Personalization vs. privacy in hospitality: Walking a tightrope to provide an optimal guest experience

As we enter the 2024 summer travel season, hoteliers are facing headwinds on many fronts. Unlike 2022 and 2023, when pandemic pent-up travel demand drove hotel occupancy levels, 2024 is more challenging for hoteliers. One main reason is that is that occupancy numbers are down for lower-tier hotels, and in smaller markets. Given the continued rise in room rates, this may indicate an increased sensitivity to price concerns in the domestic leisure traveler.

In 2024, hotel occupancy rates have shown that while international travel is up, domestic travel has flatlined. Combined with persistent inflation, stubborn high interest rates and news of high-profile layoffs and hotel operators have few options for reaching expansion, growth and revenue goals.

Savvy hoteliers are increasing personalization efforts in an attempt to drive incremental revenue, increase brand equity, and achieve better reviews. These efforts leverage guest facing technology that enable seamless experiences and strives to better monetize the guest journey.

Yet, there are strong concerns on the part of both guests and hoteliers, concerning privacy issues and data security. Hospitality companies are justifiably leery of emerging technologies' capacity to handle sensitive information securely. And while personalization can lead to pitfalls, most guests want a highly customized experience. According to a McKinsey report, 71% of consumers expect personalization. What’s more, the report states that an even greater percentage (76%) get frustrated when they don’t find it.

The smart hotel room is increasingly common in the hospitality industry, benefiting both guests and hoteliers. Smart hotel rooms are powered by the Internet of Things (IoT). This involves equipping conventional guest room features and appliances with internet connectivity, permitting them to send and receive information. Research shows a strong link between personalization and overall satisfaction, with 61% percent of consumers willing to spend more if they offer a customized experience. 

Smart room analytics help brands build greater guest loyalty by providing invaluable first-party data — increasingly important as third-party data access dries up. Hoteliers can use this data to make personalized recommendations, and anticipate needs on future visits, based on a guest’s interests and information saved in their account profile.

Smart rooms and personalization efforts

Connected hotel rooms allow guests to customize room features to their specific preferences, such as controlling lighting, thermostat and window treatments. Smart tech impacts the in-room entertainment experience as well. With a simple voice command or tap on a screen guests can play music from personal playlists through smart speakers, order Pay-Per-View movies, or stream shows on the in-room TV from their third-party entertainment services, such as Netflix, Amazon Prime or Hulu. 

The in-room entertainment options are a particularly relevant feature for today’s guests, as Variety reports, “On average, Americans households that subscribe to streaming video entertainment services said they spend $61 per month for four services, according to Deloitte’s 18th annual Digital Media Trends report. That’s up 27% from $48 per month on last year’s survey.”

However, data privacy is important to customers: according to a 2022 survey, 85% of customers say that knowing a company’s data privacy policies is important before making a purchase. Hoteliers seeking to increase their personalization efforts can sometimes trigger privacy concerns amongst guests. Proactively managing possible resistance to personalization entails ensuring that hospitality organizations show that they take data privacy seriously.

Protecting data to preserve guest privacy

As the newsletter PMC School reports, “At the heart of the hospitality industry’s challenge is a diverse and often complex set of laws governing guest privacy. These laws vary significantly by jurisdiction, encompassing federal, state, and local regulations that dictate how hotels must handle guest information, from collection to storage and sharing. Central to understanding these laws is recognizing the fundamental right of guests to privacy and confidentiality regarding their personal information and activities during their stay.” 

The need for hoteliers to protect against cybercrime cannot be overstated. Hotels are repositories of personal identifiable information (PII), including credit card numbers. According to recent reports, nearly 31% of hospitality organizations have reported a data breach and 89% report having been affected by various types of breaches more than once a year. To protect such critical data, cybersecurity protections should be designed to work with a hotel’s network and co-managed with a trustworthy partner, both to counter breaches and minimize their potential damage. 

Cybersecurity expert Chuck Brooks agrees: “The hospitality industry, like all businesses, needs firewalls, intrusion detection systems, anti-virus software, and encryption techniques to guard against unwanted network access and guarantee the integrity of personal data. Regularly updating and patching software is also especially important.”

Hotels are well aware of the ongoing need to safeguard consumer data and protect guest privacy. According to Hospitality Technology, “54% of travel/hospitality organizations said they have increased their cyber budget over the past year. Of those organizations, 80% have increased their cyber budget from 4% to 20%, and 83% of travel/hospitality organizations have dedicated between 4% and 20% of their total IT budget to cybersecurity.” 

Spectrum Enterprise can help

We offer managed and co-managed solutions, tailored to your hospitality organization’s unique needs and objectives. Managed Network Edge for Hospitality is an end-to-end managed solution that includes security and routing, local network switching, network management and WiFi.