Tuesday, 22 December 2015

2016 - Year of the "smart hotel".

The US smart home market is "stuck in the chasm of the technology adoption curve" according to new reports from Business Intelligence agencies - e.g see here and diagram below. But where is the "smart hotel" market?

2015 saw the rise of a number of smart home companies and start-ups before falling spectacularly into the chasm - one example is Quirky which filed for bankruptcy in September, and sold its smart home business for $15 million.Another example is Australian smart home business Ninja Blocks, which had two successful Kickstarter campaigns including a $700,000 campaign that closed in January this year, before announcing their bankruptcy in May.

So as the smart home market tries to claw itself out of the chasm in 2016, the smart hotel market is already on the other side of the chasm and will see mass market adoption in 2016.

Some examples of Hotel Groups that have already converted or are converting to "smart hotels" are listed below with links to examples of their "smart conversions". The smart conversions can include adding smartlocks, smartphone check-in, smart TV's, smart room temperature controls, smart lighting, smart/digital concierge services, or any combinations of these and more. And when a hotel chain makes a decision to convert to being "smart", often for the sake of their brand they aim to make all their hotel rooms smart. Some examples of hotels that began turning "smart" in 2015 include (this list could go on for another two pages, but we've just selected a handful here);
Hilton Hotels (550,000 rooms are being converted to smartlocks and smartphone check-in)
Starwood Hotels (350,000 rooms are being coverted to smartlocks and smartphone check-in)
Silver Needle/Next Hotels
Marriott Hotels
Bloc Hotels
Prizeotel Hotels

The problem with the smart home market at the moment, which the smart hotel market does not have, is that there are;

  1. too many players trying to get into the market causing confusion to consumers about who to trust to buy products from (think of a giant tech company, and they're most likely already have products for the smarthome or developing something). For example residents have grown tired of the poor service from cable companies, so they don't want to trust the cable company to buy smart home devices off them.
  2. little to no regulations/standards exist controlling smart home devices and securities
  3. there is not much proof/evidence that conversion to a smarthome brings significant $ value to the homeowner
  4. there are too many devices and too many technologies that are not talking well enough to each other.
  5. the home owner has low to no 'consumer buying power' -  he/she is an individual customer making a purchase of one, and therefore they are dictated to about what products they should buy for the smarthome. They can't exactly go back to a manufacturer and demand their products be built and designed differently. Put simply if one home owner wants/desires are different to whats offered by companies selling smart home products, then they will not be met.
The smart hotel market does not have any of these issues for the following reasons;
Smart home problem 1 does not exist for hotels because hotels have developed long term relationships with a small select number of companies they trust with long reputations for delivering quality products and services to them.
Smart home problem 2 does not exist for hotels because regulations, laws and standards have always existed in hotels 
Smart home problem 3 does not exist for hotels because there is proof in $ terms that hotels must now differentiate themselves from their competitors such as Airbnb, and other hotel chains, and vacation rental properties and so on and so forth. That is by making their hotels smart, it improves their service, and therefore attracts customers and $ over the non-smart accommodation service providers.
Smart home problem 4 does not exist for hotels because this goes back to problem 1 above, there have only ever been a select small number of companies providing products and services to hotels, and those companies have traditionally had the cooperation with each other to make their products integrate/talk with each others products. 
Smart home problem 5 does not exist for hotels because hotels have significant 'consumer buying power'. For example a chain hotel can make a decision to buy 500,000 smartTV's in one purchase. Chain hotels can dictate what products they want, how they are designed/built/operate, and how they work with other products. If the chain hotels are not happy with the products from the companies they have their existing long term relationships with, then they can either demand that the product be changed/designed the way they want it. If the company does not accommodate the chain hotels changes/design they want, then the chain hotel can easily go to another company and demand what they want.

Watch out in 2016 for more and more hotels announcing their conversion to smart hotels.

With just Hilton Hotels and Starwoods rolling out smart locks and smart phone check-in it equates to 900,000 rooms out of a total market size of 15 million rooms, putting just those two hotels combined at 6% of the total market.

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