Hospitality Industry Technology Exposition & Conference
November 14–15, 2017
Hospitality Industry Technology Exposition & Conference
April 11–13, 2018
RAI Amsterdam Convention Centre
Hospitality Industry Technology Exposition & Conference
June 26-29, 2018
EHL 13 September 2017
LAUSANNE, Switzerland --- A study by the METRO Chair of Innovation at the Ecole hoteliere de Lausanne (EHL) analyses use of digital solutions in the hospitality industry.- Currently about one third of the restaurant operators in Germany, France, Italy and Spain use digital technologies to facilitate their business processes.- The hospitality sector thus offers a high potential for digital solutions. 46 percent of the respondents rate technology as important or very important, 15 percent plan investments.- METRO AG supports its HoReCa customers in growing their success through digital innovations.The first study of the METRO Chair of Innovation takes a look behind the scenes of the hospitality sector and offers new insights on the use of technology in the restaurant industry in Germany, France, Italy and Spain. How do restaurants use digital solutions - or why do they refrain from using them, what are their demands? And why is it worth to drive digitization in an industry that is still largely operating in the analogue world? Now we have the answers.What does a steak on the menu have to do with digitization? Much more than one would expect, i.e. when the restaurant operator can focus on his core business, e.g. on preparing and serving a good steak, while state-of-the-art technologies facilitate or even completely take over other tasks related to his business. But, do restaurant owners in Europe actually want to be assisted by digital solutions? How are restaurateurs using technologies, which barriers need to be overcome and which processes in restaurants can be improved by means of digital solutions?The new study by METRO AG and the Swiss hotel management school EHL provides useful information. They joined forces under the METRO Chair of Innovation to investigate the digital future of the restaurant industry. "We conducted a quantitative survey in order to analyze the level of digitization in the restaurant industry. Indeed, it is essential to understand the situation before being able to identify solutions. This is why the METRO Chair of Innovation at EHL has undertaken this study which brings concrete recommendations to restaurant owners, with the intent to help them face their three main challenges: attract new customers, meet their clients' needs and manage their costs", says Professor Christine Demen Meier, head of the METRO Chair of Innovation.Great potential for technological supportIn the first study conducted by the METRO Chair of Innovation, 2,746 independent restaurateurs in Germany, France, Italy and Spain were surveyed. The result: 31 percent of the restaurant owners already use technologies at an intermediate and high level. 46 percent - that is almost half of the respondents - are open to the use of digital technologies, 15 percent are even planning concrete investments. The main reasons for the four countries which keep the restaurant operators from investing into digital support are lack of priority, high costs and development strategy.More success for METRO customers from the hospitality industryOlaf Koch, Chairman of the Management Board of METRO AG, explains why his company wants to support the European restaurant industry. "Our goal is nothing less than the digitization of the hospitality industry. We are convinced that especially for small and medium-sized businesses, this will create substantial opportunities to become even more successful. We are talking about two million businesses in Europe generating around EUR400 billion in sales. If we help to digitize ten percent of these companies in the long-term perspective, we can make a substantial contribution to transforming the industry".If its customers are successful, this will also benefit METRO AG. "By building up digital competence, we want to further consolidate our position as a strong and trustful partner in the hospitality sector", says Koch.A wealth of ideas for digital innovationsA vast number of innovations to enhance productivity, service and competitiveness in the hospitality sector and intensify customer relationships are already available today. METRO AG has taken on the task of supporting the digitization of restaurant businesses, which constitute one of the key customer groups of this B2B company as their partner. To this end, the wholesale and food specialist created a new business unit and launched an accelerator program promoting start-ups for the third consecutive year in 2017.The business unit HoReCa Digital brings innovative technologies that improve the business processes and customer relations management of small and medium-sized hotels, restaurants and catering businesses to market maturity. The METRO Accelerator for Hospitality supports the matching innovations by leading selected start-ups from all over the world to success.The new study - and those that will follow - creates the foundation for achieving this goal as fast and purposeful as possible. Going forward will enable European restaurant owners to focus on what is really important to them: their core business.METRO is a leading international specialist in wholesale and food retail. The company operates in 35 countries and employs more than 150,000 people worldwide. In financial year 2015/16, METRO generated sales of around EUR37 billion. The company provides custom solutions to meet the regional and international needs of its wholesale and retail customers. With its sales brands METRO/MAKRO Cash & Carry and Real as well as delivery services and digitization initiatives METRO sets the standards for tomorrow: for customer focus, digital solutions and sustainable business models. More information at www.metroag.de.
