

Blockchain represents a digital ledger that contain data that is impossible to modify once recorded (Kizildag et al., 2019). While seemingly abstract, blockchain technology works by linking blocks of information to one another to create chains that cannot be altered once written. For example, a piece of information is written in one of the blocks, and that block is chained with another block. The information in the original block cannot be changed. Because it remains unchanged, it provides very strong protection for transactions, intellectual property, and represents an undeniable record of facts (Bandara et al., 2021). There are a few characteristics of blockchain technology that makes it unique relative to other technologies.

Blockchain is designed to record all transactions in a way that makes it impossible to alter the previously recorded transactions. It would take a supercomputer an unconceivable amount of power and time to alter the information written in the blockchain (Patel, 2018). Many experts believe that blockchain technology is the biggest IT discovery since the development of the Internet and has the potential to radically change the way businesses operate globally. It is the foundation for the technology that runs crypto currencies (Solana, 2021). Despite its fascinating origins, it is still not completely understood. Yet, it has potential to change the way global transactions are conducted and recorded, offering some unique advantages to businesses and consumers. For this reason, this technology is on the radar of the financial industry, computer science researchers, entrepreneurs, owners of crypto currency, and regulatory bodies like the IRS or the U.S. Congress.

Blockchain technology is based on a distributed ledger (Berberich & Steiner, 2016). A ledger is a record of information, mostly pertaining to transactions, that is distributed (i.e., it resides) on a multitude of computers connected to the Internet. One of the advantages of this technology is that the blockchain information is not stored on a single computer, but rather on multiple computers, which makes it extremely secure.

Blockchain technology is that it is resilient and is based on decentralized components. This means that no single organization is able to control the information. It is also decentralized and resilient to attacks, which increases its security.

The number of blocks used in the blockchain is infinite, and the complexity of the blockchain structure only depends on the number of computers connected to the Internet. This means the technology is based on unlimited infrastructure. Moreover, the blockchain technology is “open source”, which means that everybody can contribute to developing it and it is available to everyone for free. This makes it highly accessible to users who want to use it and does not pose any barriers of entry to businesses.

Perhaps the most important aspect of the blockchain technology is its distributed governance. It means that no single entity can be in control of blockchain, except for the owner of the blockchain. There is no single government, financial institution, political organization or business that controls the block chains of different owners (Patel, 2018). The owners control their own blockchains and nobody else.

Because of the level of security that it provides blockchain has several potential applications in the hospitality industry. First, it facilitates direct transactions among various partners. These transactions can be initiated and completed directly within partners without intermediation. The record of the transaction is recorded in the blockchain and can be verified if there is ever a question or doubt about any transaction that had occurred. This aspect could be beneficial in the hotel industry, where end consumers can book rooms directly from hotels without interference from intermediaries (Kizildag et al., 2019).

Another important application is that blockchain technology can be prone to better audit tools. Transactions are recorded and can never be altered, and this is crucial to ascertaining the truthfulness of transactions or the terms of specific transactions that occurred in the past (Guo & Liang, 2016).

Another critical application of blockchain technology is that there could be new business models poised for innovation. For example, there are already travel companies that are based on blockchain technologies when they purchase inventory from hotels and they resell it to the consumers. Also, companies such as Sandblock offer blockchain-based personal loyalty tokens that can be used to accrue benefits (Sharma, 2022). Other models include concepts related to blockchain technologies such as sovereign self-sovereign identities, which could impact the travel authentication and border processing management. For example, a self-sovereign identity is identity information recorded in blockchains that is only under the control of the owner of that identity and not under the control of other organizations that manage identities such as governments, employers, health organizations, educational institutions (Stokkink & Pouwelse, 2018).

Biometrics

Biometrics represent characteristics of humans that describe them uniquely. Biometrics help humans distinguish themselves from other humans. Examples of biometrics include a person’s fingerprints, iris, retina, palm shape, vascular patterns, ear shape, voice, speech, or gait. Some of these characteristics are not controllable by the user and are generally called physiological biometrics (e.g., fingerprint, iris), while others can eventually be changed by the user (e.g., voice, gait). Biometric systems represent computerized systems that recognize a person based on their biometrics.

