Gulf’s latest ‘smart destinations’ must keep an eye on costs, however big they may be

Travel and hospitality were among the most impacted sectors during the pandemic. While there are promising signs of recovery, varying vaccination rates, the high transmission of variants and geographic nuances continue to put pressure on the industry.

As the world eagerly awaits the full return of travel, ambitious developers are taking advantage of the time to build memorable destinations that set new digitally connected experience standards. For nations, these investments can make business sense and the opportunity is most evident in the Middle East.

High-profile purpose-built destinations are rising out of desert sands and against ocean backdrops. Examples include urban living centers such as Neom, luxury leisure destinations such as The Red Sea Project and Lusail City in Qatar. These and other such developments, in addition to their respective unique purpose for construction, share a similar goal: they intend be “smart”.

Counting the true cost

The intelligent destination is enabled by data processed through 5G, AI, the cloud, and a prodigious number of sensors. From enabling operational improvements - such as efficient energy usage - to transforming large portions of people’s life experience, the ambition for each development is admirable.

However, for these destinations to succeed in the long-term, they must be sustainable in the environmental sense and also under the economic lens. Absent a sound business case for the investment to enable and maintain a dramatic array of advanced technology, governments and sovereign funds risk subsidizing these efforts for an extended period or creating a new tax burden that threatens the desirability of the locations themselves.

Ultimately, these costs add to the risk of project failure. However, it’s possible not just to manage the cost of making a destination intelligent, but with thoughtful planning and a human-centric approach, enable a virtuous cycle that significantly increases the RoI of these developments.

Get tech to drive down costs

There are clear use cases for the use of data to drive down costs. Optimize energy consumption at all levels - through a smart meter grid in a city or neighbourhood, building automation systems at an individual asset level, and smart thermostats on a per room basis in hotels.

Use technology to automate labour-intensive activities. Sensors replace manual maintenance checks; connected vehicles enable fleet optimization and congestion reduction; and traditionally siloed departments seamlessly work together using the same core data hub, thus abating duplication of work and organizational complexity.

Work requiring human intervention can be predicted accurately and thus optimizing labor costs. Many more business benefits are feasible depending upon the level of technology deployed.

Gains all round

A sustainable growing destination requires not just cost management but an increasing revenue. At a destination, consumer spending represents revenue potential for individual businesses, which increases the desirability of investing further in the destination.

Likewise, the municipality benefits from increased tax revenue, which in turn, through additional scale, allows the proportional tax burden to reduce and making the location even more desirable. In essence, we have a virtuous circle of growth. A ‘smart destination’ is uniquely able to engage the visitor or citizen through bespoke automation – using data and technology to simulate a ‘white glove’ experience.

This data comes from sensors in the destination, devices carried, and digital transactions that are conducted. Anticipating the needs of the traveller, knowing the preferences of the shopper, or offering the right service or proposition at the right time are just a few examples of how smart destinations support this virtuous circle of growth.

Clearly each municipality, development, or even building needs to assess the investment return aspect of building intelligence into their infrastructure based on their strategy and unique circumstances. While it may not always be possible to be 100 per cent confident about a business case, planning ahead, modelling the scenarios and understanding the assumptions and limitations will help to maximize the opportunity for success.

Smart destinations can be smart business, thus providing bespoke automation and setting a new standard for luxury travel.