EHL 20 July 2017
As the practice of revenue management continues to evolve, industry professionals should increasingly look to use their RM systems and processes strategically and move away from tactical operations. Integrating data from the various systems and resources is an important first step.Revenue management used to focus primarily on setting room prices and optimizing room inventory. The revenue manager's main job was to analyze data to recognize trends and make pricing and inventory management decisions. Over the last ten years, due to technological advances, the scope of RM has expanded as traditional hotel revenue management practice became much more complex, while offering new approaches to enhance hotel revenue. Today, revenue management strategy goes beyond pricing and inventory management, and revenue managers should look for new ways to optimize revenue growth and profitability. Although more advanced revenue management systems (RMS) have been developed over the years, with the aim of analyzing performance and forecasting demand, demand patterns have become much more unpredictable, while increasingly dependent on numerous external factors. Successful revenue management strategy starts with a clear understanding of the guests and market demand dynamics. Revenue managers should not just crunch RMS numbers but need to understand guests' selection behavior, consumer psychology and their competitors' strategies by analyzing various pieces of information.RMS cannot, therefore, be the only toolkit for a revenue manager, because customer data reside in different hotel systems. RMS should be integrated first with the property management system (PMS) to take into account the entire booking information, analytics, and reporting functions, as well as with other internal systems such as the central reservation system (CRS), point of sale (POS), the customer relationship management (CRM) system, competitive rate shopping software, channel management tools, the hotel's own website, and various social media channels.User-generated content is one way of learning about the guests' needs and wants. By analyzing such content, revenue managers can identify their competitive advantage from the guest's perspective and update their rate fence structure accordingly.Moreover, external resources can help revenue managers in their decision-making. It is essential for revenue managers to broaden their view of their market by incorporating external market data in their planning to make sure their RM strategies correspond with market demand. Data supply services like STR and HotStats offer reports on hotel performance metrics and trends, as well as supply and demand analysis, market segmentation, and supply pipeline reports.Some distribution partners also offer useful tools for revenue managers. For example, Expedia's Rev+ helps hotels gauge their rates against competitors over the course of 90 days and alerts hotels to changes to rates over the course of the last 24 hours. Hotels can keep track of up to 20 competitors operating in their area and averages for the lowest rates are displayed in calendar form. Further, a forecasting tool helps hotels view demand for markets based on data captured across the portfolio of Expedia brand. These external systems and resources provide valuable data analytics that offer visibility into a specific area of a hotel's positioning or market performance, relative to their competitors or even the entire market.Effective revenue management strategy depends on integrated information to ensure revenue managers can react quickly when they need to. Thus, combining data from various systems and sources is an important issue, because RMS cannot exist as a standalone application. However, the different systems used by hotels do not always share all the transactional data because hotels typically acquire different systems at different times from different vendors.Data integration is the process of identifying ways to bring data from disparate sources and combine them in a unified way to produce meaningful insights. This task, in itself, is not at all easy. It is the first challenge revenue managers face in connecting their different systems so that they work together and allow for seamless data transfer. Vivek Bhogaraju, director of global strategic alliances and initiatives at IDeaS Revenue Solutions, says "without better systems integration, companies may be missing opportunities to mine customer data for insights they can use to target guests with customized offers."Another challenge is turning all data into valuable, new insights. Information is powerful only if you can access and analyze it properly. Competent revenue managers should be able to pose the right questions and find answers through the careful interpretation of data and by providing actionable recommendations to all departments. To this end, revenue managers should be capable of communicating their analysis and strategy to all stakeholders in their hotels and then adjust their strategy based on feedback from the stakeholders.Without capable revenue management professionals, sophisticated systems and data are no longer useful. Organizational structures also need to be reformed to promote teamwork and collaboration across departments and the revenue management director should report directly to the hotel's general manager. Mike Chuma, vice president of product strategy for IDeaS, says too many revenue management teams still remain siloed and calls for RM teams to work closely with sales, marketing, F&B, and event teams.From a revenue management perspective, not all guests are equal. Some guests may only make use of the hotel rooms but not the other facilities, while others may spend hundreds of dollars on F&B, leisure facilities, and spa treatments. Identifying those guests with a higher value to a hotel in the long run is extremely important in today's market. In order to maximize long-term profits, hotels need to increase guests' spending by satisfying their expectations and encouraging repeat visits. An increased amount of data does not automatically lead to better revenue management decisions but it should lead to more opportunities.
