Experts from multi-national hospitality companies compared their perspectives on technology developments in the industry at the IH&RA's recent European Hospitality Technology Show & Conference,
Asked to comment on the impact of the Internet, Price said it was a powerful force in the distribution market and a great cost containment opportunity. A major benefit was the ability to present the product accurately to customers – an ability which the GDS doesn't have. "And it allows customers to give information back to us about their wants and needs, so that we can serve them better," he said.
John Paul Nichols agreed that, currently, the most important upside to the Internet is the communication it offers with customers and franchisees. "You can get more information, reach more people and have richer content," he said. The expense involved, though high, is offset by the additional information available to the customer which translates into competitive advantage for those with good brands and/or products. He stressed the revenue potential of the Internet for Cendant: "Right now, we estimate that 15-18% of what we deliver is over the Internet. The GDS growth is being driven by online growth. We think up to 20% of revenue is driven by the Internet and this could be 50% in five years."
As for the importance of e-procurement, Nichols said that the Internet had the potential to reduce costs but hadn't yet produced a proven business model. Price commented that e-procurement had limitations: "It can be difficult to aggregate demand if you have one luxury property in one location in one country. "Co-opetition" (with business rivals) may be possible, but it isn't happening successfully yet," he noted. Tinner added that business-to-business was not so much about technology, but about agreeing on the best process with your business partner.
Another challenge facing smaller hotel companies, Tinner observed, was getting investment in technology approved by owners and management. "The IT people must close the gap with the rest of the business and ensure the decision makers can see the strategic advantage of technology," he said. "The big task is to educate them."
Price said his main frustration with the industry's attitude to technology was its failure to fully embrace its potential for enhancing customer service. "Technology is critical in sectors like financial services and retail where they've taken IT to a higher level in the last fifteen years. In the hotel industry, we still see technology as a 'nice to have' -many smaller establishments could exist without it," he lamented. He insisted that the change point was imminent and that it must start with a review the of the budgetary, management and strategic responsibility. "There's a belief that IT is the only technology that matters – yet it's the other technologies that are customer facing. Ultimately it must all be connected to provide better guest service." He criticised hotels who view technology as just a gadget or amenity to impress the guest: "Why should the guest have to use a computer console just to turn on the lights?".
For Tinner, the success of IT will depend on it being firmly linked into the business strategy. He warned hoteliers not to be tempted by the vendor hype into making technology investments before running a 'pilot' installation to monitor levels of guest acceptance, or to take the outsourcing option without first ensuring that it would genuinely take up less management time than keeping the function in-house.
Nichols, too, criticised the industry for taking technology decisions without prior research, especially among customers. "If the customer is using the technology already at home or at work, that's the guide to what they want in the hotel," he commented. But his biggest frustration – to which he attributes the industry's failure to fully capitalize on technology – is hospitality's fragmented ownership structure….
Experts from multi-national hospitality companies compared their perspectives on technology developments in the industry at the IH&RA's recent European Hospitality Technology Show & Conference,
Asked to comment on the impact of the Internet, Price said it was a powerful force in the distribution market and a great cost containment opportunity. A major benefit was the ability to present the product accurately to customers – an ability which the GDS doesn't have. "And it allows customers to give information back to us about their wants and needs, so that we can serve them better," he said.
John Paul Nichols agreed that, currently, the most important upside to the Internet is the communication it offers with customers and franchisees. "You can get more information, reach more people and have richer content," he said. The expense involved, though high, is offset by the additional information available to the customer which translates into competitive advantage for those with good brands and/or products. He stressed the revenue potential of the Internet for Cendant: "Right now, we estimate that 15-18% of what we deliver is over the Internet. The GDS growth is being driven by online growth. We think up to 20% of revenue is driven by the Internet and this could be 50% in five years."
As for the importance of e-procurement, Nichols said that the Internet had the potential to reduce costs but hadn't yet produced a proven business model. Price commented that e-procurement had limitations: "It can be difficult to aggregate demand if you have one luxury property in one location in one country. "Co-opetition" (with business rivals) may be possible, but it isn't happening successfully yet," he noted. Tinner added that business-to-business was not so much about technology, but about agreeing on the best process with your business partner.
Another challenge facing smaller hotel companies, Tinner observed, was getting investment in technology approved by owners and management. "The IT people must close the gap with the rest of the business and ensure the decision makers can see the strategic advantage of technology," he said. "The big task is to educate them."
Price said his main frustration with the industry's attitude to technology was its failure to fully embrace its potential for enhancing customer service. "Technology is critical in sectors like financial services and retail where they've taken IT to a higher level in the last fifteen years. In the hotel industry, we still see technology as a 'nice to have' -many smaller establishments could exist without it," he lamented. He insisted that the change point was imminent and that it must start with a review the of the budgetary, management and strategic responsibility. "There's a belief that IT is the only technology that matters – yet it's the other technologies that are customer facing. Ultimately it must all be connected to provide better guest service." He criticised hotels who view technology as just a gadget or amenity to impress the guest: "Why should the guest have to use a computer console just to turn on the lights?".
For Tinner, the success of IT will depend on it being firmly linked into the business strategy. He warned hoteliers not to be tempted by the vendor hype into making technology investments before running a 'pilot' installation to monitor levels of guest acceptance, or to take the outsourcing option without first ensuring that it would genuinely take up less management time than keeping the function in-house.
Nichols, too, criticised the industry for taking technology decisions without prior research, especially among customers. "If the customer is using the technology already at home or at work, that's the guide to what they want in the hotel," he commented. But his biggest frustration – to which he attributes the industry's failure to fully capitalize on technology – is hospitality's fragmented ownership structure.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
