I chose the hospitality/leisure/tourism industry for this project, primarily because when I googled

industry digitization, one of the first links I found was a 2011 white paper from Price
Waterhouse Cooper that described this sector as the worst of the laggards, and very little
seems to have changed since the date this was written, in terms of (mainstream) industry
adoption of technologies. 1

Digitization of hospitality is also of particular interest to Asheville, since this sector (which
encompasses restaurants, tourism, hotels) is a major factor in our local economy.
Hospitality (NAICS 72) is a large industry, and can be broken down into many subsectors. For
the purpose of this brief, I will focus only on subsector NAICS 7211 (traveler accommodation),
although further inquiry into other subsectors may be warranted at a future time.
The Bureau of Labor Statistics defines Traveler Accommodation as follows:
1 http://www.strategyand.pwc.com/reports/measuring-industry-digitization-leaders-laggards

Industries in the Accommodation subsector provide lodging or short-term

accommodations for travelers, vacationers, and others. There is a wide range of
establishments in these industries. Some provide lodging only; while others provide
meals, laundry services, and recreational facilities, as well as lodging. Lodging
establishments are classified in this subsector even if the provision of complementary
services generates more revenue. The types of complementary services provided vary
from establishment to establishment.2
The Bureau of Labor Statistics goes on to estimate the size of the workforce for Traveller
Accommodation (7211):
This industry generates a large amount of revenue, as well. According to the American Hotel
and Lodging Association (AHLA):
In 2013, the lodging industry generated $41.0 billion in pretax income, an increase of
10.2% over 2012. Total industry revenue was $163 billion, an increase of 5.4% from
2012. 3
The following is a list of the top 5 major players worldwide in Traveller Accommodation by
room count (numbers self-reported in 2013, published by industry publication
Hotelnewsnow.com4:
1.
2.
3.
4.
5.

Marriott/Starwood (5,456 hotels)

Hilton Worldwide Holdings (4,480 hotels)
Intercontinental Hotels Group (4,963 hotels)
Wyndham Hotel Group (7,760 hotels)
Jin Jang International (6,000 hotels)

Major chain hotels have been slow to adopt major digitization projects, and there is a growing
perception among the public that this slowness has led to non-industry upstarts such as the tech
startup AirBNB encroaching on their market space (substitutability, vice direct competition).
Prognostications from industry experts seem dire, as this section of a March 2016 white paper
by lodging SME Ahmed Mahmoud will show:
The emergence of multi-sided technology platforms, collectively known as the "sharing
economy", has enabled individuals to collaboratively make use of under-utilized
inventory via fee-based sharing. Consumers have so far enthusiastically adopted the
2 http://www.bls.gov/iag/tgs/iag721.htm

3 https://www.ahla.com/content.aspx?id=36332

4 http://www.hotelnewsnow.com/Articles/28560/The-10-largest-hotel-companies-by-room-count

services offered by firms such as Airbnb, Uber, Lyft and TaskRabbit. The rapid growth of
peer-to-peer platforms has been aided by their ability to scale supply in a near
frictionless manner as well as the rich selection of goods and services they have on
offer. As an example, Airbnb, a provider of travel accommodation and a pioneer of the
sharing economy, has served over 30 million guests since it was founded in 2008.
Although Airbnb remains privately held, its valuation of over $10 billion now exceeds that
of well-established global hotel chains like Hyatt. Yet incumbent firms, despite both
facing higher marginal costs and offering less personalized products than peer-to-peer
platforms, have mostly downplayed competition from platforms like Airbnb.5
Ten million dollars. This means that in just a few short years, the sharing economy has
managed to grab roughly 25% of the total US hotel revenue, and none of that is going to the
giant chains. This is bad news for hoteliers, and good news for homeowners who dont mind
letting out a room. Rather than going head-to-head with AirBNBs technology, though, the hotel
industry has chosen to clamp down on legislation and lobbying efforts to reduce availability and
legality of shared-economy rooms in U.S. towns.6 However, counting on legislation to kill home
rentals is a double-edged sword, as one industry blogger points out:
Counting on the government to shut down innovation and disruption-based business
models is really sad. Hotels need to know that any government that is going to shut
down innovators is going use the same logic to hurt you when you innovate. Unless you
have sworn off innovation as a hotel brand, beware what you wish for. Anyway, lets get
real. Building code violations in NYC are not going to be stopping Airbnb. Wishing for
that to happen is a fools dream.7
AirBNB seems to be doing to hotels exactly what Netflix did to video stores, Uber did to taxis,
Amazon did to Barnes & Noble, Kindle did to bookshelves, Ipod did to CDs, Kayak did to travel
agents, Video did to radio stars, and smart phones did to.well everything.
Due to hotels deep pockets, the big hit of AirBNBs disruption is still the subject of speculation
and controversy, and investors continue to pump money into the hotel industry, giving the
pockets perhaps even more depth, and giving the illusion of an endless war chest, but when
does this become throwing good money after bad?
5 http://www.hospitalitynet.org/news/4074708.html

