Who really has the buying power when it comes to hotel technology purchases?
When it comes to the hospitality industry and the purchase of hotel technology, most B2B tech vendors believe that the hotel brands themselves are the focal point for the purchase decision making process. After all, big brands represent huge potential business, and with the hotel landscape being multi-layered (owners, management companies, advisors etc.) shouldn't the sales focus appeal to the brand's top-line?
In fact, this can often be a flawed approach to selling B2B hospitality technology. But if that's the case, who really has all the juice when it comes to either persuading the brands about what technology purchases make sense, or making the buying decision themselves?
To better understand a more effective approach, we need to take a closer look at the infrastructure which supports hotel properties, and those coinciding authorities. Larger hotel brands with properties across the globe can dictate certain aspects of the hospitality experience within each property agreement. After all, if a prospective hotel owner is buying into an established hotel brand and all of the associated marketing and sales benefits, it becomes imperative that certain segments of that 'brand' are consistent across all properties. This includes things such as the CRS, mattresses, labour standards, etc.; however - and perhaps surprisingly - hotel brands often have difficulties dictating the purchase of specific hotel technologies. Ultimately, it is often the hotel owners who carry the most power when it comes to technology purchase decisions and initiatives.
Traditionally, hotel brand giants (such as Marriott or Hilton etc.) have been popularly viewed by technology vendors as the 'Golden Goose' or, in other words, the gateway to success. Why? Because a large brand with countless properties and owners represents an exciting (and extensive) business opportunity, right? While this is true in a sense, it is extremely unlikely that the brand itself will mandate some tech solutions down to franchisees or owners that is outside of the reservations control environment.
Let's put this theory to work by considering the following scenario: Independent hotel A would like to become part of a larger, flagged hotel company. When the transition occurs, Hotel A may already have a PMS, POS, Sales and Catering solution, etc. in place. The likelihood of the owner of Hotel A swapping out all (or some) of these systems in order to comply with the brand standard is somewhat unlikely. If their PMS can connect with the brand's CRS and some other reporting standard solutions, the other systems could remain in place for quite some time. As such, ancillary technologies such as text messaging solutions, mobile check-in and out platforms and many other will be decided by ownership, not the brand.
With this in mind, knocking on the door of the brand itself should never be the first step. In fact, gaining the approval of the brand in most cases essentially just grants a green light to then approach individual owners, leaving technology vendors no closer to the desired finish line of making any actual sales. You've been granted access to the building, sure, but you've yet to infiltrate any of the offices, so to speak.
Rather than approaching the brand, technology vendors should seek out opportunities to connect with small or medium size ownership companies. These companies will often have multiple flags and, once a sale has been made, word of that technology upgrade or new solution can percolate upstream with much more ease than if it were a mandate trickling downstream. In that same breath, the more hotels an ownership group has, the higher the likelihood they have to make (positive) noise and garner attention from the brand itself, in which case the brand will often do whatever the owner considers to be the best decision for the property.
Not only that, but it's the hotel owners who will have a more intimate grasp on the demands directly associated with their specific property, and will therefore have a stronger opinion regarding appropriate tech solutions. The business focal points, concerns and long-term goals may be different depending on who you ask (brands vs. owners) and, thus, it's important for technology vendors to go right to the source and deliver their proposal head-on. Hotel brands and hotel owners have a symbolic and co-dependent relationship, but it's not without its unique dynamic. It's important to recognize the increased autonomy which owners have when it comes to tech-related decisions for the long-term success of their property. While the larger hotel brand has a pre-established image that current and prospective travelers are likely familiar with, it's ultimately up to the hotel owners to identify the tools and resources their property needs to succeed and remain competitive. Ultimately, when it comes to moving the dial for their flag, hotel owners occupy the power position.
Puzzle Partner Ltd.
157 Cumming Drive
Barrie, ON L4N 0C8
Alan E. Young is the President of Puzzle Partner Ltd. and co-founder of Next Big Thing Travel & Hospitality. Previously, Alan has held executive sales and marketing level positions with startup companies such as Newtrade Technologies, (acquired by Expedia), Hotel Booking Solutions (acquired by IBS Software) and TrustYou. Alan is past Chair of the Board of Directors of The OpenTravel Alliance and has been very involved with other industry associations most notably AHLA, HEDNA, and HTNG. With over two decades of experience in the travel and hospitality technology world, Alan specializes in helping innovative companies achieve winning performance and dramatic growth.
Puzzle Partner Ltd.