Biometrics can serve important purposes in recognizing people. In other words, biometrics are used to ascertain that people are who they claim to be or to identify a specific person based on information from a database. There are two types of recognition used in biometric systems, and they both relate to ascertaining someone’s identity. Identification represents the process by which a user provides a biometric sample that is not necessarily known by a system. Upon extracting a feature set, the system compares the biometric sample with samples stored in the system’s database to identify persons with specific characteristics (Morosan, 2012). In contrast, verification is a process by which a person’s biometrics are compared to the person’s own biometric sample already enrolled in the system, and typically results in a decision to accept/reject the person based on the extent of match between the samples (Jain, Ross, & Nandakumar, 2011). While identification-based systems are relatively more common in law enforcement applications, the hospitality and travel industry mostly uses verification-based systems. They are used in border control settings, airports, hotels, and other hospitality contexts.

Generally, verification-based biometric systems work in two phases: (1) enrollment and (2) authentication. For a biometric system to work, users must be first enrolled. For this, it is necessary for the system to collect both biographic and biometric information. Biographic information includes a name, address, date of birth, residence address, nationality and so on. Biometric information could be in the form of fingerprint, iris image, face image, speech sample, etc. Upon the collection of biographic and biometric information, the system creates a profile of the user, in which relevant features from that information are extracted to create a profile for the user. The enrollment process ends with storage, where the profile is stored in the database or a card.

Once users are enrolled, they can perform authentication. It is important to mention that authentication is automatic with biometric systems, which means that the computer makes the decisions to authenticate the user in the absence of human input. For authentication to work, a new biometric reading is necessary, where the user will submit a new biometric sample of the same biometric that was used in the original enrollment. For example, if the user was enrolled with a fingerprint, then the user will need to provide a new fingerprint reading in order to authenticate. Upon the new biometric reading, the system will perform a matching task, in which the new sample is compared with the enrolled one. Upon matching, the computer will have to decide whether to accept or reject the user based on the extent of the match. The match doesn’t have to be perfect in biometric authentication, which is different than authentication based on passwords. Biometric systems are designed to have a certain threshold for matching a new reading to an enrolled sample. If the system detects that there is sufficient match acceptable within a pre-specified threshold, the user is accepted. In contrast, if the samples don’t match according to the predetermined threshold, the user’s identity claim is rejected. At this stage, authentication is complete. That is, if the user’s authentication claim is accepted, the user will gain access to restricted resources or an area (e.g., enter a national territory, access a guest room).

There are quite a few applications of biometric systems in hospitality and travel. For example, in travel, there are currently 160+ countries that offer biometric passports to their citizens. U.S. is one of the countries that offers biometric passports to citizens. That means that any regular U.S. passport has a chip on which biometric information (a facial image) is being stored. The chip is readable by machines at the border crossing ports and airports, which facilitate identity verification when crossing the border or entering a country. Biometric passports are secure and are more resilient to identity fraud than non-biometric passports.

Another important application of biometric technology is trusted traveler programs. A trusted traveler program is a subscription program where individuals can become members upon having their identity verified. The benefits of being a trusted traveler include faster processing at airport screening, faster processing when entering countries, and potentially mutual benefits with other countries where such programs exist. The U.S. has a few trusted traveler programs, such as Global Entry, Nexus, Sentry, and Clear.

Global Entry is a program available to U.S. citizens or permanent residents. Upon application, they undergo a criminal background check and if cleared they become members of Global Entry. As members, they benefit from having a TSA pre-check designation on their boarding passes when they travel by air and an expedited screening at the border every time they return to the U.S. Upon entry to the U.S., Global Entry members scan their fingerprints using a kiosk in the immigration area at the port of entry, which is able to verify their identity and provide clearance to them in approximately two minutes. This is extremely beneficial because it does not require that the traveler wait in a long line in speak directly with a Customs and Border Patrol (CBP) Officer to get clearance to enter the U.S. Enrollment is based on biographic, fingerprints, and facial image information, in addition of a criminal background check and a fee of $100. The other programs work in a similar fashion and provide advantages related to crossing borders, expediting the mandatory security checking in airports, or accessing other countries.

