Mr. van Meerendonk

Technology

Why Investing in Hospitality Technology is Investing in Good Business

By Paul van Meerendonk, Director of Advisory Services, IDeaS Revenue Solutions

As the wider hospitality industry continues to face a slow recovery, savvy hotel owners and managers should be looking inwards during this time with a view to ensuring that the technology they use to help run their facilities are best suited for the roles they have to perform.

Whilst many international hotel organisations have used the economic downturn to adequately plan for the future through improved levels of technology and staff investment, many others are not heeding the warning signs and are instead shedding costs wherever possible - which can lead to disastrous consequences.

No one knows for sure if the current 'green shoots' being reported in the media will lead to a rapid or sustained economic recovery, but all pundits agree that there is definitely some recovery and eventually the situation will improve. Will markets return to normal? The question to ask is what's normal in the post GFC era? 'Normal' in 1996 meant something completely different to 'Normal' in 2006.

Progressive hospitality organisations that have currently heeded the warning signs that dynamic markets and changing industry requirements are part of the new 'normal,' and have taken the time to update or invest in the right technology and training, will be better placed to effectively conduct business in the market place of 2010, 2011 and beyond. To quote Bob Dylan 'The times they are a changin.' Hoteliers across the globe need to ask themselves - what are they doing to position themselves for this?

In consideration of how investment in hospitality technology can support business growth, rather than being an added cost, or unnecessary financial burden, to a hotel - it is important to look at what operational efficiencies the technology can bring, including any improvements in staff activities and morale that can be delivered and how the technology will ultimately benefit the hotels revenue performance.

There are many technologies that tick all of the above boxes, including:

  • Energy Management Systems
  • Revenue Management Systems
  • Property Management Systems
  • In-Room Technology
  • Sophisticated Telco Systems

Consider Revenue Management Technology: This technology is used in a wide variety of industries. In hospitality it is used to provide analytics that will increase rates and occupancy, track historic data, forecast future demand and set room and package pricing. These systems have a strong track record of significant revenue and efficiency improvements. ASP (Software as a Service) delivered Revenue Management (RM) systems for hotel groups, chains and independent boutique hotels, an opportunity to improve their market position, reduce their carbon foot print, bind together the organisation with a deeper understanding of organizational goals, become more knowledgeable of market trends in the industry and ultimately improve their bottom line.

Equally as important, when considering whether to invest in new technology within the hospitality sector, is the need to recognize that technology is constantly changing and improving. Decision time frames are shortening. International hoteliers that have a good view on the future, realize that the technology decision they make today will only be relevant for the next 3-5 years at the most and are already planning next generation migrations. There is an onus on the vendors to also re-invent themselves and re-invent their technologies. The concept in 2009 - 2010 of having something 'future proof' is both outdated and naïve.

IDeaS experience in many regions to date is that there are many technology vendors in hospitality that fail to acknowledge the above reality. We are seeing more hotel groups gravitate to some of the international technology providers, which is also an emerging trend in developing economies like China.

As the hotel industry continues to move towards a more dynamic and inter-connected environment it is vital that the correct technology infrastructure is in place to meet this challenge. Technology must enable a seamless flow of process and procedure and decisions through all aspects of the business, thereby enabling a philosophy of managing by exception rather than on a day to day tactical basis.

It is also important to recognize the importance of managerial experience in rate-setting. Revenue Management Technology itself, while providing results, can be maximized by educating staff in the most effective ways to use it. A study conducted by Dr Lewis Lim at the Cornell-Nanyang Institute of Hospitality Management (CNI) in Singapore compared different styles of hotel revenue management. One viable style of revenue management involves actively employing data-driven IT tools, while insisting on human influence in rate-setting decisions.

Dr Russell Arthur Smith, Interim Dean of CNI states that, 'While there's merit to applying sophisticated technology to rate-setting, hotels should not neglect the value of human judgment and insight.' Dr Lim elaborated that 'Hotels make better rate- setting decisions when they effectively combine technology and human inputs. Besides being receptive to technological innovations, hotels need to be more nimble and experimental in pricing, and learn to deal with non-quantifiable concerns in price decision making.'

Importantly, hoteliers also need to realize that the hospitality industry is constantly changing and a lack of up-to-date technology and older strategies will not always be applicable to new, unique situations. For instance, with the increase in choice of distribution channels for a hotel, it is no longer appropriate to expect a Reservation or Revenue Manager to handle a multitude of manual Extranets to ensure revenue management and pricing integrity. Hoteliers are faced with the choice of having key resources spending hours per day updating these channels manually or create an environment where the implementation of any pricing decisions is largely automated and thereby freeing up these resources to focus on strategically important issues to enhance a Hotels performance.

Hotels that haven't properly invested in updated technologies can find themselves under-prepared for the increased workload that comes with having to manually update rates according to information being received from multiple channels. In light of an increasingly technologically dependant operating environment, hotels that still manually alter room rates and various revenue strategies rather than having the right technology in place to do this for the, can find themselves lagging behind the competition - both in terms of meeting their revenue potential but also in their ability to deal with different periods of patronage.