6 http://www.businessinsider.com/why-hotel-industry-lobbyists-want-a-global-crackdown-on-airbnb-20135

7
http://www.hotelnewsresource.com/article71138Airbnb__More_Than_a_Threat__It______s_a_Great_Disr
uptor_To_The_Hotel___Travel_Sector___By_Vikram_Singh.html

Could hotels be doing something more with digitization (Automated check in? NEST integrations
so your room is exactly the temperature you like? Smart TV integrations so you never need to
struggle with and/or lose the remote?)? Something? Other than fighting it on K Street and in
court? Perhaps, but it seems more likely that they are late for the train, and the hospitality
industry as we know it will die completely in the next decade or so, to be replaced with a sharedeconomy model.
Forecasts (Substantive, immediate tech adoption)
3 years: Most chain hotels move towards automation as a means of cost reduction.
Lobby space is reduced/repurposed as check-in is moved to smartphones. Customers
can choose their own rooms from architectural diagrams, continue their scheduled
workout routine in the hotel gym (which picks up their stats and goals by bluetooth), and
room/chain preferences are saved and catalogued in conjunction with loyalty programs.
Some in-room improvements to customer experience, such as enhanced room service
food delivery from various area restaurants (Yelp app), no downtime guarantee,
universal smartphone remote control for multimedia/gameplay, automated checkout and
payment, climate conditioning integrations (NEST), enhanced connectivity in-room and
in business centers. On the back end (housekeeping, security), RFID-enhanced
logistics help to minimize cost through efficiency.
5 years: Hotels still take a hit as tech enhancements are commoditized and available to
home rentals, but adoption outside of chains is not universal or even pervasive.
10 years: Hotel use becomes bimodal, with most travelers staying at very low-end
(bargain) hotels off the interstate with little interest in connectivity but also no viable
AirBNB substitute, and some travelers staying at very high-end hotels with exceptional
tech service. High end hotels will continue to serve business and government travelers,
mainly because of reliability and risk mitigation (liability). Some mid-range hotels are sold
off and repurposed, but the industry manages to limp along.
Forecasts (No major tech adoption):
3 years: Private hotel travel (not business-related) will be increasingly disrupted by
shared economy accommodations. Expect a rise of 25-50% in AirBNB traffic, much of
which will remain/become officially illegal/off the books.
5 years: Increased lobbying power of shared economy players (Uber, AirBNB,
TaskRabbit), new industry entrants may upset existing technology infrastructure (such as
ITunes did to Napster). Shared economy accommodation becomes more mainstream,
starts to overtake large hotels in some urban markets.
10 years: Hotel industry has either managed to pivot beyond shared-economy
competition, or is already dead on its feet. Accommodation sector is overtaken by
(millions of) individual property owners with vast localization and no major players.

Of the two forecast sets above, I personally believe that the pessimistic outlook is more likely to
be accurate. The road to your nearest chain hotel is littered with squandered opportunity and
missed chances. The chain-dominated hotel industry as we know it today is reminiscent of that
guy in the war movie who doesnt know hes dead yet and is talking about going home to his
wife, but then the camera pans down and we see he has no body below the chest. Hotels are
dead--they just dont know theyre dead yet.