Predicting the Rise of the Smart Hotel in 2016

For those of us who cover the hospitality industry, we hit a plateau in 2015 with the dismissal of Starwood Hotels CEO Frits van Paasschen, followed by Marriott gobbling up the 1,200 Starwood hotels in the hotel merger of the century in November.

Since the early 2000s, Starwood played the role of the resistance in the global hotel industry battlefield dominated by Marriott, Hilton, Hyatt, InterContinental, and Accor. The Starwood narrative was like Apple’s defiant spirit of innovation flying in the face of Microsoft’s hegemony. The Rebel Alliance fighting the Death Star.

I had 12 minutes alone with Paasschen in the fall of 2014. We talked about how next generation devices and software could personalize the guest experience. We discussed technology’s potential to educate and connect guests with the world, shifting hotels into global knowledge sharing machines. The future of hotels for those 12 minutes was pregnant with possibility.

But then Paasschen was fired for not opening enough Four Points by Sheratons in Topeka and Tucson. And I discovered Airbnb.

Poof. Starwood is gone. Like that.

The death of hospitality in hospitality has been replaced by the Holy Grail of scalability. I interviewed Marriott CEO Arne Sorenson on the day of the big merger. He told me part of the motivation behind acquiring Starwood, and I paraphrase, was acquiring more leverage power to push around the also-merging online booking engines a little more.

It’s about margins. It would be naive and nostalgic to question this, obviously. Marriott and Starwood stakeholders are happy. End of story.

But what are we supposed to get excited about in the hotel world now? Our always reliable Ace Hotels just opened in Pittsburgh. Kimpton is going to open in Europe in 2016. Canopy by Hilton and Hyatt Centric are coming online, slowly. The CityHub, Generator and Freehand hybrid hostel/hotel model is interesting, but there are so few of them.

Nothing really stirs a fire in the loins there. Looking specifically at the large corporate hotel groups, it’s like Seinfeld lamented years ago about his favorite sports teams always trading his favorite players. We’re just cheering for laundry. Hospitality today is basically a battle of brands supervised by yield managers and absentee landlords.

Or as Gray Shealy, executive director of the Master’s of Hospitality Management program at Georgetown University, told me in January, the big hotel brands are basically just giant loyalty reward programs with bedrooms.

That’s not a bad thing necessarily. New hotels like the JW Marriott Austin and forthcoming Hilton Cleveland are far more interesting than their predecessors. They’re actually pretty cool in terms of their design, spatial relations, and food and beverage. They will both make their owners and Marriott stakeholders lots of money.

It’s just that I can’t tell the difference between them.

Marriott now has 30 hotel brands, or maybe it’s 31 or 32, including verticals like Delta, Protea, and Bvlgari. The hotel flags are pigeonholed neatly in every travel consumer demographic and psychographic bucket known to man, strategically diced and sliced and acquired and adapted with attuned precision aligning with the latest consumer behavior surveys.

Those consumer segments encompass every guest type from the Moxy Hotels millennial, who isn’t bothered by ping pong players scurrying around the lobby chasing errant balls, to the St. Regis sophisticate with a Black Card in one hand and a butler in the other.

Except one. There is perhaps one sliver of white space remaining in hotel branding and guest delivery heading into 2016.

The Smart Hotel.

The Smart Hotel isn’t about a tablet by the bed that you can’t figure out how to use to open the drapes. It’s about real time data and connectivity. It’s about having better ability to find and engage the people and places you want in any given destination. And it’s about more opportunity for personal and professional development — what’s now being called “transformative travel” — at an affordable price point.

It’s really a shift from lifestyle hotels to having a better life hotels. That would be something to get me excited. That would give me a reason to ever consider booking an urban hotel again, instead of an Airbnb.

Building the Smart Hotel

Let’s start with the hardware and an understanding that the Smart Hotel is a cheap hotel. The more money I spend on a room is inversely proportional to how much I won’t be able to experience in the destination.

That means I’m not interested in a “design hotel” that spends $30 million on a restoration of a heritage building because that’s going to be amortized in my rate. I’ll eat, drink, and attend meetings there while looking at the restored period plasterwork, but I’m not paying to sleep in it.

Instead, the Smart Hotel of the future is built inside an existing office building, maybe purchased in a hardship sale.

