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COVID 19: The catalyst for digital transformation in the hospitality industry?

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Palavras-chave: Covid-19, crise, transformação digital, hotel, pandemia.
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Tourism & Management Studies, 17(2), 2021, 41-46 DOI: https://doi.org/10.18089/tms.2021.170204
41
COVID 19: The catalyst for digital transformation in the hospitality industry?
COVID 19: O catalisador para a transformação digital no sector hoteleiro?
Nuno António
NOVA Information Management School (NOVA IMS), Universidade Nova de Lisboa, Lisbon, Portugal;
CITUR- Universidade do Algarve, Faro, Portugal; nantonio@novaims.unl.pt
Paulo Rita
NOVA Information Management School (NOVA IMS), Universidade Nova de Lisboa, Lisbon, Portugal,
prita@novaims.unl.pt
Received: 10.02.2021; Revisions required: 17.3.2021; Accepted: 15.04.2021
Abstract
Despite its benefits related to efficiency, creating better customer
experiences, increasing revenue, and supporting decision-making,
until the outbreak of COVID-19 digital transformation was not on
many hotels’ strategic plans. However, like in many other industries,
the COVID-19 physical distancing good practices and governments’
restrictions acted as catalysts and promoted hotel digitalization. To
this end, a questionnaire was administered to 51 hotel managers to
verify if that happened in Portuguese hotels and what processes were
most impacted. Results showed that 92% of the hotel managers
agreed that COVID-19 promoted the digitalization of processes, with
most organizations considering that online meetings and technology
productivity tools are here to stay. Hotels’ digitalization has the
potential to generate high-efficiency gains both in public-facing
operations and back-office operations. This study highlights these
implications and intends to spur researchers to investigate the
practical impact of these implications on business efficiency and
social theory.
Keywords: Covid-19, crisis, digital transformation, hotels, pandemics.
Resumo
Apesar dos benefícios relacionados com a eficiência, criação de melhores
experiências para o cliente, aumento da receita e apoio na tomada de
decisão, até ao aparecimento da COVID-19, a transformação digital não
fazia parte dos planos estratégicos de muitos hotéis. No entanto, as boas
práticas de distanciamento físico e as restrições atuaram como
catalisadores e aceleraram a digitalização dos hotéis. Para avaliar o efeito
da COVID-19 na transformação digital, foi administrado um questionário
a 51 gestores hoteleiros para verificar se isso acontece nos hotéis
portugueses e quais os processos que registam maior impacto. Os
resultados mostraram que 92% dos gestores hoteleiros concordam que a
COVID-19 incentivou a digitalização dos processos, sendo que a maioria
considera que as reuniões online e as ferramentas de produtividade
tecnológicas vieram para ficar. A digitalização dos hotéis tem o potencial
de gerar ganhos altamente eficientes tanto em operações voltadas para
o público quanto em operações de back-office. Este estudo destaca essas
implicações e visa estimular os investigadores a estudarem o impacto
prático dessas implicações na eficiência empresarial e na teoria social.
Palavras-chave: Covid-19, crise, transformação digital, hotel, pandemia.
1. Introduction
This manuscript has been written as a “research note” to
provide very much up-to-date information based on current
data regarding what hotel managers feel about digital
transformation. Our main motive is to share how COVID-19 is
propelling the hospitality sector to embrace digital
transformation and further use it. By doing so, we aim to foster
researchers to focus more attention on research in this field.
A new coronavirus causing an infectious respiratory disease
was found in late 2019. The first reported cases of what
became known as COVID-19 occurred in Wuhan, Hubei
province, China, in late December 2019. In January 2020, the
virus spread to other Chinese provinces, assisted by the
Chinese New Year migration, with Wuhan being a major
transport hub and rail interchange in the country. In February,
this severe acute respiratory syndrome (SARS-CoV-2) spread
rapidly throughout Europe, leading the World Health
Organization (WHO) to consider in March this continent as
being the active centre of the pandemic, which within that
same month also started to impact strongly in the Americas
(ECDC, 2020; WHO, 2020).
