Posted on September 2011
Technology is changing – particularly in the hospitality sector. Guests demand greater online interaction and more tailored offers. Shareholders want greater cost savings to drive profitability following the sluggish performance of the hotel sector in the last two years. Hotel groups need to relentlessly search for new revenue opportunities, and need to act quickly to secure them. In this era of change, hoteliers face a crucial question: what to demand of IT providers?
With IT becoming an essential component of effective corporate strategy, it is important to get fundamentals right. Through discussions with industry analysts, commentators and hotel groups, analysing surveys, and considering recent research, five key themes have emerged on what global hoteliers should demand from IT providers:
Over the past decade, the technological demands of hotels have grown significantly. Such demands occur on two levels: the growing extent of information surrounding each guest; and the need for operational agility. Relating to the first, hoteliers have increasingly focused on developing specific customer relationship management programs to foster cradle-to-grave brand loyalty, requiring capturing and storing information on guest activities and preferences. Simultaneously, guests themselves have increasingly demanded more sophisticated technological facilities, mostly before and during their stay. Relating to the second, unpredictable markets and shifting economies require hotels to adjust accordingly. IT providers must be able to meet these adjustments in an agile, responsive manner. For instance, advertising sites and search engines are increasingly able to propose leads to hoteliers in real time, requiring hoteliers to accept or reject these leads in real time too. This requires not so much a large amount of data as it does the ability to process quickly the qualifications of a lead against an extensive amount of data – which in turn requires IT providers suited to the task. Such operational agility is particularly important for growing hotel chains.
While Hoteliers focus on their own business, they may not have the possibility to focus so much on technology. Hoteliers may struggle to transform and develop IT technologies themselves. Indeed, in the past, hoteliers tended to be almost reluctant to invest in IT, arriving late to technological change. Yet now the consumer is pressing for technological development, and the e-commerce/mobile trend in the market is becoming an increasing reality.
Customisable website booking options is thought to be the number one emerging technology trend.
Given this, hoteliers must look for IT providers that both integrate new technology, and that possess a future-oriented vision to determine what technological actions should be taken. Integrating new technology refers to the ability of IT providers to work with new applications, keeping up with and driving change. Studies have shown that hoteliers should expect the next decade to demand enhanced websites, upgraded Central Reservation Systems and internet booking engines, new means of promotion, and an increased interaction with technology. Customisable website booking options is thought to be the number one emerging technology trend. Artificial Intelligence-based technologies used to forecast food and beverage demand more accurately will become more common. Mobile technology is increasingly being used by consumers to interact with hotels, leading to pressure for specialised websites and interfaces.
Can the IT provider handle these approaching demands? Indeed, can they not just meet these changes, but actually drive change forward, operating as a proactive rather than reactive force for the hoteliers? Understanding such trends and future developments require constant immersion in the IT world, combined with a serious focus on the omnipresent question of ‘what is next’. Hoteliers deserve IT providers that can both respond to, and lead, innovation.
IT providers should have demonstrated in the past that they have the delivery capabilities and know-how to take on major industry challenges. They need to be able to handle global, complex implementations and on-going support for clients. How many dedicated client-facing and research and development staff do they have? How many years of experience do they possess managing portfolios? What is their track record in dealing with heavy transaction processing? The absence of such a background could be dangerous for hoteliers. For instance, the web often has a high ‘look to book’ ratio. If IT providers have been unable to handle heavy transaction processing in the past, this suggests they will continue to do so in the future – meaning this ‘look to book’ ratio will struggle against bad technology, and the hotelier would lose business. Again, hoteliers require IT providers that are future-proof – and in this case with the background to prove it.
A hotelier needs to be able to rely on their IT provider. They must be able to trust that the IT provider’s system is at once stable, secure and robust. A recent study indicated that more than 55% of credit card fraud comes from the hospitality industry. Unpatched systems, storing prohibited data, using low-strength passwords, and operating via unsecured web applications have all been cited as leading to credit card fraud. Security is crucial to protecting the reputation of the hotel brand. What can the IT provider offer to ensure guests are protected? Likewise, what happens when complications arise that challenge the stability of an IT provider, such as a natural disaster or a power outing? Infrastructure, system strength and security must be at the top of any priority list, providing not simply stability but high level stability within a heavy transactional environment.
Increasingly important to security is the use of hybrid-cloud technology.
Thus IT providers should offer innovative, forward-looking solutions. Data monitoring and data surveillance are obvious steps. Increasingly important to security is the use of hybrid-cloud technology. The managed nature of certain cloud structures helps ensure that important data is stored within a secure, stable location outside the hotels. Should a natural disaster or power outage occur, stressing the infrastructure of the hotel or the IT provider, cloud computing helps ensure data is housed within a stable cloud environment. IT providers should also offer systems secure not only in the present, but in the future, considering projected security developments like ambient intelligence, knowledge mining, biometrics and predictive analytics.
For hoteliers, budgets inevitably factor into cohesive business plans. IT providers should be conscious of this, operating in such a way that a hotelier’s investment is maximised. A recent study determined that not having the budget to make necessary improvements was the biggest challenge for IT departments, even as such developments and improvements were considered to be crucial. Likewise, projects supporting both cost-savings and revenue generating were ranked first (97%) as the main driver for technology initiatives. Thus hoteliers should ask: what is the IT provider doing to accommodate financial realities? How are they addressing expenditures without hindering development? For instance, some IT providers invest their own extensive funds into a centralised system, enabling hoteliers to access the benefits of these systems without having to likewise expend such capital upfront. Hoteliers should consider the capex versus the opex commitments required to modernise their systems.
Inevitably, this is only the start. There will be other things hoteliers should demand from IT providers – such as sector experience and an ability to quickly meet needs, to name only two. But the five demands listed above are crucial as hoteliers consider their IT needs. They allow hoteliers to work with IT providers towards future-proof, secure, client-focused, business-aware development. They encourage advancement with stability and affordability with innovation. In short, they are demands worth making.
To learn more, see:
Amadeus Invent the Future - http://www.amadeus.com/amadeus/x181821.html
Amadeus Hotels 2020: Beyond Segmentation - http://www.amadeus.com/hotelit/beyond-segmentation.html
Amadeus Transform Your Growth Strategy Now - http://www.amadeus.com/hotelit/transform-your-growth-strategy-now.html
Lodging First Annual Technology Study – Hospitality Technology - http://hospitalitytechnology.edgl.com/home