EHL 2 June 2017
The hotel room of the future is likely to be a combination of the high-tech and high-touch. EHL's YU Virtual video highlights the former, with virtual reality creating the ambiance we want in our hotel room. And what then of artificial intelligence (AI) and robots? What role will they play in hospitality?EHL's prestigious International Advisory Board (IAB) met recently in Lausanne to discuss disruptive innovation in hospitality and education. In a panel discussion on the topic 'Leading through disruption', Wilhelm Konrad Weber, a partner at Swiss Hospitality Solutions, said technology is definitely driving the hospitality industry but it also poses a threat "because hoteliers are not necessarily early adopters." The internet came along, he said, but hotels failed to build the best online booking engines. The online travel agencies or OTAs moved into the space, leaving hoteliers lagging behind.The industry has become fragmented, he continued, with customers having far more choice than they had previously. Consequently, there's "a lot less loyalty.""Most of the guests using our properties are much more savvy in the use of technology ... than us actually providing it. So that's probably going to keep us challenged."Disruption in hospitality has, by and large, come from outside the industry - whether in terms of the OTAs and alternative accommodation platforms - although, one rental site, HouseTrip was set up by two EHL alumni, Arnaud and Junjun Chen Bertrand (AEHL, 2008) who were both panelists at the IAB session. (The digital platform was sold to TripAdvisor in April 2016 after raising some $60 million in funding).Arnaud Bertrand candidly stated during the panel discussion that he would have preferred to have taken the start-up to an IPO (initial public offering) but admitted they had made many mistakes along the way ("probably every mistake we could make, we made")."I don't have any regrets," says Arnaud Bertrand, adding that they had learnt "an enormous amount" from the HouseTrip experience. "Were I to do it again, I would do everything differently and that's why we're creating a new start-up (the virtual reality dating platform, LovInVR) to try to be even better this time."Weber says that although Accor has been "bold", listed hotel companies are having to meet the expectations of analysts, investors and journalists, so innovation in hospitality tends to be evolutionary ("something that everyone expects you to do") rather than revolutionary and disruptive ("something nobody expected you to do.")"What we're lacking in these big companies is this revolutionary thinking, this radical change," he says, adding that "the reason we're lacking it is because it's very tough at the C-level' and few are prepared to risk "doing something crazy."Artificial intelligence is at the core of tech firm Afiniti, whose chairman and CEO is Zia Chishti. Afiniti sifts through publicly-available data, using AI, to pair customers with call center agents to maximize sales. "The AI-ness of what we do is around behavioral prediction for both customers as well as for internal agents. And then the construction of a prediction of behavior between the two. So that's at the heart of what we do."The venture is on course for an IPO ("this one will probably go out somewhere between $5-10 billion into the public market ... having said that, I've been incorrect in my prediction evaluation every time I've made such a prediction") but Chishti calls himself a disruption and AI cynic."I think disruptions have actually slowed, if not completely stopped over the last 10 years." The internet as an 'information retrieval and exchange system' and the smartphone have been "somewhat derivative" and have not made us any healthier or happier, he says, whereas antibiotics and motorways have had a profound effect on "human lifespans, levels of income and how societies function.""There's a perception that AI will change everything but it's not like that. AI is just a set of statistical tools and various incarnations of this have existed for the last 40 or 50 years. It's just that the machines in which these tools run have become somewhat more advanced and more powerful over the years, but this is not a seismic shift. There's no dramatic and disruptive event happening here. It's just the slow and steady emergence of a technology that's been around for quite a while."Robots have already appeared in some hotels, particularly in Japan. Suggest to Chishti, however, that robots may end up having a major impact on society as fewer people would be working anymore, and his response is "that's not going to happen.""If you take all of the computational capacity that exists in the whole world today - every single smartphone, mainframe, supercomputer, every single PC and you put it all together - it's approximately equal to the brain power of a dog. That's an extraordinary figure if you think about it. The best estimate for the entire computational capacity in the whole world, approaching that of a human brain is five to seven years out. The best estimate for a single machine approaching human level intelligence is north of 30 years out. And the cynical view ... I bet, it's north of 50 years out.""What is more likely to happen is a re-distribution of work. So in many cases AI actually enhances human labor productivity and should increase labor demand. There are some areas where the increasing power of computational systems in AI will absorb labor capacity