Augmented and Virtual Reality in the Hospitality Industry: What you need to know
Abstract: In this Article, Dr. Danny Han summarizes academic and industry relevant knowledge on Augmented Reality (AR) and Virtual Reality (VR) in the hospitality industry. The key aspects are:
- Technology Readiness
- Accessibility of AR and VR Technology
- Consumer Benefit
- Return on Investment
December 2019, by Dr. Danny Han
How many times have you found yourself in thoughts actively contemplating about getting yourself one of these VR or AR headsets and dive into a world full of magic, fairies and alternative realities? A world that promises to instantly ‘cyborgify’ you, bring objects to life, and blend out friend requests of dudes you successfully ignored last weekend in your favorite bar.
If you’re anything like me, the answer is likely somewhere between 0 to almost 0.5 times in the last 5 years. But why are we still so fascinated about AR and VR? What’s all the fuss about? I thought it was another one of these ‘boytoys’ or ‘gimmicks’ for gamers and nerds, but apparently, I hear there are people who dedicate years of their life to study virtually enhanced realities in various context to obtain a doctorate in “XR”.
In this post, I will give you insights in all you need to know about developments around AR and VR technology, recent activities and use cases in the hospitality industry as well as some perspectives into what we don’t know yet.
”VR and AR have the potential to deliver a $1.5 trillion boost to the global economy by 2030.PWC
Ain’t NOBODY got MONEY for Augmented and Virtual Realities!
“The value of AR and VR is expected to grow to USD 108 Billion by 2020” (Digicapital)”; “Over the next 5 years, shipments of AR and VR headsets will reach 59.2 Million up from 9.6 million devices in 2017” (IDC)
It’s clear that businesses who are serious about surviving in a highly competitive environment in the next 5-10 years invested in AR and VR yesterday. So, everyone else is surely doomed…or not?
Research conducted by American Rockbridge Associates and the University of Miami on enriched digital experience showed that 49 percent of consumers expect the most impact of Virtual Reality in our industry in the hotel booking process. This service ranked first, even above the common example of virtual dressing rooms when buying clothing on the internet. In the tourism field, VR is expected to contribute largely to the pre-travel stage for tourism marketing purposes (Li & Chen, 2019). That sounds promising, but although we (Han and tom Dieck, 2019) are convinced that AR and VR will grow in the coming years, it remains striking that we hear so few success stories let alone major investments especially in the hospitality industry. Let me formulate several reasons that have stopped us thus far from embracing the technology at this point.
Arguably, this is a big topic. With any development of emerging technology, we are highly dependent on the current stage of hardware capacity that either makes or breaks the user experience. Marketing yourself as ‘innovative company’ based on your efforts and investments to pioneer in a new technology is one thing, making it work for your customer and your business is a completely different matter. Especially in the hospitality industry, we simply cannot take the risk of implementing a technology that is not ready to perform consistently and to expectation, as every ‘negative’ experience of our guest can draw fatal consequences with it.
Accessibility of Technology
As an academic, I access and discuss numerous theoretical models that examine, some better some worse, phenomena in society, one being the adoption of technology. As researchers in consumer technologies we often ask ourselves what the underlying conditions are that allow for mass adoption of tools and applications (see Rauschnabel & Ro, 2016; tom Dieck et al., 2018 for examples). Accessibility of emerging technology is certainly one of the issues to address when rambling about AR and VR for the consumer market, and we must acknowledge that so far, technology in both cases has not been widely accessible. On the one hand, due to the still relatively high price it costs to acquire things like wearable headsets (e.g. 399USD for a pair of Oculus Rift S, or 3.500USD for the Microsoft HoloLens 2), but I believe more importantly due to the desire to develop ‘new’ hardware (such as glasses) that need to be acquired separately instead of building on existing technology. It’s due to that key reason that I believe the next stage of AR implementation will be adopted through mobile AR first, which is based on smartphones which are well-established in the consumer market.
With all developments and experiments going on in several industries, the same question often remains, “What’s in it for me?” Consumers (including you and me) are naturally poled to look for a reason of existence. In other words, from our upbringing we often find ourselves looking for incentives before taking action or investing time and effort into certain projects. Naturally, the same principle applies for the investment into new technologies. If an AR or VR application or any other technology for that matter fails to provide a clear message regarding the benefit for the user (whether it is the consumer or the business) it will most certainly result in a failed attempt towards adoption and a complete waste of money and other resources. This is why it is crucial to dedicate our efforts to understanding what the technology can do FOR US by putting the user and how AR and VR will benefit the user in the center of development, not the technology.
Return on Investment (ROI)
The last of the key points, and one that I’m frequently confronted with in meetings and conferences is the question how investment and implementation of AR and VR technology in my business will translate into profit. This is certainly a tricky question, but not as difficult to get your head around as you might think. It’s true that AR and VR are still relatively new to an extent that measurements have yet to be recorded and potential impact monitored. However, measuring success is not so different as measuring success in other areas of the hospitality industry. Taking a marketing perspective, there are certainly enough reasons that justify investment into social media marketing such as using Facebook or Instagram for a number of objectives, some of which might be difficult to clearly measure in form of financial indicators. Investing in AR and VR to ‘enhance the customer experience’ (which I hear every so often, but doesn’t mean a thing), needs to be justified based on the purpose it aims to achieve. If the purpose is to create a buzz around the brand, it can very much be sufficient to focus on creating a 10 second kick-ass AR experience, but this will most likely not result in building a relationship with your customer, nor result in generating an additional stream of revenue
Han, D. I. D. & tom Dieck M. C. (2019). Calling for user-centric VR design research in hospitality and tourism. Hospitality & Society, 9(2), 237-246.
Li, T., & Chen, Y. (2019). Will virtual reality be a double-edged sword? Exploring the moderation effects of the expected enjoyment of a destination on travel intention. Journal of Destination Marketing & Management, 12, 15-26.
PWC (2019). Seeing is believing.
Rauschnabel, P. A., & Ro, Y. K. (2016). Augmented reality smart glasses: An investigation of technology acceptance drivers. International Journal of Technology Marketing, 11(2), 123-148.
tom Dieck, D., tom Dieck, M. C., Jung, T., & Moorhouse, N. (2018). Tourists’ virtual reality adoption: an exploratory study from Lake District National Park. Leisure Studies, 37(4), 371-3
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Han, Danny (2019): Augmented and Virtual Reality in the Hospitality Industry: What you need to know; xrealitylab-article from Dec. 01, 2019; URL: http://xrealitylab.com/augmented-virtual-reality-in-hospitality-challenges/
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