Those hotel groups that fail to recognize the speed of change in technology and what this can bring to the business will find themselves significantly under prepared when the market starts to strengthen. While "its never too late" to act - there is a significant opportunity cost in doing nothing or worse still, cutting technology out of the day to day operations. For a hotel to effectively operate and ensure it is maximizing its incoming revenue, the right technologies needs to be in place. Through investing in the right technology at the right time, savvy hoteliers will be ensuring that their facility(s) are able to effectively maximize their ongoing revenue capability now and into the future.

As Director of Advisory Services for IDeaS Revenue Solutions, Paul van Meerendonk leads a global team of revenue management advisors focused on hotel revenue optimization projects. Mr. van Meerendonk is responsible for global development, management and operations of the Advisory Services team. He oversees the hiring, training and management of industry-leading consultants located in London, Beijing, Singapore and Atlanta. Mr. van Meerendonk also represents IDeaS on industry thought-leadership initiatives related to trends and best practices within revenue management, including authoring a number of white papers, conducting public speaking engagements, as well as leading key client webinars with an average audience of over 200 global representatives. Mr. van Meerendonk can be contacted at +44 (0) 118-82-8100 or Extended Bio...

HotelExecutive.com retains the copyright to the articles published in the Hotel Business Review. Articles cannot be republished without prior written consent by HotelExecutive.com.

Receive our daily newsletter with the latest breaking news and hotel management best practices.
Hotel Business Review on Facebook
RESOURCE CENTER - SEARCH ARCHIVES
General Search:

APRIL: Guest Service: The Personalized Experience

Scott Hale

Home sweet home. Your dog recognizes the sound of your car pulling in the drive and waits anxiously for you at the front door. Your thermostat knows the temperature that you expect the kitchen to be as you prepare dinner. Your stereo knows what playlist works best with tonight’s recipe. Your television has your preferred programming all cued up when you’re done with your meal. The list goes on. Home sweet home. What if you could make your guests’ next experience at your hotel just like home – but better? You can. READ MORE

Tom O'Rourke

Mobile devices are not only important when planning trips, they are indispensable to guests when they are on the actual trip. According to the Expedia and Egencia Mobile Index published last year, travelers rank their smartphones as their top priority when on the go. Mobile devices are so important that survey respondents ranked them higher than a toothbrush or a driver’s license. The mobile experience extends beyond the point of booking the room—it’s now an integral part of the journey. READ MORE

Adele Gutman

Before the first shovel was in the ground, we knew Aria Hotel Budapest would be an extraordinary hotel. For the Library Hotel Collection and our founder, Henry Kallan, creating a hotel that is beyond ordinary is everything. We think about each detail of the design and experience to create wow factors for our guests. These elements generate rave reviews, and rave reviews are the cornerstone of our marketing program. This is how we became the #1 Hotel in the World in the TripAdvisor Travelers’ Choice Awards. READ MORE

Megan Wenzl

A personalized guest experience is important in today’s hospitality industry. Guests can voice their opinion about a hotel in seconds because of the Internet, and their feedback is contained in sources like social media sites and online reviews. Potential guests read this information when they are looking for where to stay on their next summer vacation. Guests will post online reviews about their experiences. According to research by ReviewTrackers, 45 percent of hotel guests are likely to leave to a review after a negative experience, while 37.6 percent of hotel guests are likely to leave a review after a positive experience READ MORE

Coming Up In The May Online Hotel Business Review




Feature Focus
Eco-Friendly Practices: The Value of Sustainability
The hotel industry continues to make remarkable progress in implementing sustainability policies and procedures in their properties throughout the world. As a result, they continue to reap the benefits of increased profitability, enhanced guest experiences, and improved community relations. In addition, as industry standards are codified and adopted worldwide, hotels can now compare how their operations measure up against their competitors in terms of sustainable practices and accomplishments. This capacity to publicly compare and contrast is spurring competition and driving innovation as hotels do not wish to be left behind in this area. Water management and conservation is still a primary issue as population growth, urbanization, pollution and wasteful consumption patterns place increasing demands on freshwater supply. Water recycling; installing low-flow fixtures; using digital sensors to control water usage; and even harvesting rainwater are just a few things that some hotels are doing to preserve this precious resource. Waste management is another major concern. Through policies of reduce, reuse and recycle, some hotels are implementing “zero-waste” programs with the goal of substantially reducing their landfill waste which produces carbon dioxide and methane gases. Other hotels have established comprehensive training programs that reinforce the value of sustainability. There is employee engagement through posters and quizzes, and even contests are held to increase innovation, sensitivity and environmental awareness. Some hotels are also monitoring a guest’s energy usage and rewarding those who consumed less energy with gifts and incentives. The May issue of the Hotel Business Review will document how some hotels are integrating eco-friendly practices into their operations and how they and the environment are benefiting from them.