Despite the growing global emphasis on smart hospitality, the adoption of smart hotel technologies in developing destinations remains limited and uneven. In Batam, Indonesia, a strategic cross-border tourism hub, the hotel industry shows low levels of digitalisation, with only a few properties implementing integrated smart systems. Previous studies have largely focused on consumer perceptions in developed economies, leaving managerial and institutional perspectives underexplored. To address this gap, this study investigates the implementation of smart hotels in Batam using a qualitative phenomenological approach supported by thematic analysis. In-depth interviews with general managers and government officers reveal that smart hotel transformation is still at a formative stage, characterised more by physical modernisation than comprehensive digital integration. Key enablers include operational efficiency and enhanced guest experience, while barriers stem from limited funding, digital-skill gaps, and inadequate infrastructure. The study proposes a Contextual Smart Hospitality Model, highlighting that digital transformation in Batam’s hospitality sector is gradual, context-specific, and dependent on the synergy between technology adoption, organisational readiness, and policy support. Theoretically, the study extends the Technology–Organisation–Environment (TOE) framework to developing destinations, while practically providing a roadmap for phased digitalisation, human-capital investment, and multi-sector collaboration toward an inclusive and sustainable smart hospitality ecosystem