7 August 2017

The Four Pillars of Hospitality Technology

By Larry Mogelonsky - Principal, Hotel Mogel Consulting
  • The Four Pillars of Hospitality Technology | By Larry MogelonskyThe Four Pillars of Hospitality Technology | By Larry Mogelonsky

Nowadays, hoteliers are so inundated with technology that the tasks of prioritization and selection have become far more than just daunting; research and procurement are practically a job title unto themselves! Unless you have specific objectives with a firm plan and budget in mind, you'll easily be intimidated by the sheer myriad of options for consideration.

With this in mind, I will attempt to simplify your journey through this process by defining hospitality technology according to four distinct pillars. While each pillar interconnects with the others in various forms – notably, guest service delivery as well as the nightly rates that you can get away with charging – breaking them down into these silos will help you weigh the matters financials as well as ensure that no single area goes overlooked for too long a stretch of time.

First Pillar: Physical Infrastructure
This first pillar is the most readily understood as well as the most established and expensive to upgrade. Infrastructure systems include those that run the physical structure of your property such as lighting, HVAC, telephones, in-room sensors, in-room tablets, laundry units, water treatment, kitchen appliances, smartphone door keys, mobile wallet receives, security instruments, televisions, cable boxes, entertainment devices, WiFi routers, point-of-sale terminals, housekeeping dispatch and engineering equipment to name but a few.

For each of these systems, there are multiple vendors offering solutions designed foremost to reduce costs from a labor as well as from an energy management standpoint, for which there are opportunities to save millions on your yearly utility bill. It's rare, though, to find a revolutionary, game-changing new device in this arena as typically such hardware is quite expensive at the outset – both in upfront charges along with all the increment maintenance fees accrued due to the technology's yet-to-be-fully-stable nature. Moreover, such incredible advancements don't usually push for hospitality industry as their primary entrance to the market. While we are often laggards in adoption, this would never stop you from breaking formation with the rest of your comp set and taking a risk on an unproven piece of technological infrastructure that might have tremendous benefits in the long-term.

If you are working on a new build, your task of deciding which vendors to court is somewhat simpler as you are less burdened by retrofit requirements and legacy contracts. For existing structures, infrastructure improvements can be straightforward or they can be a nightmare. As one example, some installations will require hardwiring and CAT6 cabling through walls which might make their implementation cost prohibitive. Then you have to worry about how all these disparate systems will talk to one other in order to produce some semblance of automation.

Last is the discussion of your in-house servers responsible for your digital storage, cyber-security and information distribution requirements. Triple redundancy is one of the most fundamental prerequisites these days given how reliant we are on electronic data. Many properties are now opting for cloud-based solutions that eliminate the need for the traditional home-based server, but a complete removal of the on-property requirements in this regard is a long way off so do your due diligence and upgrade accordingly until that time.

Second Pillar: Management Systems
Paramount here is your property management system (PMS). This is like the central nervous system for your property, connecting all the various pieces of physical infrastructure as well as automating the communication between them and processing any credit card data. Moreover, it's here where you take the reins to yield manage your room distribution channels and connect in any ancillary revenue streams to make packaging a cinch.

If these ancillary management systems can't connect to this central processing bank, I strongly recommend that you consider replacing them as your PMS is also where your guest profile data is housed. Commonly referred to as customer relationship management (CRM), guest profiles are becoming ever more sacrosanct to our operations as it is through the amalgamation of this rich data that we can better analyze how we are performing, what entices our visitors to spend and what each individual guest prefers.

Thus, an effective CRM will both help you improve guest satisfaction on an individual level by remembering each person's specific preferences as well as reveal opportunities for growth on the macro level. The two keys to make this happen are to first ensure that as many points of contact between the guest and your property as possible are set up for quantified recording and next that all data is being compiled into a singular bank so each guest profile is as rich as it can be.

Various CRM tools are available to lever this data towards building a new and improved guest marketing program. A complete 'tool set' would include such touch points as voice reservation activities, data gleaned from the website, check-in confirmations, post-checkout surveys and newsletters in addition to all the onsite touch points and points of sale.

In terms of how to improve in this regard, first know that the PMS is a mature piece of software, meaning that every single one has a plenitude of features that you have probably never used before. Start by reaching out to your provider for a refresher as many of these features are designed to enhance your profitability by computing the data in various ways to offer new insights into how your operations are performing. Most PMS companies offer webinars and regional meet-ups on a regular basis so this shouldn't be hard to arrange. After all, the more you use their software, the more output you get from it and the happier you are as one of their customers!

Third Pillar: Digital Marketing Channels
I've separated digital marketing from the aforementioned internal management systems because these are external efforts that largely exist beyond your property's borders. CRM technology is primarily concerned with database while communications activities encompass all your efforts to target the consumer at large and move them down the sales funnel right up until they input their credit card data.

Whereas a PMS contains specific, and hopefully secure, information about each past guest, digital marketing is broader and more ambiguous. These channels include your website, search engine optimization (SEO) activities undertaken in tandem with your website updates, search engine marketing (SEM) such as Google Adwords, email newsletters, blogs, social media, mobile apps, what OTAs you push inventory to and your approach to third-party review websites. There are still many others but these should definitely help you paint a good picture of what's involved here.