but it'll do so in a manner that enables rather than destroys.""Symbolic systems are maybe 100 years out to compete. And between here and there - and the hospitality industry is part of it - we create a magical experience that borders on art and borders on beauty that enable our customers to come back. That just doesn't get replicated by machines. The twinkle in the eye that a waiter has when they serve a particularly delightful meal will not be replicated by machines in the next 30-50 years, so I wouldn't worry about it."Weber of Swiss Hospitality Solutions says he gets somewhat nervous "if somebody is talking down AI." Citing the MIT online experiment, Moral Machine, he adds that artificial intelligence, built into self-driving cars, may have to make life and death decisions on the roads. "It's not like the big hype that ... there will be no doctors anymore, but I think it's going to impact us a little bit more than revealed."For an entrepreneur like Arnaud Bertrand, self-driving cars could have a massive impact on the hospitality industry if the automobile becomes a de-facto mobile hotel room. "If you don't drive the car anymore, what do you do inside it? You entertain yourself, you work, you sleep, when you travel. Sounds familiar? Where do you normally do that? In a hotel room, right?"Should AI have a bigger impact as we move towards a leisure society, we would likely have more time to engage in continuous learning activities. For Jean-Marc Tasseto, the co-founder of Coorpacademy and a former senior Google executive in France, there will be a shift from professors reading out research articles in a lecture theatre to a 'blended' learning approach which integrates digital teaching elements. Tasseto, who sees himself more as a 'marketing guy' than a disruptor, says the continuous learning market may be worth some 150 billion dollars, with e-learning possibly worth around 15 billion dollars. Education, he says, has still to be disrupted, perhaps with the emergence of a major tech firm like Google, but this time with an education focus. The potential is huge; so Tasseto's advice is, "invest in education."
EHL 1 June 2017
The term 'disruption' is widely used by the media to denote a form of breakthrough that takes place in rapidly-changing markets. It can mean different things to different people, along a continuum from incremental change to radical transformation. According to conventional wisdom, a provocative marketing campaign may be seen as 'disruptive' as an affordable-luxury hotel concept with shared bathrooms.What disruption means to academics - and some business leaders who have been influenced by the theories of Harvard professor Clayton Christensen - is somewhat different. According to Christensen's well-known (and oftentimes misused) theory, disruption describes a process whereby relatively small companies with few resources are able to successfully challenge, often to the point of up-ending, incumbent businesses. Disruptive innovations are however differentiated from sustaining innovations. The former originate either in low-end markets or new-market footholds, whereas the latter make good products better. As such, there are few innovations that can truly be labelled 'disruptive'. Yet, few terms have so affected the collective psyche that companies in virtually every industry now seem to face constant disruptive innovation.But the fear or hope of emerging disruption is exaggerated and misleading. For example, Christensen argues that Uber does not qualify as a genuinely disruptive company as it didn't originate either as a low-end opportunity or in a new market, primarily targeting non-consumers. In an article published a year ago, I made a similar claim about Airbnb. Yes, Airbnb's sustaining innovation effectively capitalizes on improving the efficiency of the system -- in a dishonest way, some would argue -- but it will not break the established industry's rules anytime soon. Rather, as my colleague, Professor Cindy Heo contends, Airbnb will develop into another major player in the industry.Self-driving cars will be truly disruptive for the automobile industry if they are aligned with their developers' ultimate goal: that consumers will no longer need to have their own personal car anymore.What is then a potential disruptive innovation in hospitality? No one has a crystal ball and is able to predict the future with any accuracy, so we must rely on intuition to forecast possible ways in which the hospitality sector may open up or see a fundamental change in the way hospitality is delivered to customers. Consider these two examples:3-D printers: Hotels 'printed' using concrete will open up a new field for hotel/temporary housing development, valuation and real estate. Using the currently-available technology, a San Francisco-based start-up, Apis Cor, can 3-D print a hotel in one day. 3-D printing of buildings will allow accommodation hosting opportunities to develop and disappear very quickly in new areas, according to changing destination popularity, or to extend capacity following a surge of visitors, for example.Virtual reality: headsets or physical spaces will change the very notion of tourism. We will virtually travel not only to places, but in time as well. As another colleague, senior lecturer Remy Rein, commented to me recently: why would we physically travel to 21st century Rome, if we can 'virtually' visit Rome in the 1stcentury BC and experience 'real-time' how the Colosseum was built?
