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11 July 2018

From Tech Dependent to Tech Savvy: How Hotels Can Get Ahead of the Curve

By Margaret Ady - Co-founder of Apaleo

Patrick Fisher of Thomson Reuters notes that, "As technologies become more and more pervasive across industries and functions, companies as varied as Goldman Sachs, Exxon, GE, Citi, and Walmart are all becoming technology companies as well." Hotels may not be peddling technology, but they are profiting off of their ability to offer guests innovative technology solutions as well as their ability to use technology to do better business. Even if hotels aren't ready to be labelled technology companies, hotel operations have evolved from an industry that once utilized technology to a technology-dependent industry.

However, as Futurecast notes, a tech dependency doesn't necessarily mean the users are tech savvy. Even when it comes to digital natives/millennials. Adapting technology to our needs can be a challenge even for those immersed in it. Perhaps this is why hotels are more tech-dependent than ever but most will report they are lagging behind the tech curve.

So how can hotels move from laggards to innovators? Here's a look at what tech savvy companies are doing to stay ahead of the curve.

Review the budget

Tech-competitive hotels dedicate budget to technology. 71% of hotels that consider themselves innovators will increase technology budgets in the coming year, according to Hotel Technology's 2018 Lodging Technology Study. Hotels that do not reallocate the technology budget will fall behind the curve. Increasing the technology budget does not necessarily have a negative impact on the bottom line. This shift will is likely increase efficiency and will, over time, have positive revenue ramifications across departments. Consider this when budgeting.

Source — Hotel Technology: 2018 Lodging Technology Study

Reinvent the central technology system

For many years now, the PMS has been the heart and core system for most hotels. As the 2018 Lodging Technology Study notes, "The PMS has truly become the central hub of hotels, being tasked to do a myriad of different functions." While in theory this sounds fine, in practice it presents problems. In trying to tout all-encompassing feature lists, PMS vendors develop poorly implemented functionalities that would be better developed by app developers specialized in these areas (think upsell, mobile check in, BI/reporting, etc.). But most PMSs do not connect with these third party applications, so hotels are stuck with their PMS's functionalities or none at all.

Hotels that want to drive their technology forward will need to rethink the requirements of their PMS and reinvent how it is used within the context of the hotel's full technology stack. Tech-savvy hotels will search for lean PMSs that offer a fully open 2-way API. This allows the hotel to use core functionality from its PMS and add additional features by connecting its favorite apps and micro-services at the click of a button. The hotel can then grant these apps access to the information stored in the PMS and write back data to the PMS so that all technology works together seamlessly. Approaching the PMS this way creates the most innovative scenario hotels have seen to date. It might initially feel risky to make the jump, but what's riskier is relying on proprietary, closed legacy systems that don't innovate at all.

Self-disrupt to innovate

Self-disruption - not to be confused with self-destruction - is when companies find ways to evolve or completely overhaul their current mode of operating before another company beats them to it. A good example is when Apple knowingly killed its iPod sales with the iPhone. It is common practice at major tech corporations, and Gartner reports that by 2020 five of the top seven digital giants will self-disrupt.

Hotels can get ahead of technology by doing the same. Self-disruption will mean different things for different hotels. For a traditional, single property hotel, it may begin with switching to a native, cloud-based PMS in order to create operational efficiency, train new staff faster, and access data on mobile devices while on the go. For a hotel with tech-savvy business travelers, it may mean connecting new technology that allows for faster (self) check-in - or better yet, setting up the infrastructure to run a staffless operation. For Marriott, this meant introducing voice technology, with the recent announcement of Alexa-enabled rooms. The opportunities are endless, but one thing is clear: hotels that take the time to reflect on guest needs and self-disrupt will succeed in an already saturated market. Technology, guest access to it as well as operational innovation, will become one of the things that differentiates hotels and drives guest loyalty in the coming years.

Say it out loud, "My hotel is a technology company"

In fact, almost all companies are technology companies now. Even at a coffee shop, if the Wi-Fi is lousy or the POS hiccups every time the tablet is spun around to get a signature, the business will suffer. Hotels that embrace the fact that they are as much a technology company as they are a hospitality organization will inherently put technology at the center where it needs to be. Let's face it, marketing runs on technology, reservations run on technology, revenue management runs on technology, as does F&B, the spa, the gift shop, housekeeping. You get the drift. Hotels that aren't actively prioritizing technology and actively working to change the entire organization's mindset will lag behind.

Recruit and hire tech-savvy leaders

While it shouldn't be a pre-requisite for every executive team member to have worked in Silicon Valley, hotels do need to hire at least one staff member who handles technology. By this, I do not mean hardware. Not the person who makes sure the computers run. I mean a high-level developer, tech lead or CIO who can review and consult on proposed technology purchases. One who can speak to the true assets and drawbacks of the technology. One who can see if it integrates with the rest of the tech stack. This way the hotel will know when a vendor says that they integrate fully that they actually mean it (because, loads of companies say they do, and it's not always true).

It may seem odd to discuss forward-thinking technology without mentioning the latest buzzworthy tech like AI, VR and blockchain, but this emphasis on individual technologies is how lagging hotels have gotten where they are - just trying to keep up with the next thing. It's time for hotels to take stock of how they budget, prioritize, implement, and innovate with technology, which requires a philosophical change at the senior level. One that says, Technology is as much our priority as hospitality because it is required to deliver the experience our guests expect. Instead of piecemeal tech solutions doled out to different departments based on who's most in need, hotels must create a holistic technology strategy, one guided by hospitality principles but led by technology know-how.

Margaret Ady

Margaret Ady is a co-founder of apaleo, responsible for the company’s brand positioning, marketing, and strategic growth. Prior to apaleo, she led marketing for Berlin-based SnapShot, and prior to that, for TrustYou. In 2016, she was awarded HSMAI Europe’s Top 20 Extraordinary Minds in Sales, Marketing and Technology. Before joining the hospitality technology scene, Margaret held key leadership roles at The Walt Disney Company and The Oprah Winfrey Network. Margaret has also provided research, branding and marketing consulting services to many companies, including 20th Television (Fox), Nielsen and Red Bull. Margaret graduated from the University of Southern California with degrees in Economics and Psychology and a focus in business. During her studies, she was awarded the USC Annenberg Communications Critical Pathway Grant for her research in new technology and its impact on healthcare decision- making.

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