Amadeus to Use Marriott and IHG Deals as Hotel Tech Springboard

Early Check-In

Editor’s Note: Skift Senior Hospitality Editor Sean O’Neill brings readers exclusive reporting and insights into hotel deals and development, and how those trends are making an impact across the travel industry.

Amadeus IT Group has long wanted to diversify from airline-related services, and its hospitality division has recently made gains.

• Today, more than 50,000 properties buy at least some software for hotel operations from the Madrid-based travel technology company.
• Two of the world’s three-largest hotel companies now use Amadeus’s core tech. In November, Marriott International signed up to replace its central reservation system with one built by Amadeus. That deal follows IHG [InterContinental Hotels Group], which migrated over to Amadeus’s system before the pandemic started.
• Wyndham has in the past year signed up for some of Amadeus’s tools.
• Last month, Aimbridge Hospitality, the largest U.S. hotel management company, said it would use Amadeus’s business intelligence tools.
• In 2021, Amadeus’s “hospitality and other solutions” revenue — the majority of which was generated by hotel-related sales — was approximately $550 million (€538.6 million).

Amadeus faces a competitive field.

• Amadeus does sell tech a la carte. But its ideal vision is for hotels to buy a platform, meaning an array of interrelated tools from a single provider.
• In hotel software, Oracle Hospitality and Shiji Group have similar approaches and are in talks with giant hotel groups.
• Other platform players include Cloudbeds, Yanolja, Protel, Jonas Software, and Mews — depending on how you interpret things.
• Given Amadeus’s broad ambitions, its products compete with the offerings of dozens of vendors.
• Nearly every hotel company large and small is today piecing together their hotel tech from multiple providers. None have moved all key functions to the cloud yet. So in a sense, Amadeus is helping to create a new platform-based hotel solution market, rather than stealing shares from others.

To learn about Amadeus’s strategy, I spoke with the top boss of its hospitality effort, Francisco Pérez-Lozao Rüter — widely known as Paco.

Pérez-Lozao said the company has three aspirational goals.

• “We want to drive demand for hoteliers across any channel, that’s number one,” Pérez-Lozao said. “Not only the GDS [global distribution system], but also through metasearch and OTAs [online travel agencies]. We have a large practice around digital advertising, for example.”
• “The second is to help hotels provide the best guest experience possible with the help of better IT [information technology].”
• “Our third leg is to grow our market-leading practice in hotel BI [business intelligence] to help hotels improve their decision-making.”

Are mergers and acquisitions part of Amadeus’s approach?

• The parent company has said it is open to making opportunistic acquisitions.
• But Pérez-Lozao didn’t volunteer that Amadeus was looking to acquire any specific functionality.
• One functionality that some outside observers have said seems to be missing from Amadeus’s playbook is revenue management, referring to the tools that help hotels set rates in response to market signals.

Does Amadeus plan to build revenue management as critical functionality?

• “No,” Pérez-Lozao said. “We want to partner with the revenue management companies. We have so much on our plate, it wouldn’t be prudent for us to do that.”
• Having said that, he also said that some of today’s typical revenue management practices need to “evolve.”
• “Where? I don’t have a clear picture,” he said. “I think we’re moving into a region of dynamic pricing where the prevailing methods and probably even the architecture have to evolve, and that will take quite some investment.”
• “Revenue management is a very tricky part of the whole equation,” he said. “Very tricky.”

“Amadeus wants to move the whole [hotel tech stack] to the cloud but, more than that, we want to transform it into something else.”

—Francisco Pérez-Lozao Rüter, president, hospitality, at Amadeus.

A few factors hold hotels back from being as digitally savvy as some other types of businesses, Pérez-Lozao said.

• “The whole landscape of channel connectivity in the hotel industry is incredibly fragmented and therefore, I would say, very inefficient,” he said. “You have hundreds of PMSes [property management systems, or key pieces of operational software]. You have payment systems flourishing everywhere that are very local and not global.”
• “If you’re a hotelier going into a new market, say Finland or Bangladesh, you have to do many integrations,” he said. “That’s an expensive and time-intensive challenge, especially the further you move down from a sophisticated enterprise to a mid-sized hospitality company.”
• Hotel companies that build their own tech are struggling to compete with technological specialists in hiring top talent, which hinders their progress, he said.

Today’s standard hotel tech stack has the property management system at its core. But a “property-centric view” isn’t the future, said Pérez-Lozao.

• Most hotels in the world have a property management system, and most of these systems are locally-installed technology, which is tremendously difficult to evolve, he said.
• “The enterprise hotel companies create enterprise IT layers, but these typically cohabitate with local infrastructure,” he said. “You have two guest profiles, one here and one there. You have two systems that post rates, here and there. Two inventories, here and there. Two channel connectivities, here and there. Two payment systems, and so on…. It’s almost like spaghetti.”
• “Amadeus wants to move the whole thing to the cloud but, more than that, we want to transform it into something else,” he said. “We want to get these overlaps out of the system, removing the duplicated functionality and other inefficiencies. There are many overlaps between what the PMSes and CRSes [central reservation systems] do, and we want to remove them.”