EHL 30 May 2017
Nowadays, we have wi-fi, a telephone and probably a flat-screen TV. But as hotel guests become increasingly tech-savvy, they are likely to expect to have the latest technology on hand.According to EHL strategy professor Achim Schmitt, hotel rooms all seem pretty similar these days: they have a bed, a bathroom, a TV and a small desk. However, he says, "hotel rooms are back as a source of strategic capability. Equipped with high-tech features and devices, hotel rooms slowly define the way we enjoy our stay.""Under increasing cost pressures and the need for differentiation, hotel operators explore how technology cannot only help them streamline operations but also deliver a highly personalized and experience-driven environment."For Cindy Heo, an assistant professor in revenue management at EHL, technology is critical for attracting hotel guests and building brand loyalty. "My research has found that specific room amenities affect guests' willingness to pay for rooms, which shows that hotels should use such room amenities to generate revenue, rather than these being given away as complementary elements.""Since flat-screen TVs and wi-fi are now standard in most properties, hotels must try to differentiate themselves by focusing on outstanding service and unique amenities," she says. "Gesture-controlled interactive walls, the internet of things (IoT), and virtual reality are only a few examples. Your hotel rooms should embrace the future to surprise and delight your guests."However, she points out that hoteliers also have to take into consideration the return on investment from new technologies and whether these can really enhance the customers' experience, as well as improve operational efficiency. "So hotels need to think whether it's really the right technology for them. And as for simplicity, the hotel room may look simpler, but it doesn't mean the hotel service will be simpler."Heo is somewhat skeptical about the prospect of VR becoming reality in hotel rooms, even though it might make sense in spas which may not enjoy great views or a soothing ambience. "When we talk about tourists, they're already outside their routine life. They're already in the place they like to stay, so I feel that virtual reality doesn't really enhance the customers' experience. However (as for) artificial intelligence, it depends on how it's used, but currently I don't think there's such a system which is able to respond to customers' demands."Technology has to be aligned with the overall hotel's strategic positioning in order to allow hotel rooms to deliver user-friendly and customer-centric service solutions, says Schmitt, adding that these in turn will then support the hotel's overall market performance."If a hotel room supports a certain type of positioning of a hotel in the market, then this is a good hotel room. So whether or not it should be high-touch or high-tech, I think it should be both in supporting the service positioning and service delivery of the hotel room."EHL assistant professor Prashant Das writes:The traditional form of hospitality will change, for sure. The only question is, how drastically? While traditional, brick-and-mortar hotel rooms are likely to continue to play an important role in the hospitality sector, their market share may dwindle over time, given the emergence of alternative accommodation.In my imagination, the hotel room of 2033 is somewhat "fantastic", but who says we won't go "Back to the Future?" Companies are experimenting with cars that can drive themselves, robots to keep us entertained, and taxis which may soon be able to fly. An alumnus from my college in India is now running a company which plans to offer return-trips to the moon. Fantasy is now getting real.I personally see the hotel of the future as a portable device rather than a static, brick-and-mortar asset. For personnel who are too busy to travel or for the physically-disabled, the hotel room of the future could serve as simulated real estate that provides sensory experiences almost comparable to any remote location.If a surgeon can operate on a patient remotely, why can't business partners shake hands like that? Virtual touch has been a topic of research at MIT and Stanford for a while now. People at some Japanese universities are working on virtual smell and even virtual taste. As these technologies develop and become more accessible for commercial use, the virtual hotel of the future will become an enabler. It could offer a comprehensive sensory experience to those who cannot imagine enjoying them today. Yet, the core success-drivers will stay broadly unaltered: service, quality, ambience and infrastructure.Dr Achim Schmitt is Associate Dean of Graduate Programs at EHL and is an Associate Professor of Strategy. He will also teach on the school's new online MBA in Hospitality program.Dr Cindy (Yoonjoung) Heo is an Assistant Professor in Revenue Management at EHL. She will also be teaching on the MBA in Hospitality program.Dr Prashant Das is an Assistant Professor of Real Estate Finance at EHL.