One of the most recent applications of biometric systems is the automated aircraft boarding systems. Major airlines such as British Airways, Lufthansa, or United Airlines have adopted systems that allow consumers to board planes upon identity verification by biometric systems based on facial recognition. This is how they work. A consumer is approaching the gate for their flight, and they encounter a system that takes a picture of their face. The consumer also scans their travel document (e.g., biometric passport) in the system. The system then matches that picture with the picture in consumer’s travel document, and if there is sufficient match, the consumer is allowed to board the plane. This increases the efficiency of the boarding process and significantly increases the security of air travel.

Biometric systems are also used for access control in hotels or resorts. Certain hotels have used fingerprint-based door locks. One of the most comprehensive applications of biometric systems for access was used at Disney theme parks. Their systems work with fingerprint authentication and optimized admission to the theme parks and purchasing once inside the park.

While consumer-facing biometric applications are still sporadic, there are quite a lot of applications of biometric technology in the back-of-the-house. A common application is time and attendance management systems. Such systems allow hourly staff members to enroll with their fingerprint and then use their fingerprints to clock-in and then clock-out at the end of their shifts. This provides more accurate verification of identity for hourly workers and reduces times attendance fraud or body punching.

BIG DATA

There is an increasing amount of data that are being collected from users through the many devices that they are using. Such data are collected from personal devices, systems, networks, through a variety of ways for a variety of purposes. Generally, these data describe human activity, ranging from location, activities, addresses of places online that are visited, and even health data. Such data are accumulating at large volumes and fast speeds and is increasingly important because it can serve in predicting human behavior. There are a few characteristics of big data that are important to discuss.

Big data are characterized by large volume and multiple dimensions. Such datasets are quite large both in terms of number of variables being collected and cases. Because of their large volume and dimensionality, big data require high computational power. Generally, it is difficult to use regular consumer grade computers to conduct analyses using big data because the hardware requirements exceed the computing capacity of regular computers. In addition to computational requirements, big data required high storage volumes. Such datasets are quite large and the systems that are used to manipulate the files should be able to handle them. Finally, big data require specific analytical tools. Basic analysis can be done with traditional software such as Microsoft Excel, but actual big data files require specific tools for visualization and further analysis. Experts agree that only the big data are not sufficient – big data need appropriate software and analytic tools in order to add value to consumers and businesses (Mariani & Baggio, 2021).

Generally, the analysis of big data is a complex process and may take multiple forms. It can be classified into four comprehensive categories as defined by two important criteria: time and type of knowledge created. The categories are:

• (1) Descriptive analytics, which seeks to describe phenomena that had happened or are happening by utilizing descriptive methods of analyzing data;
• (2) Exploratory analytics, which seeks to explain the causes of past or present phenomena by using analytical statistical methods that minimize the number of variables;
• (3) Predictive analytics: which seeks to infer information about what would happen in the future using forecasting or regression methods of data analysis; and
• (4) Prescriptive analytics, which seek to optimize phenomena that are likely to occur in the future, by using optimization and experimental analysis tools (Mariani & Baggio, 2021)

There are multiple applications of big data in hospitality and tourism. One of the most common applications is the analysis of data from social media ratings and reviews. Using big data analytic tools, experts conduct sentiment analysis from textual data left by consumers, and they can interpret consumers’ feelings and their behavior toward specific brands. Using the tools of predictive analytics, experts can predict with a great level of accuracy consumers’ future purchasing behaviors.

Another branch of big data analytics is analysis for insight for customer service, financial analysis and generally business intelligence. Data are analyzed based on user feedback and other corporate data and can provide insight into consumers behavior. Such insight can be used to further develop customer service protocols, make financial decisions or develop overall strategies for companies.

Given that the hospitality is an industry with a strong consumer-facing presence, it is critical to understand the importance of data that consumers leave behind when they provide reviews. Such reviews are instrumental to developing a sense of how a business is doing in terms of customer service and can serve in decision-making for a company. However, it is very important to distinguish between truthful and fake reviews, which is an important trend in big data analysis. Moreover, when such data are corroborated with consumers’ GPS location, it provides a powerful informational background for companies (Dursun & Caber, 2016).

In addition to the data left by consumers as reviews, it is important to recognize the role of data that consumers provide to hospitality and travel companies when they interact electronically either online or on the property. For example, data from web session cookies, payments, network connectivity in hotels and other sources can become instrumental in the development of insight into consumers’ emotions, behaviors, satisfaction, or engagement (Fuchs, Hopken, & Lexhagen, 2014).

