This move by Hilton is significant and shows that the hotel industry is, finally, modernizing its core systems. For HotelKey, it's a remarkable win by a small tech vendor in a competitive space.
There are now 1,200 Hilton hotels using the HotelKey system, and about 50 are being added each week. The plan is that all hotels will use the cloud-based system by 2026.
For the past few decades, Hilton’s hotels and resorts have been using an on-premise system developed in-house called OnQ. The customized tech provided by HotelKey, which primarily includes the property management system and corresponding training software on the same platform, is being called Property Engagement Platform.
It’s time for a change so Hilton can reach its next goals for tech innovation and guest service, said Michael Leidinger, chief information officer.
“This was part of our broader program to renovate all of our technology and our platforms,” Leidinger said.
Hilton started the integration at its lower-chain-scale brands — such as Hampton, Hilton Garden Inn, and Tru — which make up the biggest footprint in terms of the number of properties. The first hotel to get the HotelKey system was a Hampton Inn in Baltimore in December 2020.
Much of the following two years went toward planning and pilots in conjunction with slow integration at about 500 hotels. In 2023, the mass rollout began. The tech is now live in multiple countries and every U.S. state.
Full-service and luxury hotels will receive rapid integrations in the next six to nine months, Leidinger said.
“We’ve given ourselves a few years to get this done because it’s a tough journey. But I think at the end, we’re going to emerge in a much better position and be able to accelerate our innovations at an even faster pace,” Leidinger said.
Hilton manages roughly 12-15 percent of the branded properties. The rest are fully franchised, meaning those operators pay Hilton for the use of its brand. The franchisees are required to use the property management system that the brand provides.
A Big Change
Hilton began considering next steps in 2019, including whether it would continue with an in-house system or if it would outsource. Ultimately, the company decided outsourcing a modern cloud-based system would be the best option.
On-premise systems are a known pain point in the industry. They often require site visits for installation and service, the siloed systems can make customer service tricky, and upgrades for a large brand like Hilton can take over a year to fully implement.
“We want to be able to move a lot more quickly, being able to deploy and innovate,” Leidinger said.
With a cloud-based system, the tech company can install and make regular updates remotely and in a fraction of the time. The same goes for customer service for the system. Now, there’s no need for continued investment by the hotel operators for servers and hardware at each property.
Hilton met with several hotel tech companies to understand different capabilities and how they would best align with existing infrastructure and future goals. Diligence meetings included speaking with HotelKey customers, like Extended Stay and G6 Hospitality.
“We just felt that for Hilton, it was the right partner,” Leidinger said. “Our vision, our objectives very much aligned. Their demonstrated willingness to be flexible, to really meet our requirements, I think impressed all of us.”
HotelKey does not make promises about a hotel being able to hire fewer people. Still, a main point in its sales pitch is around the ease of use and training for workers, said Aditya Thyagarajan, co-founder and president of HotelKey.
That’s an important point, as there has been so much labor turnover during the pandemic.
“As there has been an increase in attrition and new people come in, our product has proved to be extremely successful in getting the new employees up to speed,” Thyagarajan said.
The OnQ system takes people at least 40 hours of training before they can start using it, and then it takes even longer before they’re familiar, Leidinger said. With the HotelKey system, feedback from hotels has been that new employees can work a front desk shift just a few hours into their first day. Then, the product expert can walk a user through the process of conducting a transaction if needed.
“In many ways, it makes hospitality much more accessible to people as a career option, and in some ways, makes joining hospitality less daunting,” he said.
With a more efficient system, front desk workers can spend less time typing and more time answering questions and offering tourism tips, he added.
“They can spend more time interacting with the guests, providing a higher level of service,” Leidinger said.
Integrating the new tech is about more than just replacing the property management system, however. It also paves the way for what’s next, with an open platform that can easily connect existing and new products that Hilton plans to release, whether they are made by HotelKey or another vendor.
Hilton plans to continue strengthening its contactless check-in and checkout systems for those who want them, as well as digital key and other products it already offers, Leidinger said. The company also wants to enable more add-on purchases in booking channels, such as a pet stay or parking payments.
Hilton is also continuing to develop its connected room platform, with a long-term goal of providing a hotel service that includes guest entertainment, messaging, and more, on one platform for customers.
This is the second big partnership that Dallas-based HotelKey has announced in the last year. The company in November announced a partnership with Red Roof to deploy the system to nearly 700 hotels. The company also provides some tech for all Motel 6 properties through a partnership with G6 Hospitality, as well as all properties for Extended Stay America.
The Hilton deal, of course, is much more significant. And it positions HotelKey as a stronger force among its cloud-based competitors. The company’s tech is currently deployed in roughly 4,500 hotels, which will more than double when the Hilton contract is fulfilled.
Tech companies offering similar products include Oracle Hospitality, which is ramping up sales of its own cloud-based system, as well as Mews, Cloudbeds, and Stayntouch.
HotelKey now has 350 employees worldwide, with another 100 open positions. The company is hiring for specific projects as they scale up, and it’ll do the same if it wins a contract with an additional company, Thyagarajan said.
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Photo credit: The lobby and check-in desk at Spark by Hilton, a new Hilton brand. HotelKey tech is meant to make front desk work more efficient. Source: Hilton.