EHL 19 April 2017
By 2030, multiple changes will occur and will influence the hospitality industry due to globalisation, one of them being a shift of market power. In the fourth thesis of the Lausanne Report, EHL - in cooperation with hospitality experts - discuss this trend that will disrupt the industry depending on the economic stages of a market and its geographical position.#4 THE EMOTIONAL EXPERIENCEThe main challenge of hospitality managers of the future is to improve guest experience, which involves perceptions and emotions. Customers may react in many different ways and the experience must therefore be carefully thought of and created. In a high tech world, people are longing for balance. The answer to high tech is high touch - that is emotions.SCENARIO A: HIGH TECH SHAPES GUEST EXPERIENCEThe age of intelligent interaction between humans and machines started due to technology. This convergence is also known as the "second economy" or "third wave". It is expected that high tech will take control over the next 20 years to come.Here are some key High Tech rationales:The "second economy", which is based on the Internet of Things (IoT), is the key element to enable the digitalisation of the overall economyA higher vertical and horizontal integration of the supply chain will be possible as a result of the "second economy"IoT will create physical devices, sensors and processors "intelligent", which will be based on CIBPs - Customer Integrated Business ProcessesSCENARIO B: HIGH TOUCH DEFINES EMOTIONSIt is a fact that technology is taking a big part in our lives, but guests still search for authencity and human interaction. High Tech might not fully satisfy visitors without a touch of emotions.Here are some key High Touch rationales:The ability of tracking and predicting emotions will be the key success factor for a hospitality businessThe way people act, live, and behave is significantly influenced by their emotionsHumans are not rational decision-makers, but are instead influenced by their emotions, which can constantly changeBeing holistically appreciated is part of a guest experience, as customers feel the need to see that hoteliers know their desiresand moodsStaff need to be "Stage directors" in order to provide their guests an unforgettable experienceAre you impatient to discover the full report? Order it now!LET'S CO-EXISTIn guest relations, dealing with emotions is more problematic and challenging than not being able to offer the lowest price. A hotel's ability to stimulate emotions puts it into a position of power and therefore of responsibility. To fulfill their promise, brands have to offer their guests authenticity ,and sustainable and consistent services. New technology-enabled services have to be used in a reasonable and non-manipulative manner to deliver a real added value. The new <<emotional transparency>> based on big data will also provide sensitive data that guests do not want to be disclosed and used for analytics as they touch privacy. The selection of data will be a challenge. Even if today it is widely accepted that privacy is no longer an issue, there will be a counter trend. Guests will change their minds during their different stages of life and insist on the protection of their privacy.
EHL 30 March 2017
Those are some of the questions we posed at a hotel ROI breakout session at the International Hotel Investment Forum (IHIF) in Berlin earlier this month, with the aim of drawing out solutions from the panelists taking part.Recent trends show RevPAR (revenue per available room) has been on the rise despite terror attacks and the global financial crisis, while global gross operating profit performance has declined across many markets. Since 2000, according to data from HotStats, improvements in gross operating profit per available room (GOPPAR) across a significant sample of hotels in the UK, have dramatically lagged behind gains in TrevPAR (total revenue per available room).Putting this into context, Jonathan Langston, co-founder of Hotstats, said this showed "how driven we are to focus on profit conversion as a key performance measure of the hotel industry. RevPAR tends to flatter to deceive because it doesn't tend to take into account rises in OTA costs.""Looking forward I suppose where we don't see much yield compression coming through to increase values, the only way to enhance value for owners and create more of an alignment between operators and owners is to extract more profit out of the business, to drive the bottom line, absent any yield compression and rising capital values."The reasons for the declining gross profits are many, ranging from the OTAs increasing their share of the business to wage increases, and ultimately a more complex and competitive operating landscape. In the lively session, we discussed what could be done to reverse the trend. The panelists identified the following possible solutions:Michael McCartan, Managing Director (EMEA) of Duetto, proposed creating customized pricing packages for every single guest, for every single stay. ("Undifferentiated discounts are not driving loyalty, they're diluting revenue in my opinion. What hotels need to do is understand their guests better ... [and offer] a price that's unique to them.")Max Luscher, Managing Director of B&B Hotels Germany, suggested selective outsourcing where service, quality and also costs could be maintained. ("We're very reluctant to outsource ... Partners let you down and quality is not where it needs to be.")Jonathan Langston of HotStats recommended the use of benchmarking and key performance indicators (KPIs) to identify positive operating trends to communicate best practices for improvement. ("Where I think the industry has dropped the ball a bit ... is to recognize that the data technology is there, the data exists. Open your minds to what exits and use it in proper benchmarking techniques as - dare I say - more sophisticated industries have [done] in order to improve your margins.")Stephen Cassidy, Senior Vice President and Managing Director of Hilton Worldwide for the UK and Ireland, suggested creating centers of excellence, in areas such as revenue management, collaborating in offsite, shared locations. ("Attracting and retaining talent is critical. The point of differentiation with the OTAs and some of the other disruptors is that we're a people business serving people. And therefore talent has to be at the front and center of everything we do in attracting and retaining it").Ken McLaren, Executive Vice President, International Operations at Interstate Hotels and Resorts, proposed instilling a culture of owner profit-driven focus on the business with every operational employee. ("It's all about expertise. I think if we're going to counter some of these trends, some of these challenges in our margins and ROI, it's all about expertise and where you focus that expertise."]Carl Oldsberg, Vice President, International Operations with Choice Hotels, suggested that owners' interests should be balanced through transparent distribution costs and the selective use of performance measures. ("I would hate to be an independent hotel today to have to manage distribution, technology and the loyalty program. There's no way you can keep up with that environment.")Overall there should be a focus on creating solutions to maximize profitability, therefore alignment with the interests of owners is absolutely key.As an industry, it was agreed we need to stay relevant. Given the challenges we face today, we have two choices: 1) do nothing; or 2) do something different. If we do nothing, we will be unable to reverse the trends; however if we do something different, we have a chance to be more profitable, survive as an industry and of success.
