How Nordic Choice recently handled a ransomware attack, sold a hotel tech subsidiary, and kept employees engaged while opening 16 hotels makes it an interesting tech example for other hotels.
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Nordic Choice Hotels oversees 214 hotels in Scandinavia, Finland, and the Baltics. It is a franchisor of Choice Hotels, but it pursues a remarkably different tech strategy than many of its U.S. brand counterparts.
- The Oslo-based private company — fully owned by billionaire Petter Stordalen’s Strawberry Group — had been a big believer in travel tech investment.
- Nordic Choice’s tech strategy has generally been more advanced than what you find at most comparably-sized hotel companies.
- For example, the company had run two tech subsidiaries (Cenium and eBerry). Before the pandemic, it had been testing using blockchain for distribution.
But the pandemic reset prompted Nordic Choice to adjust its strategy.
To learn more, I interviewed Eirik Bogsnes, executive vice president, hotel service.
First, the newsiest bit: Nordic Choice made headlines in December when hackers snuck inside its computer systems.
- A Nordic Choice employee clicked on a false link in email pretending to be sent from a tour operator the company frequently communicated with. Clicking the link accidentally activated a Conti ransomware attack.
- Hackers shut down the hotel group’s antivirus protections, copied data about employees and operations, and demanded a ransom of $5 million, according to the Wall Street Journal.
- Staff had to check in guests using paper and pen. They also had to walk guests to their rooms because the electronic keycards didn’t work.
- Yet Nordic Choice Hotels refused to pay. Luckily, no customer data was compromised.
- The company moved 4,500 computers off the infected Windows machines to new Cloudready (Chrome OS) systems.
- “We had planned to use the first half of 2022 to do this project, but we instead deployed Cloudready as a response to the ransomware attack,” Bogsnes said. “And instead of spending six months, we basically shifted the first 2,000 computers in two days. Our partners at Google called this a world record. We moved the rest within about a month.”
The recent hacking is newsy, but it’s the least interesting thing about the Norwegian company.
Nordic Choice has changed how it approaches the “build, buy, or partner” question during the pandemic.
- “We had a very ambitious digital agenda,” Bogsnes said. “We paused in the crisis to regroup.”
- “We now see that many technologies have matured,” Bogsnes said. “We can buy a lot of things. Before, we had to make things because they weren’t available in ways that delivered world-class guest experiences.”
- “For example, when we wanted to roll out mobile keys, we were ahead of others,” Bogsnes said. “So we essentially made everything ourselves. Five years ago, we had a differentiated product in our markets with digital check-in and check-out. Today there are a lot of high-quality products available.”
Nordic Choice is getting out of the business of running a property management system — something it built in-house and licensed to others through its Cenium unit.
- This month it handed the Cenium business over to Mews, a startup that offers a platform for hotels to replace their property management systems.
- “Building and owning our own system gave us a lot of flexibility for many years,” Bogsnes said. “But now there are a lot of compelling out-of-the-box options.”
- The company is now testing to see if they can migrate all of its properties to a single property management system run by Mews, or if it will be necessary to operate different systems at different types of properties.
- Its first property, owned by a franchisee, switched to Mews this month.
- “The property management system [PMS] is going to play a much less central role in any hotel company in the future,” Bogsnes said. “The joke used to be that what happened in the PMS stayed in the PMS. Any hotel company today should have a strategic goal of freeing itself from one system governing its entire infrastructure.”
Nordic Choice’s near-term tech focus is on renewing and enhancing its enterprise software to improve the employee experience and to push the envelope in its digital guest experience.
- “Part of ensuring a good guest experience is taking the friction out of the process behind the scenes,” Bogsnes said. “My favorite example is when you’re checking out of a hotel and sometimes you have to spend 10 minutes at reception because there’s something wrong with processing your payment — maybe because you’re using a corporate card and there’s some backward process in handling it. That’s too common.”
- “We focus too much, as an industry, on what happens when guests visit our website or on what kind of gadgets we can put in our rooms for guests to shut the blinds, or whatever,” Bogsnes said. “But digitalization should also be about streamlining everything in the back office to ensure the guest experience is smooth.”
- “We’re still in the process of redrawing our entire architecture,” Bogsnes said. “We have made a few one-off changes along the way.”
- “We’ve been using artificial intelligence [AI] and machine learning in some unexpected places,” Bogsnes said. “During the pandemic, we began using AI in a new invoice handling system [from Propell] to reduce manual work to a very high degree.”
- “Last year, we changed our employee engagement platform,” Bogsnes said. “The new system [Workday Peakon Employee Voice] will do a sort of sentiment analysis to tell us about how the employees are really doing and suggest ways to respond, letting us know the drivers for change.”
- “We’ve also launched a mobile learning platform [from Motimate] where our frontline workers can access training on their mobile phones,” Bogsnes said.
Nordic Choice is also trying to figure out how to take its loyalty offering to the next level.
- “One of the discussions we’re having is how do we tailor our technology to cater both to the transient leisure travelers who may only stay with us maybe a couple of nights a year and also tailor it to serve our most loyal customers that, while a small group, represent quite a bit of volume of room nights,” Bogsnes said.
- “For example, guests who stay only once or twice with us a year aren’t likely to want to download a mobile app to get their mobile keys for their guest rooms,” Bogsnes said.
- “We’ve invested a lot in a master data strategy,” Bogsnes said. “So we have one master data system that owns the so-called golden record for our guests. But we’re in the middle of a discussion about where the master record should be in our tech stack in the future.”
- “For example, we have many more guests than are in our loyalty club, so grouping the general customer data along with loyalty data may not make sense,” Bogsnes. “We’re still doing the architectural concepts.”
Nordic Choice now sees its tech subsidiary eBerry as “an innovation hub.”
- “The eBerry focus is on the digital guest experience,” Bogsnes said. “They’re rebuilding the entire booking flow. We would like to use this new flow across our portfolio.”
- “They’re doing some cleanup of technical debt to make sure our tech stack has a strong foundation,” Bogsnes said. “Then we can focus more on improving our personalization, cross-selling, and upselling.”
- “We need to get to a place where we can recognize guests regardless of the fulfillment system or channel they come to us,” Bogsnes said
Nordic Choice hasn’t been afraid to make calculated investments in its business.
- It opened 16 hotels last year, despite the pandemic. Some of them were large hotels, with the largest having about 700 rooms.
- Since 2018 the company has expanded into serviced apartments. It manages 3,000 rentals under Strawberry Living’s Företagsbostäder brand. Those units run partly on the same tech as the hotels and partly on different tech.
The Norwegian company has been able to be more nimble in the crisis than many other hotel companies because it is privately held and owns much of its inventory.
- Nordic Choice has a mostly unified ownership structure, which helps the company stay more agile than many U.S. hotels, which often have split ownership structures. It owns the majority of its properties — about 160 out of 220.
- It requires its franchisees to agree to use its core tech systems to ensure brand standards and efficiency.
- “We like to say there’s no standard guest and we don’t want to be a standard hotel company,” Bogsnes said. “That reflects how we approach tech spending overall.”