Attribute-based selling, as an alternative to listing rates by room type, is a goal of a few enterprise-level hotel companies, as I reported last week. Amadeus has introduced rudimentary attribute-based selling into the central reservation system it has stitched into the systems of IHG. But it will take time to spread the change so that guests actually see it and use it.

• IHG is in the process of collecting the data it needs from properties to roll this out.
• Many other changes to the hotel ecosystem have to happen, too.
• Property management systems, revenue management systems, and eventually online travel agencies have to adapt their processes to be able to handle attribute-based selling, as a LinkedIn discussion last week noted.
• Today, even if IHG had fully rolled out attribute-based pricing already, travel management companies wouldn’t have the technology to be able to help travel agents fetch a single price for a business traveler who wants a basic bed plus breakfast in a high-floor quiet room with a proper desk for working at length.
• It will take time for the changes to propagate throughout the travel technology ecosystem — if Amadeus’s vision comes to pass at all.
• Another piece of friction is a debate among hotel owners, investors, and brands about who should pay for technological innovation. Many hoteliers are cost-conscious about tech overhauls. “They say, ‘Hey guys, if you impact my P&L [profit-and-loss sheet] we’ve got a problem,” Pérez-Lozao said.

Helping hotels drive more direct bookings — which cost less for hotels than acquiring guests through online travel agencies and other third parties — is another goal. That task requires a lot of data savvy, Pérez-Lozao said.

• “The biggies are solving it themselves because they have the muscle to do that,” he said.
• Mid-scale operators need help teasing insights out of their data so they can essentially recognize a customer by their online behavior and provide relevant services and messages to them, he said.

What about the rise of short-term rentals and vacation rentals?

• “We’ve inserted alternative accommodation into the demand side of our strategy,” Pérez-Lozao said. “In our business intelligence tools, we give customers a view on how alternative accommodations compare with hotels and how they affect supply and demand. But we haven’t looked at the IT side of things. At some point, some customers may want to manage alternative accommodation along with hotels as one single inventory ideally. But not yet.”

How about Amadeus’s operational tools for hoteliers, like HotSOS, which offers management tools for housekeeping and other activities?

• “HotSOS is the leading product in the market,” Pérez-Lozao said. “We’ve put quite some investment in upgrading it. It was a little bit dated but we’re reinvigorating that.”
• “We’re the largest player on the sales-and-catering side,” he said. “We have fully moved that product into the cloud.”
• “Our events product is fast-growing,” he said. “In Las Vegas, with maybe one or two exceptions, every big property is a customer for our events software. And we have a presence with big players everywhere.”
• “We are connecting the sales-and-catering into the meeting broker channels, such as Cvent, and seamlessly integrating that in the cloud,” he said. “That is a super-powerful proposition. Nobody else has that.”
• “Our ultimate vision is to take the hotel industry from a siloed approach to a platform, cloud-native approach,” he said. “We’re actually putting our money where our mouth is in R&D [research and development] spending. I can’t say the same of all of our competitors.”

Amadeus’s view today is arguably slightly different than its view in 2015, when it acquired a property management system called Itesso. The story goes that IHG, Amadeus’s customer, essentially recommended Amadeus buy Itesso to help quickly add some functionality to complement the central reservation system product. But it’s unclear how much of Itesso’s offerings has made it into Amadeus’s platform today.

• Pérez-Lozao partly agreed with this version of events that Skift heard from sources. He said Amadeus’s big client originated the idea, giving Amadeus reassurance to proceed. He said his team did due diligence on the architecture of Itesso’s software and knew upfront that Amadeus would have to evolve the tech to fit its needs.
• “We knew we didn’t need a standalone PMS,” Pérez-Lozao said. “We knew in the due diligence that we needed to evolve it. You could argue we could have done it with more or less pain but there’s always a bit of more or less pain here when you evolve something, to be very blunt.”

Right now, Amadeus offers a “functionally rich but simplified” (no attribute-based booking) central reservation system that’s different from what it offers the Marriott’s and IHG’s of the world. Pérez-Lozao said his teams are working on the two projects in tandem with equal energy.

• “We’re saying internally every day that our high-end clients IHG and Marriott are important but this project for the rest of the market is also important,” Pérez-Lozao said. “We’re doing a double whammy in investment.”
• He said his teams are re-engineering their interfaces with external systems and Amadeus systems to make them, aspirationally, universally compatible. In the future, it will need fewer one-off integrations.
• Perhaps five-ish years from now, ideally Amadeus would merge the tech and sell essentially one platform for every type of customer, Pérez-Lozao said.

If all of the above wasn’t ambitious enough, Amadeus as an overall company has a vision for what it calls “the transversal traveler.”

• Someday, Amadeus and other platform companies might link enough systems across airports, airlines, hotels, rental car companies, and other parts of the travel system to provide more intelligence across any given traveler’s trip.
• The goal? If there’s a disruption in a trip, such as a canceled flight, the process for rebooking and making adjustments to each of the other parts of the affected traveler’s trip would be much more seamless than the recent chaos and Airmageddon. This has echoes of the connect trip vision of Booking Holdings’ CEO Glenn Fogel.

If nothing else, Amadeus thinks big.