How does regulation affect the hospitality industry?

Hotels are subject to a huge number of laws and regulations, from rules that affect the building itself or the services rendered, to tourism regulations and even local ordinances. Hotels that operate internationally must adapt to the local laws of each country, which may vary substantially within the European Union and even more when countries around the world are taken into account, with laws and regulations that are specific to each location.

The need to comply with such a wide range of laws has always represented a burden to the hospitality industry when it comes to introducing changes: a burden that translates into a loss of competitiveness.

The emergence of the Internet and new technologies has opened new doors to companies seeking to be more competitive: Access to qualitative and quantitative information for improving decision making through the use of Big Data and Smart Data, much faster and more personalized communication channels with customers, better internal and external processes, automation, etc. There is now a whole range of possibilities that have even made it possible to create entirely new business models.

But regulatory obstacles also affect the Internet, in a way that is even more restrictive than in other industries. Laws that regulate digital environments are often weak and quickly become obsolete, since the regulatory process is too slow to keep up with the pace of change of new technologies.

For example, when a hotel decides to implement a given solution, it may find that the solution is not in compliance with current regulations, or that when regulations are finally brought up to date, the proposed solution has become obsolete or has been replaced by something more innovative.

Fortunately, there are two factors that are helping to bring greater balance to this state of affairs.

First, the ability of technology to be flexible and to adapt in order to comply with regulations. The companies that develop technology are aware that it make no sense to develop solutions that the hotel industry can’t apply, or that might be rendered totally obsolete by new regulations. For this reason, they try to develop solutions that respond to regulatory compliance while at the same time preparing for future change or even forcing changes to the law, as in the case of the boom in biometric technologies.

Secondly, laws are changing at an increasing pace in an attempt to respond to technological advances and properly regulate the innovations that come onto the market.

One example of this is the new European data protection regulation, the GDPR. This regulation, which for the moment seems only to be a source of headaches for many companies, responds to a real demand of users who want to have greater control of their data, together with greater security and privacy. This can translate into a great opportunity for companies who are able to apply it proactively and transparently, thus generating a greater level of trust in their customers.

It will also bring about a huge improvement in the industry as a whole. One of the main barriers against Internet use by customers is the lack of trust, especially when the time comes to make payments online or to provide personal data. They feel like their data are not very secure, or they are concerned about how their data might be used. La GDPR takes a big step forward in overcoming the fear and reticence that many users have of digital channels.

We can say that, even though there is a long way to go before technology and regulation work together hand in hand, the work that is being done on both sides is moving in the right direction, and we can expect a future in which the law, instead of acting as a barrier, will improve and facilitate the use of new technologies.