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China's unmanned hotels ride 'contactless' wave

AI and Internet of Things technologies offer cost and quality improvements

Leyeju Smart Hotel customers can check into their room by themselves, using an ID card and facial recognition technology. (Photo courtesy of Leyeju Smart Hotel)

BEIJING -- "Contactless" is the new buzzword in consumer-focused businesses due to the novel coronavirus outbreak. In China, products and services ranging from robotic waiters, to driverless disinfection and sanitation vehicles, to unmanned smart hotels are proliferating.

At unmanned smart hotels, guests can do everything from reserving a room and checking in online using facial recognition, to turning out the lights, drawing the curtains and adjusting the air conditioner -- all without human assistance. They don't even need to touch the gadgets in their rooms, a feature that gives peace of mind in a time of concern about infectious disease.

The new services are possible thanks to robots equipped with artificial intelligence, and Internet of Things technology that connects everyday devices to the internet.

Chinese e-commerce giant Alibaba Group Holding opened FlyZoo Hotel in Hangzhou, Zhejiang Province in November 2018. The unmanned hotel employs facial recognition technology and charges 1,000 yuan to 3,000 yuan ($141 to $423) per night. At FlyZoo, the ratio of staff to its guests is 0.5 to 1, versus 2 to 1 at conventional hotels, helping keep costs down.

The Leyeju Smart Hotel company was established in 2016. It opened its first property in the central city of Chengdu in October 2017. It now has nine hotels: in Chengdu; in Shenzhen, near Hong Kong; Guangzhou, also in the southeast; and Hangzhou, southwest of Shanghai. The company plans to open 21 more.

Leyeju Smart Hotel targets middle-income customers, with room rates ranging from 200 yuan to 400 yuan a night. Li Zhan, Leyeju's chief operating officer, said the chain's average annual room occupancy exceeds 90%, while the repeat rate is as high as 85%. So far, it has accommodated more than 670,000 guests and has more than 500,000 members.

Customers can make reservations through online travel agencies and through its own website and app. They can check in with facial recognition and Robots guide guests to their rooms. Curtains, air conditioners, TVs and lighting are all automatically adjusted. The high degree of automation means each hotel only needs one or two employees to deal with emergencies.

Five minutes after guests check out, the electricity and water are shut off and cleaners go to work. Housekeepers are part-timers recruited through an app and paid based on performance. Because they are not regular employees, labor costs are lower.

These measures mean operating costs at unmanned smart hotels such as Leyeju are only about 60% that of conventional hotels. With automation, it is also possible to save on water and electricity, as well as labor costs.

Unlike traditional hotels, Leyeju Smart Hotel properties do not have large lobbies. This lowers construction costs by 25% puts more hotel space to revenue-generating use. Conventional hotels typically need 80 to 120 rooms to be profitable, requiring large plots of land and buildings. Smart hotels can be much smaller -- mini hotels with as few as 20 rooms are possible.

Leyeju Smart Hotel also uses data from guests to improve its services. It can make technical improvements based on guests' use of IoT gadgets.

Leyeju's properties are all directly managed at the moment, but the company is considering opening franchise outlets. If that happens, new hotels will likely open an accelerated pace, thanks to the company's experience with IoT, which it can offer to franchisees. This year, the chain plans to open between 100 and 150 new hotels in first- and second-tier Chinese cities.

Zhang Jian, Leyeju's founder and chairperson, has long experience in IoT, while co-founder Luo Biao is a researcher on IoT and big data. Li Zhan previously worked at a Fortune Global 500 company's strategic division.

In January, Xiezhu Technology, a hotel service company specializing in AI and IoT, raised more than 200 million yuan in a Series A+ funding round. It has 8,000 partner hotels and has upgraded 350,000 rooms.

Atour Hotel is another chain promoting the switch to smart hotels. Unlike Leyeju, which uses technology to make its business more efficient, Atour stresses the quality of its facilities and services. It is also working to enhance customer loyalty through an image strategy and value-added services.

Whichever strategy they pursue, hotels look certain to make greater use of IoT in the future. The hotel industry is likely to be the forerunner of an eventual move toward smart homes.

36Kr, a Chinese tech news portal founded in Beijing in 2010, has more than 150 million readers worldwide. Nikkei announced a partnership with 36Kr on May 22, 2019.

For the Japanese version of this story, click here.

For the Chinese version, click here.

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