HITEC 2001 Interviews - Microsoft Corporation - Mr. Gary Cooke - Industry Manager for Hospitality & Food Service

January 22, 2001

Hospitality & Food Service is a large, diverse, global market comprising well over 600,000 individual hotel and restaurant sites in North America alone; inclusion of international sites could double this number. Each site deploys different kinds and mixes of technology to serve customers and perform its business operations, making this industry a complex technology environment. As hotels and, to some degree, restaurants come to be booked as part of a larger "travel experience," the ability of everybody's systems to interoperate becomes more important, and the need for security intensifies.

Hospitality & Food Service also represents the intersection of business and consumer markets—hundreds of millions of consumers around the world interact with hotel and restaurant businesses. This convergence of travel and hospitality, business and consumer, creates significant opportunities for generating incremental revenue by leveraging brand awareness and loyalty. The top three issues for the hospitality industry are:

• Increasing cost effectiveness
• Managing technology complexities
• Maintaining and building customer loyalty

Along with the opportunities, however, hoteliers and restaurateurs face a daunting array of challenges at the start of the 21st century. These include:

• Franchise business model. This business model can produce tension between corporate managements, who focus on processes and solutions that can be quickly and broadly applied to all properties under their flags, and franchisees, who want to see value for their individual businesses before they buy into corporate programs.
• Globalization, consolidation, growth, renovation. These along with the mere geographical separation of properties all impact the complexity and potentially the profitability of hotel and restaurant operations.
• Employee issues. Turnover, training requirements, and language barriers affect the ability of hotels and restaurants to operate smoothly and profitably while impressing customers with a satisfying experience.
• Internet-based business models. These present complexity because of the multiplicity of systems deployed in restaurants and hotels today, as well as privacy/security considerations. But they also hold the promise of incremental revenue and reduced costs. The latter in particular is driving interest in supply chains and e-procurement exchanges.
• Operating cost efficiencies. The ongoing search for cost efficiency is driving consideration of "thin client," Web-based solutions that complement or replace traditional client/server solutions, but also imposes new communications and interoperability requirements.
• Integration with the larger travel industry. This has important implications for decisions involving communications, computer system interoperability, redundancy and security.
• Industry standardization. This is a way to trim costs, achieve operating efficiencies, and improve profitability. But executives must also find ways to preserve and strengthen their brand images and create customer loyalty.
• Measurable business value. Sustaining return on investment.

What's the common thread running through these challenges? The need for business agility—anticipating or responding to changing conditions; getting the most out of technology investments already made and quickly deploying new solutions; creatively using the Internet to interact with partners and customers; investing in solutions that scale up and out to meet the needs of growing, evolving businesses.

Technology can help hoteliers and restaurateurs gain this agility and meet these challenges, but their efforts must be guided by a clear vision. Microsoft's vision is to help every Hospitality & Food Service company to:

• Build deep, rich customer relationships. This certainly means building and extending customer loyalty, but it can also involve engaging in new types of business with customers and thus realizing incremental revenue per customer.
• Enhance employee productivity. Helping employees to be more productive clearly helps the bottom line, as does improving retention and development.
• Boost operational efficiency. Streamlining business processes can trim costs while improving customer satisfaction.
• Drive e-commerce. Purchasing consumables and furniture/fixtures/equipment through e-enabled supply chains and trading exchanges can improve cost-effectiveness. At the same time, business-to-consumer e-commerce can improve customer satisfaction and loyalty while opening new revenue sources.
• Achieve real business value. Wise design, purchase and deployment of technology can give hotel and restaurant operators strategic flexibility, extend the life of their legacy systems, respond promptly to competitive developments, capitalize on their corporate knowledge and lower their total cost of owning technology.

The Internet is central to this vision. We call our vision Microsoft® .NET.

Microsoft .NET is a technology framework in which the Internet is used for computing as well as communicating. Traditional software applications can become "Web services" that are accessible and usable via the Internet, no matter where they actually reside. The Internet becomes part of the system, not just the network linking systems. This efficient architecture is based on open standards, making it easier for hotels and restaurants to collaborate with suppliers, affiliated properties, their regional and corporate offices, and customers. From a technology acquisition standpoint, the Microsoft .NET Framework will allow hospitality executives to decide whether they want to buy or rent the software that runs their businesses, host it locally or remotely, through a third party. And .NET is the framework that truly will enable hotel and restaurant businesses and their customers to communicate any time, any place, on any device.

Three key attributes of our .NET vision will be of great interest to hotel and restaurant operators:

• NET is about easier collaboration. XML (eXtensible Markup Language) is integral to .NET, and it is becoming the standard for describing and transferring information between businesses, as well as between applications within a business. XML makes it possible for information to travel between trading partners and customers who use different applications, store their data in different databases, operate and access data with different devices, etc. Easier collaboration means more agility for hoteliers and restaurateurs.
• .NET is about Web services, or programmable applications accessible by standard Web protocols. These applications can "live" inside the firewall at a company, or they can be hosted remotely and accessed via the Internet. Remote applications can be used by hotel and restaurant companies on a "rental" basis, offering a new dimension of business flexibility. A hotel management company, for example, could provide a Web-based property management service—centrally hosted—to its properties rather than having each hotel run its own PMS locally. The host could be the hotel management company or a third party.
• .NET is about new devices and interfaces. Handheld wireless devices like cell phones and personal digital assistants are increasingly commonplace for travelers and restaurant patrons. In the foreseeable future, it will not be unusual for travelers to check themselves into hotels and for diners to book restaurant reservations via these devices. Hotels and restaurants seeking greater agility are also discovering the utility of handheld wireless devices for staff.

As a result of these and other attributes, .NET has the potential to impact all aspects of hotel and restaurant operations, back and front office.

Our strategy for making the .NET vision reality comprises three elements:

• Deliver the best technology platform. Microsoft .NET Servers are designed to work together smoothly, but they can also interoperate with other products. XML is at the core of these servers; they are designed to be the foundation for e-commerce. And each member of the family delivers enterprise-ready scalability, reliability, and manageability—at very compelling price points.
• Evangelize open standards. Microsoft actively advocates open standards for software design in the Hospitality & Food Service industry. This approach creates significant benefits: extended life for legacy systems, faster time to market for solutions that can be deployed across different organizations that use disparate hardware, operating systems, databases and applications, and the freedom for hoteliers and restaurateurs to choose best-of-breed solutions.
• Collaborate with independent software vendors (ISVs). Our goal is to deliver the best Hospitality & Food Service-specific line-of-business solutions on the Microsoft platform. A broad variety of ISVs provide Microsoft-based front desk and back office solutions for hotels, including property management, central reservation, sales and catering, high-speed Internet, point-of-sale, and other applications. Likewise, a strong set of ISVs provides Microsoft-based POS and back-of-store solutions for both table service and quick service restaurants.

You need the ability to interoperate with disparate computer systems across the Internet and the ability to Web-enable your legacy systems quickly, easily, and flexibly. You need the ability to adapt to market shifts quickly and intelligently. You need to leverage your core assets for maximum business value. This is what Microsoft .NET allows the Hospitality & Food Service industry to do.