Industry Update
Opinion Article16 July 2019

The Dangers of Hotel Technology Consolidation

By Binu Mathews, CEO at IDS Next

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Hoteliers are frequently faced with a common dilemma — how can a hotel work smarter, not harder? Within an industry that is hyper-competitive and subject to the on-going influence of guest demands, how can hoteliers ensure their property is best equipped to maximize revenue, enhance guest experience and streamline operations?

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The answer, more often than not, lies in technology. As hospitality technology becomes more complex and robust to suit the evolving needs of properties, legacy systems are being aptly replaced with new-age technology stacks. These technology stacks are represented by a collection of apps, platforms, and solutions that offer various key functionalities to a property, allowing it to establish an effective operational infrastructure.

However, this brings us to a new challenge. The hospitality industry currently finds itself facing a technology consolidation conundrum. Quite the mouthful, wouldn't you say? Yet, that's precisely what it is; a conundrum, of sorts. Across our industry, we are witnessing the acquisition of countless smaller platforms, as their offering is merged into the service portfolio of hospitality technology giants. Not that long ago, for example, Oracle purchased Micros Hospitality, Amadeus purchased TravelClick, while RateGain purchased DHISCO — and the consolidation movement is only getting started. The big players in hotel technology are only going to get bigger. The true challenge lies in the aftermath of consolidation, and the potential for service and integration-related complications.

Consolidation is a Double-Edged Sword

On the one hand, technology consolidation has for years, and across industries, been considered an essential step in establishing long-term scalability. Companies crave the ability to do more with less, all while reaping the rewards of new efficiencies and solutions that allow them to grow and evolve. In this sense, the consolidation of technology is often viewed as the most effective way to establish better service, with a smaller 'footprint' and reduced cost. Companies can remove unnecessary complexity, cost, and redundant capabilities in favor of a more streamlined, lean technological model.

In the case of hospitality, technology consolidation is the simplification of a hotel's technology environment. Rather than working with 5 or more separate vendors, companies can work with a larger vendor that offers a host of platforms and features that suit the needs of their business. This is great, in theory, but doesn't come without its unique set of challenges.

A Higher Standard of Service — Or Is It?

In some cases, increased simplicity can lead to enhanced service. However, in the case of hospitality technology consolidation, it's important to remember that hotel clients transition from being viewed as a 'big fish in a small pond', to a 'guppy in the ocean'. When working directly with vendors of smaller scale and a very specific offering, hotels can establish a more direct and responsive relationship. This more intimate arrangement lends itself favorably to a supportive, customer-centric relationship when hotelier's run into issues with that platform.

When that smaller vendor is acquired by a large organization, however, resources are merged, and clients may not receive the same level of support when troubleshooting is required. This has become a rather well-known problem across the hospitality industry, as we bear witness to an influx of customer complaints following one of the largest PMS and POS vendor being purchased by a multi-vertical technology giant, claiming that the process to receive ample support has become a nightmare. Hoteliers are often unable to get through to a member of the support team, do not receive a callback and find themselves lost within a broken support system. Large-scale efficiency is important, of course, but it's equally important for that efficiency to not come at the cost of on-going customer support and the eventual demise of the client-vendor relationship.

Beware of Combative Technologies

Simply put, not all technology is created equal. As it relates to the continued consolidation of hospitality technology, not all acquisitions truly lead to an improved offering. In some cases, companies purchases distressed assets that are seemingly hotel tech-related; however, they do not actually fit into their current offering.

As certain cross-platform features overlap or contradict each other, clients using the ill-suited solution are likely to be abandoned. Why? Because when a larger company purchases another company that is in 'distress', it is often believed that those problems will be amended once they are folded into their current structure. Unfortunately, this is not usually the case. If the technology was flawed or inferior before, it wouldn't become magically revamped once swallowed up. Instead, it will be viewed as combative and, in many cases, discarded or ignored. Further, this often results in the request for hotels to do forced migration to other solutions, which is rightfully frustrating in itself.

Product Integration

In the case of hospitality technology, ease of integration is the name of the game. A promising new platform can, ultimately, only be as good as its' ability to integrate effectively into a hotel's existing infrastructure. In this sense, consolidation without integration doesn't help anybody.

When a large company comes to own your specific software, it doesn't necessarily translate to easier integrations with 3rd party applications. Due to the bureaucratic nature of larger firms, having an interface or integration completed can be incredibly time consuming and rife with setbacks. It's also important to recognize that sometimes, larger scale leads to a lack of flexibility, and without open integration, hotels can't truly benefit from a 'best of breed' technology stack. In an ideal world, hotel technology (regardless of consolidation) is open and accessible to every hotel group or tech provider, ensuring the creation of truly optimized hotel operations.

Technology consolidation is a movement that shows no signs of slowing down — both from the perspective of technology vendors and in the case of hotel brands. While this boasts a great deal of promise in respect to simplified technology environments and user-friendly interfaces for hoteliers, it's essential to remain privy to those related challenges. Consolidation can only be successful in the long run, if approached the right way and if vendors continue to operate with the needs of hoteliers, and their guests, in mind.

Binu Mathews

Binu is a seasoned professional with more than two decades of unequaled proficiency in varied industries including manufacturing, hospitality and information technology. As the CEO, Binu aims to drive IDS Next towards achieving the ultimate goal – to become the global leader and most preferred hospitality technology vendor globally.

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    About IDS Next

    IDS Next is a company of vision, a company that focuses on the future, a company that develops, deliver and supports innovative technology solutions for the global hotel industry. With unrivalled domain expertise, our driving force is to create solutions that assist hotel to increase revenues, optimize costs and above all provide the ultimate guest experience.

    We are a dynamic company, which fully understands today's emerging markets and their specific needs. We provide leading edge technology across all hotel market segments no matter how large or small, whether an enterprise or a single property. Our offerings include highly integrated hotel management software, restaurant management software, central reservations, hotel channel management, mobile apps and mobile analytic solutions.

    IDS Next software and technology solutions have the trust of over 4800+ hotels in 40 countries spread across South Asia, South-East Asia, Africa, Middle East, Sri Lanka & Maldives and Oceania. A truly dedicated 24/7-support centre ensures 98% retention of customers and unmatched customer satisfaction.

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