It's never been easy for hoteliers to decide which tech investments to make. The pandemic has tightened budgets and workforces, making the choices even tougher.
If you’ve ever stayed in a hotel whose guest rooms still had iPod docking stations, you have an intuitive grasp of why hotel executives are nervous about investing in guest-facing technology. Some technologies are faddish, and it isn’t easy to know which ones will deliver a high return on investment.
“How many of us remember years ago — long before the pandemic — when NCR sold us self-check-in kiosks for something like $55,000 a unit?” said R.P. (Raman) Rama, president of Sarona Holdings, an investment company that owns 25 hotels worldwide. “The guests hardly used them. With many technologies, it’s a matter of timing and changing consumer preferences.”
Several industry experts echoed Rama’s thoughts last week in Dallas at HITEC, the Hospitality Industry Technology Exposition and Conference run by HFTP, the association of Hospitality Financial and Technology Professionals.
It’s easy to second-guess hotel investment decisions when you don’t have to deal with a split-ownership structure and all the finger-pointing that can happen between real estate owners, management companies, and brands. But the view from inside the sector reveals the nuances.
“I’ve worked in a lot of different industries, and I agree that hospitality has been a bit of a laggard in terms of its ability to execute in adopting technology that isn’t even cutting edge,” said Sonesta International Hotels CEO Carlos Flores.
“But I see now that when you’re dealing with the brand, the manager, and the owner, getting everybody on the same page on a single asset — let alone an overall portfolio — is very complicated,” Flores said.
Given the difficulties, which pieces of technology show the most promise? Here are some highlights about what hotel executives are looking at most closely right now in technology investment.
Tech That Lowers Operational Costs
Labor has long been a big cost center for hotels, though the fact has been exacerbated by worker shortages in some markets.
Any tech that can automate processes and reduce the amount of labor needed will catch the eye of hoteliers. Examples include tech that helps hotel managers track worker tasks, helps workers perform tasks more efficiently, and helps reduce the need for manual effort.
Hoteliers looking to gain from the revival of weddings and small team meetings are seeking more efficient ways to handle requests for event space. For example, both Infor and Oracle Hospitality, sellers of widely used software for managing properties, have been pushing new tools that help automate many parts of the event sales process that previously were essentially manual. The tools replace calls, emails, paper forms, and spreadsheets with automated tools that require less time to manage and let hotels respond more quickly to requests.
Upselling tools, or tech that helps hoteliers boost non-room revenue, are also popular.
“Hotels have an enormous opportunity to merchandise,” said Ilia Kostov, executive vice president and chief commercial officer, hospitality North America, at Amadeus. “While airlines have merchandised everything from seat assignments and upgrades, they have a limited number of combinations. Every room in a hotel is different, given the floor it’s on, its proximity to the elevator, its view, or its layout.”
“Full-service hotels can do more to merchandise their pools and spas, for example, by letting guests reserve chairs with umbrellas by a pool or book activities that are either on or off a property,” Kostov said.
But to max out the upsell opportunity and “optimize total revenue,” many manual processes across hotel organizations need to be automated.
“You need a fully automated system rather than one person creating a report and another person creating pricing and another person managing the delivery of services,” said Sanjay Nagalia, co-founder, chief operating officer and technology officer, IDeaS.
Nagalia said hotel interest and use of his company’s revenue management software has led to record revenue despite the pandemic.
Unifying Data a Priority
When it comes to choosing which tech to buy, hoteliers said there’s rarely a “magic quadrant” or a spreadsheet that can point toward a clear answer.
“You can never, ever measure the return-on-investment for guest-facing technology in dollar terms,” Rama of Sarona said. “It all boils down to guest satisfaction leading to repeat business and positive word-of-mouth.”
But one clue to follow is how other industries outside of travel have adopted innovations.
“If you look at our industry at large, we are reacting very slow because we cannot articulate what we want,” said Michael Levie, a founding partner and former chief operating officer of citizenM, which runs more than 20 hotels and has about 18 under development.
“We get distracted by individual hardware instead of thinking of bigger picture questions. We need to learn from other verticals such as retail and banking, which have done a better job of responding to changes in consumers’ digital journeys.”
Hotels need to have a better data game to serve guests in sophisticated ways.
Sometimes, point solutions are popular, such as tools that help automate housekeeping. Some vendors provide tech that enables hotels to replace walkie-talkies and clipboards with mobile devices, photo-based checklists, and online project management for more streamlined housekeeping processes.
Vendors providing even broader end-to-end digital systems for hotel operations reported a lot of interest at the HITEC event.
For example, Cloudbeds, a provider of software for managing properties, setting prices, and marketing online, had a higher revenue year in the first half of 2021 than it did in the comparable period pre-pandemic and never laid off any staff during the pandemic.
Cloudbeds has a voting system in which customers can say what tools they want the startup to prioritize. No hotel company contributes more than 1 percent of the startup’s revenue or otherwise has an outsized say.
Hoteliers have voted for more automation to enable a smoother and cost-effective e-commerce process for guests.
“Hoteliers are asking how can we optimize a guest’s journey from discovery through booking through the stay and after?” said Cloudbeds CEO Adam Harris. “Their goal is to answer questions like, ‘How do we know what this particular guest needs an hour from now and tomorrow morning based on what we can infer from their profile based on data we’ve collected?'”
Connecting Guest Rooms to the Cloud
Vendors offering to connect hotel operational systems to the internet have also reported strong sales. Hoteliers like the idea of centralizing control, monitoring, and maintenance of lighting, heating, cooling, lock, and window shade systems at guest rooms because it can allow for more remote operation, reducing the labor hours needed to run a property.
When adding internet-connected devices to rooms, some properties are considering adding panic buttons for housekeepers. While the U.S. industry
pledged back in 2018 to make panic buttons for hotel workers commonplace, the industry has been slow to adopt the technology.
Five hotel brands have promised to provide their U.S.-based hotel employees with safety devices.
“About 22,000 properties in the U.S. have committed to rolling out panic buttons by the end of next year,” said React Mobile CTO Riley Eller leaving about 30,000 hotels to go.
The Paradox of Choice
It can be tempting for hoteliers to try to offer more than one option, such as a touchless check-in process along with a high-touch check-in process. But choice can create complexities.
“It puts us in a quandary,” “I want to provide as much choice to the consumer as I can because that will allow me to win the day over rivals. I also benefit financially if we’re catering to multiple vendors who will fight for my company’s business.”
“But when I look on the other side, I don’t want the complexities associated with supporting multiple platforms and applications,” Flores said. “It can get very, very onerous.”
One of the glib ways to think about whether to buy a piece of tech is to think about consumer preferences. But that’s only modestly helpful to a decision-maker.
“We, as an industry, solve for customer choice, which means we try to have more than one option available,” said Page Petry, a consultant who formerly was chief IT officer of the Americas at Marriott. “But we also struggle with tech obsolescence.”
Asking the data to give you an answer isn’t often fruitful.
“At the end of the day, we’re ultimately going to have to make a guess, right, when it comes to tech spending?” Flores of Sonesta said. “While I’m a big data junkie myself, I also understand that, at the end of the day, a lot of the best business decisions are made from the gut.”
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Photo Credit: Check-in kiosks at a CitizenM hotel in London's Shoreditch neighborhood. Source: CitizenM.