EHL 27 February 2017
Industry practitioners and revenue management (RM) educators, meeting recently in Orlando in the U.S., are in agreement: there is a great shortage of well-qualified revenue managers. Competent revenue managers should be not only able to use data analytics to predict customer behavior and proactively formulate RM and pricing strategy, but they should also possess the necessary communication, decision-making and leadership skills required to help companies to maximize revenue.The list of corporates taking part in the Orlando RevMe workshop was impressive: Disney; SeaWorld Parks; IDeaS Revenue Solutions; Delaware North; STR; and Hard Rock International. Among the items on the agenda: dynamic pricing; bridging the gap between technology and people; and education, skills and behavioral traits that make great revenue managers.Today's RM practice is evolving from the traditional rooms-revenue model towards a total revenue management approach. Under the traditional model, hotel revenue management has focused largely on rooms. However, revenue management principles can be applied to operational areas beyond just rooms. At its core, total hotel revenue management brings together and optimizes all revenue streams, as opposed to thinking of each department separately. Thus, a more holistic approach to revenue management is needed to identify revenue-generating opportunities, and optimize revenue and profit generation.The move to total revenue management involves a shift from a tactical, short-term focus to a more strategic, long-term view. Total revenue management relates to capturing mostly untapped revenue and profit potential, associated with hotels' non-room revenue-generating centers. Some hotel chains are already expanding revenue management practices to F&B outlets and/or the function rooms.As for 'integrated' hotel resorts, the casino industry also offers specialized hotel room rates, based on the guests' 'value', by analyzing their gaming and spending behavior.While the evolution of revenue management presents many opportunities for today's revenue leaders, it will also bring many challenges. Industry practitioners recognize the importance of utilizing a total revenue management approach and conclude that talented personnel, combined with the right technology are the keys to success for total revenue management strategies.Technology providers have also begun to deliver solutions that address these areas as well, from robust F&B reports that transform point-of-sale or POS data into actionable insights, or into forecasting and optimization solutions for alternative revenue sources such as meeting space.However, technology is still one of the key barriers to practicing total revenue management. The data and technology required to support the successful implementation of total revenue management is not readily available to most companies. When different departments collaborate, they typically operate on multiple software applications. Companies, however, more often than not acquire different systems at different times from different vendors, but the systems need to be interconnected. Therefore, it is a challenge for companies to interlink their different systems, so that they can work together and allow for the seamless transfer of data.For total revenue management to become a reality, the revenue manager should be able to manage demand and profitability for every revenue stream in the hotel. One of the core components of a total revenue management program is increased involvement by the revenue manager in optimizing all revenue streams, and so have both tactical and strategic influence on other revenue centers.In addition, one of the keys to successful total revenue management is to have it embedded in the organization's culture and an integrated approach is needed to analyze the decisions of sales departments so that they can be aligned with the revenue and profit objectives of all the revenue centers.Therefore, a key quality of effective revenue leaders is that they must not only be good with analytics, they must also be effective influencers in sales, marketing and operations. With automated revenue management systems in place, revenue managers can reduce their workload in terms of 'number-crunching' and spend more time on analyzing data and making better and more strategic decisions for the hotel.Revenue managers should be corporate leaders who guide sales and marketing teams in the most effective positioning of their selling strategies and campaigns, and lead the overall strategic direction of a property.Future revenue managers will have to develop far beyond the current, stereotypical number-crunching, often believed to the revenue management role, as the key competency of revenue maximization is becoming more strategic.Every decision a revenue manager makes affects a company's profitability and, because of this, the role requires a professional competent in their abilities to manage both people as well as revenue. Top revenue managers should be visionaries and corporate change agents who rely on innovative thinking to develop and build a total revenue strategy to increase a company's profitability for both the short and long term.Revenue managers in future should not only be tactical, but also have the right skill sets to be the strategic revenue leaders that companies need.Dr. Cindy (Yoonjoung) Heo is an assistant professor in revenue management at EHL. Dr. Heo will be one of the team of professors on the school's new MBA in Hospitality program which is scheduled to start in September 2017.Discover EHL's online module Driving Hotel Revenues.
