Why hoteliers should care about this Chinese smartphone company

[This article was originally published in HOTELS Magazine online version in Sep 2018]

In my last piece, I mentioned that although some hotel chains have invested tremendously on Internet of Things (IoT) to transform “in-room” experience, they should actually expand their strategies to the broader “in-hotel” experience. Exactly as I suggested, recently Marriott International announced that they have adopted Artificial Intelligence (AI) powered facial-recognition to enable frictionless check-ins at two hotels in China.

The locations of the two hotels are rather interesting. One is in Sanya, the Honolulu of China. Sanya is not only one of the hottest tourist attractions of China, but also the best-known city of Hainan, which is recently designated the largest Free Trade Zone in East Asia. The other one is in Hangzhou, the city known for its poetic and historic West Lake, as well as for the headquarters of one of the most powerful tech companies in the world, Alibaba.

Alibaba, thanks to its unparalleled ecommerce platforms such as Taobao and Tmall and its most widely used Fintech products such as Alipay, enjoys a tremendous amount of commercial and financial data and thus is the crown jewel of AI in China. Therefore, it is not surprising for Marriott to choose Alibaba as the partner to pioneer facial-recognition check-ins (Not to mention Marriott’s August 2017 JV with Alibaba, which set things up so that Alibaba’s travel service platform Fliggy now manages Marriott’s storefront on the platform. Ultimately the company will also manage Marriott’s websites and mobile apps in Chinese language).

However, another tech company may be a better partner than Alibaba, if all hotels want to embrace the AI and IoT revolutions. Alibaba might be one of the most powerful Internet companies, but what it lacks is a deep and broad IoT network. In the future, without a powerful IoT network, hotels wouldn’t be able to benefit from the full potential of AI.

If Alibaba is the unmatched AI giant, then who’s on the cutting-edge of IoT networks? You may have heard about the company from its recent blockbuster IPO in Hong Kong. Yes, it’s Xiaomi. Although better known for its deep patronage in China and India because of its low-cost smartphones, Xiaomi’s founder and CEO Lei Jun, dubbed “the Steve Jobs of China,” has established an ecosystem of IoT products via strategic investments from Xiaomi and Lei Jun’s venture capital fund Shunwei.

By the end of 2017, Xiaomi’s IoT network claims to have connected to 100 million smart devices, or more than 90 different kinds of devices. The scale of this IoT network opens up a new world of imaginations for what the hotel experience can be in the future. For example, that bracelet which constantly monitors guests’ body temperature will be able to automatically control the AC in real time, and the room lights will automatically turn on and off and adjust the volume based on your location in the room, sensed via your phone and the smart Wifi. If your guest is in the mood, just order a bottle of Champagne via Ai Mini, Xiaomi’s Echo-like home assistant, and the wine will be delivered on an autonomous driving Segway (via a company acquired by Xiaomi in 2015).

In the future, by combining IoT with AI, we can imagine hotel services achieving an unprecedented level of personalization. Imagine customers’ preferences stored on their personal devices feeding directly into a hotel’s system, allowing the hotel to utilize all the IoT devices to provide fully-customized services without the cost of human touch. This will add even more value on customer loyalty — the more the customer stays with the hotel chain and the more data its IoT devices will be able to collect, the more personalized the service will be.

Xiaomi is definitely not the only believer in the IoT story. You’re probably familiar with the wearable device companies such as Fitbit. There’s also a wide range of startups making smart devices from smart locks to smart robots. Among the big players, Google, with its Nest Labs, in 2014 acquired Dropcam, the video streaming camera maker, and is competing head-to-head with Amazon in the AI-powered home assistant space. However, Xiaomi still enjoys the advantage of lower-cost in comparable products.

The only concern? Hotels should move fast as tech disruptors such as Airbnb are quick adopters of all things forward-looking.

Global Fintech Founder & Investor | ex-Adyen, ex-Franklin Templeton

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