One of the consequences of this highly contagious disease was
a tsunami of hotel closures, together with a steep decline in
tourism and business travel taking place across the world. This
decline exerted devastating effects on the hotel industry
(Filimonau, Derqui, & Jorge Matute, 2020; Hao, Xiao, & Chon,
2020). Due to the acute negative financial implications of this
last resort deed, when an opening window was identified,
decisions of reopening hotels were considered but subjected to
a widespread list of cautious actions, namely, to attend public
health requirements, including a myriad of safety/hygiene
measures.
Notwithstanding being a medium-sized country, Portugal is a
prominent tourist destination worldwide, having the oldest
borders in Europe and situated in this continent’s extreme
south-west. Portugal was considered in 2019, for the third
consecutive year, the best tourist destination in the world,
receiving this award from the World Travel & Tourism Council /
WTTC (World Travel & Tourism Council, 2020). More recently,
in 2020, Portugal became the first European country to receive
the seal of ‘Safe Travels’ by WTTC. In the last five years (2014-
2019), Portugal’s tourist flows went up by an impressive 56%
António, N., & Rita, P. (2021). Tourism & Management Studies, 17(2), 41-46
42
(Turismo de Portugal, 2020). Unfortunately, due to the COVID-
19 pandemic that is affecting the world globally, the tourism
and hospitality figures for 2020 are expected to go down
significantly in a similar fashion with all other tourist
destinations across the globe.
The first cases of COVID-19 in Portugal were recorded on March
2, 2020 (Direção Geral da Saúde, 2020). Despite a number of
initiatives put in place, just over two weeks later, the
Portuguese government had to admit the country could not
contain the virus any longer and declared the state of
emergency, which lasted from March 18 to May 2.
Consequently, and like happened in many European countries,
Portugal also had to implement lockdown measures across the
country to sustain the rapid increase of cases of COVID-19.
Hence, many citizens had to stay at home and work from home,
and in just a few months, the landscape of work has altered
dramatically, which except for COVID-19 itself, has been the
radical change of 2020 (Waizenegger, McKenna, Cai, & Bendz,
2020).
All major consulting companies recognize that the COVID-19
outbreak is accelerating digital transformation in organizations
in many industries (Ernst & Young, 2020; Hernandez, 2020;
Kane, Phillips, Copulsky, & Nanda, 2020). In fact, a report from
Twilio calculated that COVID-19 accelerated companies’ digital
transformation strategy by an average of 6 years (Twilio, 2020).
For instance, the COVID-19 pandemic triggered a digital
transformation in the education sector (Iivari, Sharma, & Ventä-
Olkkonen, 2020) as well as in healthcare with a boost of
telemedicine services. Many services across the board were
compelled to accelerate digital transformation since many
service employees had to work remotely to keep service
businesses running (Bartsch, Weber, Büttgen, & Huber, 2020).
The real question is how technology can be leveraged to allow
employees to do their work more effectively and safely, and the
current situation is changing how people conceive work. To face
challenges and seize opportunities, employees also need digital
competencies to raise productivity (Soto-Acosta, 2020). What
happened in Portugal in terms of confinement was very
rigorous. Hotels were closed from the end of March to at least
June, so most organizations had to work remotely (if not in
total, at least partially).
By the way, it should not be a surprise to see companies satisfying
these much more pressing needs to increase significantly their
market capitalization, such as Teladoc Health (provides video-
conferencing consultations for customers with general medical
professionals, dermatologists, and behavioural health specialists)
and Zoom Technology (designs, produces, markets, sells, and
supports broadband and dial-up modems, Voice over Internet
Protocol products and services, and other communication-
related products) being as of February 10, 2021, up 158% and
382%, respectively, in just one year (Yahoo, 2021).
Unfortunately, despite its benefits for hospitality, such as saving
time, creating better customer experiences, increasing
revenue, and supporting decision-making, until the outbreak of
the COVID-19 pandemic, the digital transformation seemed not
to be on the strategic agenda of many hotels (Alrawadieh,
Alrawadieh, & Cetin, 2020; Lam & Law, 2019). This study was
set up to find if COVID-19 brought any change to this situation
and, with that, achieve a response to the following two research
questions:
1. Do hotels experience an acceleration in their digital
transformation process due to COVID-19?
2. What type of processes did the COVID-19 accelerate in the
digitalization?
