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What is, for example, the future of brick-and-mortar retail when we know that the number of visits to shopping malls will drop from 34 billion in 2010 to just 8 billion this year?
Sebastien Bazin is the first man of the global hotel group AccorHotels, which has 600,000 rooms in 4,300 hotels around the world. Hotels Fairmont, Sofitel, Novotel and Ibisare just some of the members in a family of 36 brands that are part of the AccorHotels. Under his leadership, a radical digital transformation of the company was started, based on a detailed analysis of the information about the guests and the ways in which customers and visitors use their services, which is why the Forbes magazine declared him a participant, not just an observer of the new economy.
His presentation, and then the master class he held, was one of the events that marked ‘my’ C2 conference experience in 2018. There were more attractive speakers, more attractive content, more provocative themes, but I will single ojut the story of Sebastien Bazin. The main reason for this is the fact that very few leaders from traditional businesses, faced with the radical change of the whole context in which their business so far took place, have been able to first review, and then radically change their strategy and begin to change their business model . The more successful they are, the more challenging it is to do this. That’s why there was something encouraging in Bazin’s brutal analysis of hotel and hospitality industry.
Facts first. Tourism, as a business branch – and the hotel industry is just one part of it – is one of the fastest growing branches of industry, and today employs 230 million people, or rather every tenth employee worldwide. This growth is largely due to the emergence of a new type of companies in that business, and airbnb is just the best known representative of this new type. As many as 80% of these new companies are no older than 3-5 years, 90% of them were founded by young people without previous experience in the tourism sector, and are based on the new IT tech that immediately places them on the global market. At the same time, 90% of traditional hotel companies are 50 years and older, with an average staff age of 35+, and invest very little in new technologies.
How was it possible for such young companies, without industry experience, but armed with new technology, to become significant players in a traditional industry, leaving behind long-time leaders who become captives of their glorious past? It’s not about the smarts, but about the perspective from which the world is being watched. The principle of every “old” industry, including tourism, is that it starts from itself, from what it already has, so new products are being created from this viewpoint and are offered to potential buyers who are then persuaded that it’s exactly what they need. And these are considered innovations. From that perspective, they couldn’t see that the IT technological revolution has given us all the tools that enable us to plan and organize our needs and wishes for travel not only easier and faster, but also offer different tourist services, from transport to accommodation. And that was a revolution. And as in every revolution, those who are currently governing the existing system – in this case the tourism industry – do everything in their power to preserve their existing positions and defend themselves from every radical change, refusing to change at the cost of their own defeat, failing to realize that change is innevitable.
(My dear colleagues from the media-marketing industry, does this ring a bell? No reason, just asking…)
Although one of the global leaders, AccorHotels has understood that it must change their perspective of themselves and the business they deal in from the very roots. If the biggest advantage of such a company in the past was a great number of facilities, at good locations, with a huge number of employees, it has now become their biggest problem. They see the solution today, among other things, in turning itself towards the local community and offering their services to the people around them. So, perhaps in the future you will be able to order your groceries through the hotel in your neighborhood, because the hotel is ordering them anyway, and can deliver them to your home address, and you will be able to specify that same hotel for the address to which your books or clothes bought online will be delivered if you think no one will be home when the delivery comes. If you need someone to look after your kid for a while, there is a playroom in the hotel with a certified sitter, so you don’t have to worry. Where to organize a birthday party is no longer a question. And there’s also the fitness center, a pool, and a cafe, and a restaurant. But no longer at hotel prices, because you are now a member of the community and you enjoy special rates. If you rent your apartment through Airbnb, you may be able to leave the key for your guest at ‘your’ hotel, or they can leave it for you there when they depart. I know, “sounds weird,” but we know it can and does work.
And for this to work, it’s not enough to just have an idea. It is necessary to change the internal organization and reject the current culture of the company. With this approach, AccorHotels acquired 70 companies in a short period of time, most of which are not from traditional hotel business, so today’s group also includes companies for event organization, event catering, mobile hotels and even co-working spaces. The vertical hierarchical structure was replaced by a horizontal organization with a high degree of autonomy of “field teams”.
I’m writing at length about this single example because it is not relevant only to the tourism industry, but to all the traditional businesses. What is, for example, the future of brick-and-mortar retail when we know that the number of visits to shopping malls will drop from 34 billion in 2010 to just 8 billion this year? And also we read daily about stores closing, both the smaller ones and those belonging to the world’s largest retail chains.
This process is irreversible. The reason lies in the fact that the main object of trade is switching from the product itself to the experience we get through its use. This experience is not something that can be bought that simply – because it’s experience. Experience is more valuable if we can share it, and that computer in our pockets, which is always with us, allows us to do it quickly and easily. And thus our experience becomes more and more valuable every day – it has become a product, as have we all.
This is the point where a definitive twilight of the traditional media-marketing industry consisting of agencies and classical media starts. Their role is taken over by tech companies. They initially had access to our personal data, because this was a precondition that we can even use their services, and then they began to systematize and analyze these data and finally pack and sell them. There is growing abundance of this data about our behavior, and attracted by the seductiveness of the constantly new opportunities that give us more and more powerful and smaller device, we are more and more inclined to give more of that data, because we always want more, and we want it now.
We have become followers, and we aren’t even aware of it. More about this tomorrow.
Source: Media Marketing