ROBOTICS

Robotics refers to the use of automated technology to perform various tasks. While robots have existed for quite some time in manufacturing industries, there adoption and deployment within the hospitality industry and other service industries is relatively new (Murphy, Hofacker, & Gretzel, 2017). This new orientation toward robotics has been facilitated by a strong and unprecedented development in robotics technology, development of artificial intelligence and autonomous systems, and consumers’ predisposition for adopting technology.

Generally, robots where used in manufacturing to automate various repetitive and routine tasks. This approach is being currently adopted in hospitality industry, where some of the back-of-the-house tasks have been replaced by robots or autonomous systems (Bowen & Morosan, 2018). These are generally tasks that are performed by hourly staff members, and are strongly influenced by employment dynamics, pay rate, and benefits. However, in recent years, due to the developments in technology listed above, robots have made the transition from the boring back of the house tasks to more interactive tasks in the front of the house. It is not uncommon today to see robots used for interactions with the consumers especially in concierge roles, or robust designed to carry dishes between the kitchen to the service areas. It is also important to recognize that user interface of robots has changed dramatically, and today’s robots are easier to interact with given their ability to understand natural language and to provide better and more effective communication interfaces (Ivanov, 2020).

Major hotel corporations have attempted for a long time to introduce robots into service. For example, Hilton introduced a robot called Connie on its property in McLean, VA and it is one of the most publicized robots in the hospitality industry. It is likely that the next years will show more examples of robots being deployed in service settings, especially as the user interfaces are developing and the consumers are more accepting of these technologies. Their applications in the hotel industry does not necessarily end with front of the house concierge tasks or interacting with consumers. There are multiple opportunities for using robots in housekeeping, in delivering products to rooms or even replenishing supplies in guest rooms.

The applications in foodservice are multiple. While several concepts have been developed in restaurants to improve consistency or mix ingredients for specific dishes, there is an opportunity to expand the utilization of robots beyond the kitchen.

When discussing the role of the robots in the hospitality industry, there is always a debate regarding the role of robots in replacing humans in their jobs (Ivanov, 2020). The past few years have shown a shortage of labor in the hospitality industry, especially in positions that are hourly paid or minimum wage. Many restaurants and hotels have had trouble finding or replacing workers for these positions. At the same time, these positions are the ones that relying on repetitive tasks, which would be more easily replaced by technologies such as robots. While robots could replace these types of jobs, they create opportunities for other types of jobs, that are more advanced and require the use of technologies for maintenance, design, or programming of these devices (Morosan & Bowen, 2022).

AUGMENTED AND VIRTUAL REALITY

Augmented reality (AR)

AR reflects technologies that create direct automatic and actionable links between the physical world and electronic information. Generally, AR permits the creation of additional layers of information on top of what is already visible through normal technology use to enhance (or augment) what is being seen. For example, there are certain mobile apps that use the camera and location services to provide a variety of additional information to the user. That is, when a user points the camera to building on the street in a city, the system can provide additional information about where the restaurants are located or send marketing messages to the user.

In general, AR does not need dedicated display systems. It uses technologies that are already available that the users are accustomed to using, such as mobile apps, web applications, or even games. Today’s augmented reality goes beyond the visual media. It is true that visual media had always played an important role in the development and acceptance of AR applications, especially in hospitality and tourism. However, due to the development of multimedia, and in association with the improvements in networking that allow multiple media to be conveyed simultaneously through the Internet, AR can take the form of combined signal or be embedded with other advanced technologies, such as virtual reality.

Augmented reality and advertising

One of the most important applications for AR is advertising. For the longest time, marketers have been concerned with providing a contextual advertising experience to consumers. Contextualization refers to being aware of the consumers’ physical surroundings and taking into consideration such surroundings in creating a context in which the product being advertised appears to be useful (Shin & Jeong, 2021). Because contextualization requires and understanding of the environment and integration of information within the consumers’ environment, contextualization has not been deployed until the development of AR and mobile technology (Mehra, 2012). Now, both of these technologies work together and can provide the context necessary for products to be promoted within the context in which consumption could take place. For example, imagine a consumer passing by a bar in a hotel and receiving a message on their smartphone that there are discounts for happy hour at that bar. Also, imagine a situation where the consumer passing on the street can point their camera app from their smartphone to a specific direction and the screen be populated with information about hospitality vendors that have discounts in that particular area (de Ruyter et al., 2020). For this reason, augmented reality creates unique opportunities for advertisers, because they can add digital content such as visual media, animations, or demonstrations to the background of information that surrounds a consumer experience in real time.

