Hoteliers explain how technology investments play into their budgeting for 2019.
REPORT FROM THE U.S.— Hotel companies are preparing their annual budgets for 2019, and technology is an important investment as guests expect more and more out of their stays.
In this virtual roundtable, a group of hoteliers answered Hotel News Now’s questions about how they are prioritizing their tech spending next year.
1. What are your technology-spending priorities in 2019? Are these more guest-facing or back of house?
Mark Hemmer, COO, Vesta Hospitality
“In 2019, Vesta will continue a trend that has played out over the last several years, that is investing in back-of-house technology solutions that allow us to consolidate multiple systems into a single vendor solution. For example, next year, we will be jettisoning separate systems for recruiting, on-boarding, timekeeping and payroll into a single platform.
“Advantages of this approach include reduced training time and expense, quicker implementations and, most importantly, it helps us focus more on being able to use data to drive decisions rather than getting inundated with data collection. Everything moves so quickly these days; the art is in acting on the right data right now.
“We look for vendors whose systems embrace all of the desired functionality in their original design, as opposed to bolt-on systems, which we have often found to be clumsy in their execution.”
Randy Griffin, EVP of sales and marketing, Marshall Hotels & Resorts
“Hilton is requiring all full-service Hiltons, Doubletree, Curio and Tapestry hotels transition to a proprietary version of (a sales and event management system) in 2019. Select-service hotels will transition by 2020. The average cost for full service is around $28,000 for data migration, new cloud-based software and training. We do not anticipate any significant spend in our other brands or independent hotels in 2019.”
Mark Van Amerongen, COO, Prism Hotels & Resorts
“As the rise of labor costs continue to be a critical issue we face as an industry today, we are looking seriously at technology that can help us directly ease labor cost pressures—such as using AI to replace jobs that are hard to fill, tech solutions to help eliminate excess expenses due to overscheduling and unnecessary overtime, and other inefficiencies and tech that enhance guest experience, improve revenue management, make marketing more strategic and effective, or introduce new operational efficiencies to help improve the bottom line across the board—offsetting increased labor costs. We’ve also invested a lot in business intelligence platforms that allow us to predict business trends.”
Marty Martin, corporate director of business systems and analysis, HP Hotels
“The world is changing so rapidly, and HP Hotels understands the underpinning of the company is technical in nature. Therefore, HP Hotels is focusing on a smart operational platform for each of our hotels to eliminate wasteful cost, improve communication (and) increase quality and customer satisfaction. Internally, we are also focusing on improving workflows throughout every function of the company and the technology that supports it is best in class, which will streamline processes, eliminate human error and enforce compliance. Furthermore, a keen focus on hospitality business insights though business intelligence will result in increased productivity and efficiency for our customers and owners.”
2. How does your spending (both in hardware/software and budget size) compare to previous years? Please explain your decision-making process.
Hemmer: “Most of the technology systems that we invest in these days are software- and web-based. It’s not like an earlier era where we had to expense more hardware and servers and their IT maintenance. With the majority of technology solutions being subscription-based, we project only a nominal increase for inflation in our 2019 spending over 2018.
“Moreover, with so many core systems in wide use throughout the hospitality industry, we are finding more and more candidates that already are capable in a given software-based system. This really speeds up the onboarding and training stages for us; new hires are more quickly productive.”
Griffin: “This Hilton requirement far exceeds anything the hotels have been required to spend on hardware/software since their opening dates.”
Van Amerongen: “We are definitely spending more than previous years, but spending in areas that will offset the costs over time. Security issues are a top priority, but once you’ve taken proper measures to ensure you are comfortable with your security, you can focus on investing in tools that will help you effectively manage your business and improve profitability. We like to be systematic in how we make those decisions, looking at the plan for the next five years, prioritizing, quantifying costs, determining risks and budgets. We take a critical look at what’s essential, what we can afford and what are the biggest risks.”
Martin: “Now, there are new ways to leverage technology. HP Hotels continues to challenge itself to be more agile, innovative and to deal with the cost curb of technology. Consequently, we challenge our partners to provide stronger operational efficiencies and aggregated solutions that in turn offer cost saving to HP Hotels, our customers and our owners.
“The decision-making is a shared model between the advisory council, the four partners, the corporate team, owners and through customer feedback.”
3. What technology are you keeping an eye on before making a significant investment? Why?
Hemmer: “We are looking at guest-facing systems that allow us to interact with guests while they are still in residence with us, so that we solve any small issues before they become bigger ones and enhance the overall experience.
“The major brands are working aggressively in this area and we are watching to see how this development effort plays out. For example, Marriott (International) has integrated its guest-facing system within a suite of products that franchisees must sign on for.
“Regardless, we believe any such systems must integrate with the entity’s core PMS (property management system), which supports the trend I discussed earlier. As our command and understanding of what technology can do for us continue to mature, we want integrated technology solutions, as opposed to system-creep.”
Griffin: “With the recent merger of (two major travel technology companies), we will be keeping our eye on how (their) products, services and cost evolve. Our assumption is, through this merger, new products, upgrades and services will be provided in the future which could make (it) more attractive. “
Van Amerongen: “We’re really keeping an eye on where (artificial intelligence) is headed. While we recognize the efficiencies and benefits it can bring to the table, it is still so new. We think there is huge opportunity in with AI, and we look forward to investing in it eventually. Overall, the best tools today allow us to be proactive versus reactive, with more targeted and accurate data around what’s next, but also what’s happening right now—and we keep that top of mind before making any big investments.”
Martin: “The velocity of change is extraordinary, and HP Hotels has demonstrated the flexibility to evolve. Technology that enables execution at every level of our organization is intriguing. Experience matters and joined with the right technology is a promise that is too incredible to ignore. HP Hotels is interested in technology that empowers us to scale more efficiently, technology that develops our people in a rapidly changing environment, and technology that increases returns for our owners. We look for technology to deliver real value to our ecosystem.”