The precedent for this is Hotel Daniel Vienna, the smartest hotel design I’ve ever seen. A short walk from public transportation and Klimt’s masterpieces in the Belvedere Museum, the 155-room hotel occupies what was originally an “International Style” glass office building inspired somewhat by the iconic Lever House in New York.

Sample direct booking prices mid-week in February 2016 start around $110 nightly.

The entire loft-like lobby is wrapped in glass so it’s filled with natural light. Over 90% of the ground floor is dedicated to a fresh market restaurant with lots of plants and shipping pallets covered with cool magazines. The rest of the space is reception and retail.

The rooms have a simple glass shower and vanity at the foot of the bed. Industrial pot lamps hang over the curvy plywood headboard, and the unfinished concrete ceilings still have old hardware left over from the previous office tenants.

“This is a new category for the lively, urban city hotel,” said Florian Weitzer, founder of the two Hotel Daniels in Vienna and Graz. “It’s tasteful with purposeful streamlining because we don’t want to get in the way of our guests.”

According to Wired, “Over the past 30 years, the U.S. has added about two billion square feet of office space to its existing stock, most of which today’s highly mobile workforce no longer needs, at least not as a permanent home.”

So there’s a potential business model here based on expanding urban office inventory, bare bones renovation strategy, and exploding demand. I would, however, copy the citizenM Hotels’ manned kiosk check-in experience, which is the smartest in the hospitality industry. To pare costs more in urban environments, owners could also adopt the socially kinetic, communal bathroom model at CityHub, Icehotel and others. Granted, that’s aggressive, so maybe save that for a Budget Smart Hotel brand.

In order for this to scale, a potential Smart Hotel chain would avoid consistent design brand standards. The brand consistency is the fluid product and variable programming, like room-sharing platforms such as Airbnb or soft brands such as Marriott’s Autograph Collection, where every accommodation option looks and feels different. That, after all, is part of the allure.

Meaning, the Smart Hotel is the anti-design hotel. It’s cool in the same way Apple stores are cool in strip malls. It adapts to any community in any building, celebrating efficiency, modernity, and end user mobility above all else.

“CityHub in Amsterdam, Hotel Schani in Vienna, FutureHotel in Stuttgart, and Workshop Cafe in San Francisco are the embryos for the Smart Hotel of the future, rising out of the primordial open data ooze.”

Programming the Smart Hotel

Now for the software. This is where the Smart Hotel differentiates itself from Aloft and Moxy and other next gen brands.

In 2016, the smart city discussion goes mainstream because the exponential rise in open data and the Internet of Things (IoT) is providing developers with so many new APIs — a set of protocols and tools for building software applications.

According to the Gartner IT company, “6.4 billion connected things will be in use worldwide in 2016, up 30% from 2015…. In 2016, 5.5 million new things will get connected every day.”

That level of connectivity and implied interoperability (the ability for systems to communicate as the ecosystem scales), provides the foundation for smart city development to improve services and quality of life. It’s the basis for cities evolving into urban operating systems — or the “city as platform” concept.

The Smart Hotel of the future will be a node in the IoT, plugged into a city’s open data platforms sharing everything from new restaurant openings to public barbecues.

Smart Hotels will educate guests about Microsoft and Bismart’s new Smart Destination App, which connects with those same open data platforms. There will be live sessions and various media content discussing IoT, open data, adaptive urban reuse, social urbanism, logistics and mobility, and participatory citizenship to co-create the future city.

Imagine a hotel bar that’s designed like Apple’s Genius Bars where you can order a test drive of Microsoft’s HoloLens headset with your micro-beer.

A smart hotel will direct me to innovation centers operated by IBM, Microsoft, Siemens, Cisco, and others, and tech events showcasing next gen smart city platforms and advanced industry developments.

All of this will come to the fore in 2016, but I want someone to hold my hand and explain it to me, and show me it in action. If a hotel can do that, I’ll pay for it.

This year in Skift, I covered the rise of social connectivity apps and coworking spaces in hospitality. CityHub in Amsterdam, Hotel Schani in Vienna, FutureHotel in Stuttgart, and Workshop Cafe in San Francisco are the embryos for the Smart Hotel of the future, rising out of the primordial open data ooze.

They are the new resistance to hospitality by proxy. They’re defining the future of travel where user experience and interconnectivity transcend the confines of a dumb terminal design hotel, and Marriott doesn’t own any of them yet.