Without a doubt, augmented reality combined with mobile technology can provide opportunities for very creative advertising. For example, Burger King has used augmented reality in an advertising campaign called “burn that ad”. The campaign encourages the Burger King app users to virtually “burn” Burger King’s competitors and digital platforms by pointing the camera of their smartphones to competitors’ billboards and seeing images of those billboards being on fire, followed by ads for Burger King. After the billboards have been burned, the users are presented with a screen that informs them that they have received the free wallpaper whopper that can be claimed at the nearest Burger King restaurant (Asena, 2019). In doing so, the company created an engaging experience for consumers, which could translate into an emotional sense of attachment between the consumer and the brand. This kind of attachment can be long lasting and can result in multiple purchases over the lifetime of a customer, eventually enhancing the loyalty toward the brand.

Other companies have used AR in combination with mobile technology to allow consumers to see themselves consuming a particular product. This is especially important in situations in which consumers have trouble visualizing their own consumption. For example, Converse uses an AR mobile app. When consumers point their smartphone camera at their feet, the app provides images of Converse shoes on consumers’ feet, thus allowing them to see how those shows would look like if there were owned by the consumer. Most importantly, such apps provide an opportunity for consumers to buy immediately, therefore aligning the promotional experience with the actual purchase.

This kind of experience could be beneficial for hotels. For example, many hotels are now using modular furniture, which can be rearranged in the guest room by the consumers according to their own preferences. Imagine a situation where a potential consumer can you use a website or a mobile app to add, remove, or change furniture in their room according to their own preferences. For example, they can place a vase with flowers on a desk or change the location of the desk to be close to a window. This could enhance not only the actual consumption experience but can produce unique feelings that the experience is tailored specifically to the preferences of individual consumers.

Other examples

Other examples of contextual advertising using AT include Starbucks’ ads which overlays images of hearts when customers point out their smartphone cameras to their coffee cups on Valentine’s Day, or Taco Bell adding additional images to situations when consumers point their cameras at products. These strategies are very creative and can help consumers to emotionally attach to these brands. The fact that AR allows the consumers to interact with their environment while they’re being persuaded to purchase a product distinguishes AR advertising from any other tools used in marketing (Hilken et al., 2018). Thus, AR advertising may create situations in which the entire context of advertising becomes persuasive, that is, it convinces the consumers that they are making the right product choice.

Virtual reality (VR)

In contrast to AR, VR is a technology that creates an artificial virtual environment and places the user in that environment. The focus of this technology is immersing the user in the virtual experience. In order to create an environment like this, specific hardware is necessary, such as VR goggles or VR sets, in addition to specifically-designed software. The user relies on these systems to obtain a sense of immersion into the environment.

The hospitality industry has increasingly adopted VR applications. These are deployed in hospitality and tourism settings to enhance the informational background related to certain products that are being promoted, or to diminish the intangibility of various products and services. For example, consumers wishing to book a venue for an event can see a rendering of that event venue using a VR set, thus making it easier to see how their particular event would look like.

Despite of potential advantages that AR and VR can bring to the hospitality industry, so far, their use has been sporadic. This could be because the AR and VR applications are still in their developing phases and many consumers have not yet had a chance to get accustomed with these technologies. It could also be because the technology departments of hospitality companies have not yet fully understood how to seamlessly align such experiences within the product lineup that they are trying to promote. Therefore, as the technologies develop and consumers have a chance to use them in their daily lives, it is expected to see an increasing number of applications in hospitality. This would be important for the industry because its products are inherently intangible, and any opportunity to add more information that describes the product, especially within its context of use, can be instrumental to the proper promotion of this products. It would also be extremely useful for consumers to understand the value that they receive by purchasing specific products.

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