EHL 23 December 2016
Technology spending has been relatively low in the hospitality industry compared with sectors such as financial services and telecoms, and certainly IT spending in Europe, Africa and the Middle East (EAME) falls short of what is spent in the United States. The discrepancy between the U.S. and EAME regions may be due to the nature of the hotel industry in these markets, with EAME having smaller, independent properties, which do not enjoy large tech budgets.So why does the wider hospitality sector spend so little on IT compared to other sectors such as retail and finance? As guests in hotels are unaware of the level of tech spending, it could be that the investment in the furniture and fittings takes priority ... that is, until the Wi-Fi fails. Or perhaps IT managers, who are competing with other departmental managers for their share of the budget, are less successful at internal marketing and are forced to do more with less. Further, the hotel industry is a high-touch, rather than high-tech industry and upscale properties are more likely to employ extra staff than additional technology, particularly in markets where labor is cheaper than technology.In addition, IT budget decisions are frequently taken by owners rather than operators or managers, and technology is viewed as a cost rather than an investment.What do hotel properties spend on technology?According to research from the IT Benchmark survey (EHL, 2014), hotels in the EAME markets only allocated a relatively small percentage of revenue (1.5 per cent) for technology expenditure. Additionally, they spent on average 726 euros per year per room, amounting to some 182,327 euros per property, with the highest spending in the Middle East market and the lowest spending in Central Europe.An unattractive market for IT suppliers?In the past, property management system (PMS) software has been the biggest single tech investment by hotels and this market has been dominated by one supplier, MICROS. The PMS serves as the main decision support system, linking point of sales, automation of all front desk activities, financial systems, client information, room allocation and distribution networks and is key to ensuring the smooth operational running of the hotel. The domination of this major player in the PMS market and the low budget allocation for IT spend makes technology development for the sector less attractive for IT suppliers and developers. Consequently, there has not been any recent, dramatic or new innovation in technology for hotels since the advent of the PMS, and much of the technology used in hotels has been adapted from retail or the home technology market. With the migration of the PMS and other operational software to cloud-based systems and remote servers, this will reduce costs for hotel and reduce capital expenditure even further.Future spending will be focused on customer-facing technologiesMany analysts forecast an increase in tech spending in 2017. As for the U.S. market, the Hotel Technology (HT) 2016 Lodging Technology Study states that 54 per cent of U.S. hotels will increase their tech spending, with an average technology budget of 4.9 per cent of total revenue. Much of this spending with be on customer-facing technology, payment security, guest room technology, bandwidth, and mobile engagement. Similarly in the EAME markets, many of the major hotel groups will focus on customer engagement and enabling technologies, mostly faster bandwidth, to serve their customer.In the EAME market, the priorities recently have been on internet provision (18.6 per cent), software (11.4 per cent) and server (10.0 per cent) upgrades, which is in line with the increased demand for greater speed and availability of internet bandwidth so that customers can use their own devices and apps services at hotels.The technology challenges ahead focus on data security, particularly compliance requirements for payment cards and, in the widest sense, preventing data breaches, particularly in a mobile environment. The challenge is also in meeting the escalating expectations of customers, whose homes are wired with high-speed internet, interactive television and location-based devices. As the 'Internet of Things' (IoT) becomes more prevalent, then this bandwidth will have to be ramped up dramatically to support customers who are controlling their home environment, chatting with their children via FaceTime and catching up on their online gaming activities. The main technology challenge for hoteliers will be keeping up with the increasing needs of customers, while maintaining the integrity of their tech environment.
EHL By Ian Millar
This is of course the motto of the renowned Special Air Service (SAS) - yet when it comes to innovation, nothing could be truer, writes Ian Miller of the Ecole hoteliere de Lausanne. Here he argues for the role of a middle man between the industry and tech start-ups, to facilitate the creation of innovative solutions that the industry needs.