While there is a lot of overlap with your CRM as these include both sales and relationship channels, the differentiating factor for this pillar is that every aspect is outbound. Like fishing, you know roughly what you are going to catch – specific age groups, psychographics, consumers living in a certain geographic radius and so on – but you cannot say with absolute certainty. Some channels cast a wide net, such as the OTAs, while others can be refined to the nth – for instance, Facebook's promoted posts and how they can target well-defined interests.

The technological advents in this arena pertain mostly to automation and business intelligence. That is, software that will help reduce labor costs or those that will unveil new growth opportunities in certain audience groups or markets. As an example in the social media camp, there are tools designed to assist your team in disseminating posts to various social media and responding in a timely fashion, all from a central screen. As well, several technologies are available that provide you with an instantaneous snapshot of your guest feedback on social media and third-party review channels, thereby allowing you to take remedial actions to your guest service delivery or to address product deficits with end-to-end accountability.

Fourth Pillar: Your Staff
That's right; the oldest piece of technology in the hospitality industry is still the most vital. While some companies are working on building robots to ostensibly replace humans in increasingly non-rudimentary tasks, we are still several generations from android substitutes capable of fully usurping all that your team members do to build the guest experience.

In terms of giving your team a technological upgrade, essentially what we are discussing is training, something that many hoteliers put on the backburner once an employee has been fully onboarded. But training is now an ongoing process and crucial for motivating your staff to perform at their best. With mobile apps and cloud-based blackboard curriculum software paving the way for the e-learning revolution to come to the hospitality industry, you would be wise to investigate your options to see how you can enhance your team training in this regard.

Both universities as well as several private service providers offer online courses that can reduce the costs of onboarding as well as improve your guest-facing 'soft' skills. While e-learning can cover the basics like language skills, SOPs, operations, guest service delivery procedures and concierge knowledge enhancements, there are also more advanced systems that have already hit the market. For example, there are motion capture stations that can be deployed to enhance your housekeeping team's muscle memory so they perform repetitive movements with proper form to thereby reduce their chances of incurring a chronic injury. Next, using artificial intelligence, there are training units that can measure how well a staff member responds to an irritated guest or a heated complaint then offer suggestions to improve this individual's demeanor and tone of voice.

A Checklist For Acquisition
Few hoteliers, if any, can afford to access every technological advance available. There are just so many initiatives that your IT folks can handle simultaneously, let alone the budget. Before you fall head over heels in love with a new piece of technology, check with your team and ask the following questions to ascertain both the feasibility and necessity of each acquisition.

1. Will this new technology reduce operating costs?

  • If so, what is the payout or breakeven point on the investment?
  • What assumptions have been taken in calculating the payout such as staff reduction, interest rates, software installations or server upgrades?
  • Have the costs of training and implementation been factored into these calculations?

2. Will this new technology improve guest service?

  • What service gap will this technology fill?
  • How easy or intuitive is this technology for the guest to both understand and utilize?
  • Will significant staff time be taken explaining this technology to the guest?

3. Will this technology improve the lives of your team?

  • How will your staff benefit from this technology?
  • How difficult will it be for them to adapt or learn its use?
  • How will you be able to monitor the team's compliance and utilization?

4. Will this new technology build revenue?

  • Will we gain efficiencies in how we execute our existing programs?
  • Will we learn more about our guests, thereby leading to improved long-term success?
  • Will it give us access to new markets or business opportunities?

5. Who on our team will champion the technology?

  • Will there be a service interruption and, if so, how will we manage this?
  • How complex will the technology be for the team to learn?
  • How long will the installation and learning curve take?

6. Will this technology integrate with my current PMS?

  • If no, is this integration necessary?
  • If yes, will you need to install any additional, and possibly expensive, plugins?
  • Who on the team will manage this integration?

Clearly the outcome of these questions will guide your decision and help to develop a list of priorities. While revenue and cost savings are always important, don't forget the long-term asset value enhancement through improved guest service delivery as well as how this can work in your favor to heighten the overall perception of your hotel.

To conclude, the late Steve Jobs once said, "Technology is nothing. What's important is that you have a faith in people, that they're basically good and smart, and if you give them tools, they'll do wonderful things with them." Remember that the technology you incorporate into your property is designed not to take the place of personal service but to enhance that which you already deliver to your guests.

(Article by Larry Mogelonsky, published in Today's Hotelier on June 1, 2017)

Larry Mogelonsky

One of the world’s most published writers in hospitality, Larry Mogelonsky is the owner of Hotel Mogel Consulting Limited and the founder of LMA Communications Inc., an award-winning marketing agency based in Toronto. His experience encompasses hotel properties around the world, both branded and independent, and ranging from luxury and boutique to select-service. Larry also sits on several boards for companies focused on hotel technology. His work includes four books, “Are You an Ostrich or a Llama?” (2012), “Llamas Rule” (2013), “Hotel Llama” (2015) and “The Llama is Inn” (2017). You can reach Larry at larry@hotelmogel.com to discuss hotel business challenges, to inquire about his consulting services or to book speaking engagements.

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Human ResourcesInformation TechnologyProperty TechnologyDigital MarketingGlobal

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