Industry Update
Opinion Article23 April 2019

HT-Next: Owners ‘Push Back’ on Some Tech Requirements

By Jason Q. Freed, Managing Editor at Duetto

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Amidst a much-needed "digital transformation" across the entire hospitality industry, hotel owners have tough decisions to make about which technologies will put them ahead of the curve and which will ultimately fail to have an impact.

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How are those decisions made? And how is success measured?

In most cases, it turns out, the answer depends on what the hotel is looking to get out of the new technology. The desired impacts are often different for each hotel and each installation. However, across the board, it seems imperative that all the stakeholders involved in a hotel—ownership, operations, brand, tech supplier—should have an open dialogue and rely on healthy communication to outline the challenges, potential solutions and desired results.

Communication was the prevailing theme at last week's HT-Next conference in New Orleans, where panels of IT executives from brands, owners and management companies laid out their tech strategies.

At Brookfield Properties, a massive real estate organization with portfolios across multi-family, retail and hospitality, decisions ultimately are made on return on investment. Is the technology going to drive return guests, boost revenue and increase the value of the property?

"It requires a balance when we take over a hotel as to what technology we are going to put in," said Nelson Garrido, Senior VP of IT at Brookfield Properties. "We're either doing a complete renovation or changing flags and we want to put in what makes the most sense for that hotel and what's going to have the best return.

"What is it going to do for this investment?" he continued. "We have a rate of return that we have to achieve for our investors who invest in our funds. We really drill down and we've fought back on some."

On the brand side, Four Seasons Hotels & Resorts has experienced its fair share of push back in recent years.

"When I got to Four Seasons we were very behind in technology—we really had none," said Marco Trecroce, Senior VP & CIO. "We spent a lot of money and now owners are starting to push back, but there's so much to do. It's getting a lot harder to get there. Getting through to ownership is really challenging."

Jason Shane, VP of IT at Hersha Hospitality, said pushing back on certain technologies is an important part of the process for ownership to protect their investments.

"We'll take risks with technology if it's behind the scenes and the guest won't see it," he said. "Where we push back is on something we don't believe is going to work. In the end, you're going to fail on some projects, so be sure to have a failure plan."

Hersha has seen recent successes and failures. The company partnered with a vendor for digital sales agreements and that partnership has pushed their business forward. On the flipside, "chip and pin" credit-card processing is not going so smoothly, he said.

HEI Hotels & Resorts both owns and manages a portfolio of upscale hotels, but it's when they're brought on as independent, third-party manager that conversations are most difficult.

"The owner can try to do it themselves and the management company is stuck there dealing with aftermath," said Mike Dickersbach, Director Capital IT Services at HEI. "Today, when we see something we know isn't going to work, we have to call it out. If ownership decides to move forward with it, they do."

Back on the brand side, IHG is focusing on new technologies to improve the guest experience through first improving the employee experience. The company is rolling out Concerto, a cloud-based tech platform that for now includes a "Guest Reservation System" and a price-optimization tool. Although it's a back-of-house product, it was built with guest satisfaction in mind because "if we can make the employees' lives easier, they'll pass that on to the guest," said Noni Gonzalez, VP of Commercial Applications.

"We looked at what we can abstract from a PMS, CRS, any of your back-office systems and keep these systems away from the guest and the employee as much as possible," Gonzales said. "You can abstract the three to four things that are needed to check a guest in or give them a room. Once you do that, you can give the power to the guest to choose their room and choose their non-room inventory and get them to a point where the experience is unified from beginning to end and across any channel."

She said IHG's ultimate end goal is to maximize profit for their owners.

"Millennials are a very different type of person and they're going to demand a digital experience. Over time, it will become a requirement for hotels versus right now it's trying to sell the owners on the value. We need to be able to prove that if you build it, they will come."

Richard Tudgay, CTO of Highgate Hotels, said technology purchases aren't as simple as proving an ROI.

"We always have to answer 'why' - including total cost and what it's going to drive. Is it going to drive guest satisfaction? Those are the things to take into account when you're having those conversations."

The final call lies with the owner, Brookfield's Garrido said.

"We do write the check so we like to think we have the last word," he said.

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Related Event

HT-NEXT 2019

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Hilton New Orleans Riverside — New Orleans, LA United States
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Jason Q. Freed

Jason Freed has been Managing Editor of Content for Cleveland at Duetto Research, Inc. since June 2015.

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