We’re on the brink of a major revolution in hotel technology.
It has been talked about for decades, to the point where it’s beyond a need and has become a must.
The ways consumers are researching travel and shopping for lodging continues to evolve at a break-neck pace, and the average hotel owner and operator can’t keep up.
Large hotel brands are managing their inventory through central reservation systems that were built more than 20 years ago. They’re slow and closed systems that lack the agility needed to adapt to rapid changes in the way room nights are bought and sold.
Through distribution and digital marketing costs, hotels are spending nearly a third of the revenue attained to sell each room. As much progress as the big hotel brands have made in marketing and selling rooms, when it comes to digital distribution, they’re continually beaten to the punch by innovative third parties.
But it appears the collective industry has reached its tipping point. Through new approaches that are more innovative and collaborative, we’re on the cusp of a tech revolution that has the ability to truly shake up the way hotels are wired, connected, operated and marketed.
Improving Your Legacy
At a Skift mini-forum during WTM London this year, hotel executives admitted the industry remains weighed down by too much legacy technology. Some property management systems are incredibly dated and don’t always provide the amount of detail necessary for hotels to understand their customers, panelists said.
Instead of building proprietary, closed systems, some hotel operators today understand that open technology stacks allows them to more easily share data or files among different programs. Look to the approach Red Lion has taken to build its best-of-breed system. Open stack technology paves the way for easier integration among the many systems a hotel needs to operate effectively because the systems are designed to communicate openly with other software.
In a recent blog post for Snapshot, Martin Soler suggests open-stack technology allows hotels to faster adjust pricing, services and react to the market. “Anyone who has daily access to high-quality information (through analytics apps or elsewhere) will remain competitive,” he says. “Eventually, those who don't will be left behind as the industry evolves.”
Soler points to Google as a good example of an open-stack provider. With almost every app Google makes (Google Analytics, Google Maps, Google Docs, Gmail, etc.) the company provides an open API where developers can build their own sub-tools tailored to their needs.
Nick Price, current CIO at citizenM, former CIO at Mandarin Oriental and co-founder of HTNG, sees a similar future for the hotel tech stack. Price wrote in HFTP’s Hotel Yearbook 2017 that the hotel industry is in need of a new, cloud-based technology concept that provides the basis for consolidating fundamental information across dissimilar source systems.
His next-gen “service bus” concept features a central hub to which various cloud-based applications connect: RMS, CRM, POS, VOIP, finance, etc. He calls it Hotel OS, “a new generation of enterprise service bus that provides the capability most commonly found in public cloud technology stacks, [which] will be soon used in the hotel technology space for communicating between applications or modules within an application.”
He lists Microsoft, Oracle, IBM and Google as companies utilizing next-gen service busses for efficient connectivity, seamless integration and smooth data sharing.
The advantages such architecture could bring to hospitality include:
- Multiple similar systems can be used across the enterprise. Think multiple payment, multiple POS, or even multiple PMS.
- A unified customer record across multiple customer profiles and loyalty systems.
- True reporting and business intelligence tools as fundamental and aligned parts of the core technology stack.
- Modern public cloud infrastructure that is being continually updated.
In fact, a major part of moving away from legacy systems is ensuring your technology can operate in the cloud. Hotel technology companies have been slowly making the move for the past decade, and recent growth in the cloud-computing sector has accelerated the efforts.
Shifting workloads into cloud-based infrastructure lets companies innovate faster. The ability to build, launch and scale new applications quickly is a critical part of staying competitive.
The Future of Hotel Distribution
Simultaneously, the combination of mobile devices, Big Data and artificial intelligence is set to revolutionize the travel consumer’s experience.
GDS provider Amadeus recently commissioned a report, Travel distribution: The end of the world as we know it, suggesting the future for many travel industry players is at a crossroads. Virtual assistants, bots, and virtual and augmented reality will very soon change the way travel is marketed and sold, the report suggests.
“Mobile virtual assistants [will] point out nearby restaurants and shops, and guide people’s purchasing choices based on their personal preferences, buying history and moods at different times of the day,” the report says. “Bots will interact with social media conversations among friends and colleagues, suggesting locations to visit and products to buy while collecting data for tailoring individual experiences over the weeks ahead.”
Amadeus suggests there are two potential paths for the future of hotel distribution. In one scenario, travel brands will continue to push to grow their direct sales. In another scenario, brands will partner with IT companies, GDSs and other aggregators to drive innovation and manage increasingly complex content across the industry.
Demand Innovation From Your Tech Partners
Simultaneous to the sea change happening across the hotel industry, Duetto CEO Patrick Bosworth advocates a consolidation in hotel technology, which he says would transform the industry. However, he says, it’s not likely to happen until outside investors turn to the hospitality technology space in a bigger way.
Bosworth says hoteliers – even multibillion-dollar companies like Marriott and Hilton — shouldn’t expect to be on the cutting edge of technology. But they could and should cast a wide net, working with partners that can interface with all the new technology entering the hotel space.
Until enough hotel brands show their willingness to invest in external solutions, rather than keeping their tech stack entirely in-house, the whole hospitality technology space remains undercapitalized, Bosworth says.
When hotel managers can plug and play cloud-based applications to automate much of their operations, they can turn their attention back to taking care of the guest. And this time around, they’ll have quicker access to a wealth of guest data that can help them make a true impact on guest experience and build longtime loyalty.