2. Literature review
Digital transformation is a process where digital technologies
create disruptions, activating strategic responses from
organizations aiming to modify their value creation paths while
managing the structural changes and organizational difficulties
that affect both positive and negative results of this process
(Vial, 2019). The potential benefits of digitization are high. For
example, when information-intensive processes are digitized,
costs can be cut down to a staggering 90 per cent, and
turnaround times can improve by several orders of magnitude
(Shahar Markovitch, Paul Willmott, & Paul Willmott, 2014). A
digital transformation project encompasses significant
challenges since it requires implementing digital capabilities to
support business model transformations impacting whole
organizations, particularly operational processes, resources,
and internal and external users (Parviainen, Tihinen, Kääriäinen,
& Teppola, 2017).
Digital transformation has been identified as a significant
hospitality trend bringing new opportunities and tremendous
challenges to players in this crucial sector within the realm of
the tourism industry (Lam & Law, 2019). This movement is likely
to have significant impacts due to technology developments
and emerging new tourist demand, and major business areas
such as marketing and operations (Salazar, 2018). In fact,
despite transforming customer experiences being considered
the most visible aspects of transformation, firms can achieve
compelling benefits from the transformation of internal
processes via process digitization, worker enablement, and
performance management (Westerman, Bonnet, & McAfee,
2014). Employees are more often working from home and using
collaboration and networking tools to communicate with
anyone in the company regardless of wherever they are. These
tools are strong enablers of knowledge sharing and stimulate
real virtualization of individual work by separating the work
process from its location. The process of strategic decision-
making is being modified by digital transformation, allowing
managers to extend borderless strategic planning sessions.
However, the benefits of digital transformation are not
consensual. Some authors argue that despite digital
technologies’ ability to ease the burdens of aesthetic and
intellectual existence, digital technologies’ benefits are
António, N., & Rita, P. (2021). Tourism & Management Studies, 17(2), 41-46
43
overrated and driven by top Silicon Valley companies
(Ossewaarde, 2019; Roth, 2019). For that reason, these authors
recognize that social theory should itself evolve into a digital
social theory a useful social theory to observe a digitally
transformed society.
3. Methods
In order to answer the research questions raised above, a
survey was administered to hotel managers who participated in
the XVI National Congress of the Association of Hotel Directors
of Portugal (ADHP Associação de Diretores de Hotéis de
Portugal), which took place in Évora on October 15-16, 2020.
ADHP is an organization that represents Portuguese hotel
managers. In most cases, hotel managers present at the
congress work in hotel chains with multiple hotels and multiple
brands.
The survey was conducted during a discussion panel, using the
platform Sli.do (slido.com). For this reason, questions had to be
kept at a low number and very concise. Hotel managers were
asked to use their mobile phones/computers to answer three
multiple-choice questions (see Table 1).
Table 1 - Survey questions
ID
Question
Type of answer
Choices
1
Do you consider that COVID-19 promoted the digitization of some
processes in your organization (ex: pre-check-in, self-check-in/out,
digital menus, online service reservations, among others)?
Single answer
No
Yes
2
In post-COVID, what do you think will be the percentage of
meetings, both internal (with employees) and external (with
customers, suppliers, and other partners), that will continue to be
held online?
Single answer
0%
25%
50%
75%
100%
3
With the appearance of COVID-19, many organizations started to
use technological tools of productivity that they did not use before.
If this is the case for your organization, please indicate which tools
you began to use.
Multiple answers
4. Results and Discussion
A total of 51 hotel managers answered the questionnaire. Table
2 summarizes the respondents’ answers, both in frequency and
percentage of each of the three questions. These results are
explored below, question by question.
Table 2 - Survey summary statistics
ID
Answer
Percentage
1
No
8%
Yes
92%
2
0%
4%
25%
20%
50%
51%
75%
21%
100%
4%
3
File sharing in the "cloud"
47%
Team management
80%
Project/task management
20%
Data analysis and visualization
25%
As shown in Figure 1, 92% of hotel managers confirmed that
COVID-19 promoted some of their organization’s digitalization
processes. Results are in line with studies on different
industries, which described that the limitations and restrictions
imposed by the pandemic led most organizations,
independently of their area of business, to speed up their digital
transformation.
