CIOs eye holistic approach for core technology
CIOs eye holistic approach for core technology
04 MARCH 2013 8:43 AM

The ability to share guest data across a single platform is leading most of the large hotel brands to replace their PMS, CRS and CRM systems.


ATLANTA—A shift in thinking from hotel chief information officers about how to approach hotel technology is expected to lead to major changes in supplier partnerships, and technology installation and operation.

Hotel companies are shifting toward replacing their core systems—property management, point of sale, central reservations, customer relationship management, etc.—with a more holistic solution that provides a platform for all of the solutions in one. Gone will be the days where hoteliers take piecemeal approaches and turn to different vendors for different parts of the solution, sources said at the Hotel Technology Next Generation annual North American conference last week.

The shift is in part driven by the increasing need to collect, host, transmit and shift guest data across all platforms and all systems.

“It will allow us to spend less time focused on the core,” said Todd Thompson, former CIO of Starwood Hotels & Resorts Worldwide. “When you’re building a CRS or CRM, that’s about all you can focus on. Analytics, customer focus, you can’t spend as much focus on that.”

The movement will cause hotel technology suppliers to adapt, sources said. They must either take a more holistic approach to building solutions or become application vendors who can layer their product over the core platform and integrate.

“The core is multiple pieces so you can’t just sell a reservations system anymore,” said Tim Harvey, president and CEO of Core Ideas and former executive VP and CIO at Hilton Worldwide.

This shift will allow hotel information-technology teams to focus more on integration and vendor augmentation of the core, Thompson said.

“We are able to focus more on IT and less on building and maintaining those core systems,” he said.

Without endorsing one solution over another, Thompson identified some companies who are already approaching hotel technology from a holistic approach: Oracle, SAP and Infor already operate heavily in the hotel space, while Amadeus and Sabre are bringing technology platforms from other arenas into hospitality.

“There are great opportunities right now. With any shift, opportunities emerge,” Thompson said. “Existing incumbent players have opportunities to grasp and accept and morph to the cloud and analytics and (service-oriented architecture) realties. And there are opportunities for those new entrants.

“There are new partnership opportunities for integration,” Thompson continued. “Who do we partner with? How do we integrate? Acknowledge some of these systems shifts we’re seeing.”

Why shift?
The shift to a holistic approach to core technology is being driven by the ability to anticipate guest needs, Harvey said. Brands and hotel management companies are rapidly losing ownership of the guest to online travel agencies, and being able to store and seamlessly share customer preferences in a cloud could provide unique opportunities.

“If we don’t do it, we lose the ability to differentiate to the customer,” he said. “Apple and Google are coming in trying to sell brands’ hotel rooms. How are you going to compete? The biggest threat to me, if I were a hospitality company, is losing control and offering things you can’t get in other places.

“If you don’t think more holistically and pull all this information together, then you run the risk of losing out to the distribution companies. And then you have no control over margins.”

Harvey said the best approach to distribution is to have multiple parties selling the rooms, and new core systems help hoteliers manage that better. However, the hotel rooms must be sold at the right margins.

“You just have to share the right data. I don’t know any one person better at it then someone else, we just all have different customer relationships,” he said. “But the core is not sophisticated enough to do that today. With the core really being open, you can adjust in real time.”

The hospitality business is becoming increasingly reliant on one-to-one communication with its customers, and a platform-based technology infrastructure allows that to happen more easily and frequently, said Vineet Gupta, executive VP and CIO of Fairmont Raffles Hotels International.

“Companies who don’t have that data on the consumer are going to lose that communication opportunity,” he said.

Owning guest data
Hotel owners could scoff at the idea. Replacing core hotel systems is a huge undertaking that requires years of planning and implementation.

It also begs the ongoing question over who owns the guest (and therefore the guest data)—the hotel owner, management company or brand.

“Who owns the rooms? The owner. Who’s supposed to sell the room? The brand. Who owns the guests? That’s the tougher question,” Thompson said.

Ken Barnes, VP of IT for White Lodging, said he longs for day when brands and owners can share guest data.

“Maybe someday the brand will let me have access to the guest data,” he said. “If we can figure out that nice Kumbaya relationship, it’s to both of our advantages.”

However, owning the guest is a major part of a brand’s value proposition, which is why they are reluctant to share the data, Fairmont’s Gupta said.

“If you lose that, you lose the brand value,” he said. “I think there’s going to be a lot of changes of that piece.”

Movement happening
Harvey said seven out of the 10 largest hotel brands are in some phase of replacing their core systems today. The role of technology will become less about how to executive and more about what value is coming out on the other end, he said.

“More CIOs are going to be challenged with providing a value, keeping the customers spending,” he said. “With less focus on constructing the technology you’ll now have a single view of the customer and you can focus on what you are going to do with it.”

The move has brands focusing less on managing technology and more on the business of technology, Gupta said.

“It’s a subtle change, but it’s about how do you derive the value of this technology,” he said.

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