António, N., & Rita, P. (2021). Tourism & Management Studies, 17(2), 41-46
44
Figure 1 - Digitization processes in the organization
Figure 2 shows that over 75% of the respondents consider that
at least half of their internal and external meetings will continue
to be held online. One interesting finding is that from the four
respondents who answered negatively to question one,
meaning that COVID-19 did not accelerate their organization’s
digital transformation, only one answered that in the future, all
meetings would be presential. The remaining three answered
that half of their meetings should be online.
Figure 2 - Online meetings in Post-Covid 19
Regarding the third question on which technological tools did
organizations use more due to the pandemic’s consequences,
as presented in Teble 2 and Figure 3, team management tools
were more often used (41 respondents, representing 80% of
the hotel managers). The second most used tool was the
sharing of files via cloud platforms, with 47% of the respondents
recognizing that the use of this type of tool increased in their
organizations. The rise in usage of these types of tools could be
related to the need for teams to work remotely, which requires
files to be accessed from anywhere and have tools to manage
teamwork (scheduling, online meetings, online chat, and other
team management functionalities).
Figure 3 - Use of technological productivity tools during Covid 19
Despite the changes in booking patterns caused by the
pandemic, only 25% of the respondents acknowledged having
increased the use of data analysis and visualization tools. Also,
only 20% of the respondents said that their organizations
increased the use of project/task management tools. In this
case, a discussion with hotel managers revealed that many used
“Team management” tools to manage projects/tasks.
No
8%
Yes
92%
0% 10% 20% 30% 40% 50% 60%
0%
100%
25%
75%
50%
% of respondents
% of online meetings
0 10 20 30 40 50
Project/task management
Data analysis and visualization
File sharing in the cloud
Team management
Respondents
António, N., & Rita, P. (2021). Tourism & Management Studies, 17(2), 41-46
45
From the 12 respondents who in question two answered that
online meetings after the pandemic would be reduced to 25 per
cent or less, nine answered that they increased the use of team
management tools, and five increased the use of file-sharing in
the cloud. This situation may indicate that hotel managers
perceive that online meetings are not beneficial. Still, they
accept that organizations should not stop working due to the
pandemic and should digitalize their processes to continue
running despite the adversities.
4. Conclusion and implications
This short but incisive survey shows that COVID was clearly a
catalyst for digital transformation in the hospitality industry.
According to the information collected from the surveyed hotel
managers, digitalization seems to continue, making the old
habits more likely to die out than to return.
This transformation can have multiple implications in the
industry. For example, the fact that employees not related to
public functions can work remotely could allow hotels to reduce
office areas in order to increase their outlets or public space. In
turn, working from home can be an important factor in
employee retention by allowing employees to choose their
work pace and better conciliate their professional and personal
life. A more satisfied workforce will also be more efficient.
Higher employee retention, coordinated with document
digitalization and cloud storage, can also foster better
knowledge management and process efficiency, improving
from basic changes, like converting presential to online
meetings. For example, many hotel companies’ regional
managers have regular face-to-face meetings. In other cases, in
some companies, a hotel manager is responsible for a cluster of
hotels, requiring him/her to rotate between hotels to have
meetings. Converting most of these meetings to online
meetings will decrease the costs of travelling and commuting to
meetings and save travel time to meetings. Not to mention the
positive effect on the environment. Additionally, the need to
manage a workforce working remotely and sometimes in
different working schedules can foster the adoption of projects
and processes management tools, which in turn can also
contribute to better efficiency. The general adoption of digital
tools for public attendance, such as self-check-in, self-check-
out, self in-room ordering, among other tools, has the potential
to generate additional efficiency gains.
Following this opportune exploratory study and considering the
importance of the topic to improve management and
streamline processes, more studies should be done on this
subject. Nonetheless, despite digital transformation’s
perceived benefits in the hospitality industry, there is no clear
empirical evidence of that. Therefore, future studies could
explore this gap and simultaneously contribute to social theory.
This study has its limitations. Considering the context where it
was administered, the empirical survey was based on a short
questionnaire without getting into more details on how hotels
were and where they are heading. With more time available,
future studies are advised to consider larger sample sizes, to go
beyond a single country, as well as to achieve a sample of
respondents from multiple sources (in this study was just one,
despite being a relevant association of hospitality managers
and directors).
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... PRISMA four-phase flow diagram (n = included; e = excluded). Source: Adapted from Moher et al.[15]. ...
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