Hi-Tech Checks in

The information-intensive hotel industry has discovered IT is critical at all points of the business chain

Back then, making travel plans involves many processes. You call up your travel agent and she supplies you with a list of possible hotels, room availability, rates and special offers. You pick the date for the trip and confirm your hotel preference. She then makes the booking through the computer system and off you go. Behind the scenes, she sends a confirmation fax to the hotel with your details. At the receiving end, the hotel will enter your details into their computer system. When you arrive at your destination and you check-in at the front desk, the hotel staff verifies your reservations, assigns you the room and hands you the keys.

Fast forward to today. Technology has caught up with the industry. As the travel agent issues a confirmation to your hotel about your reservation, the global travel distribution system (Amadeus, Galileo, Sabre or Worldspan) will connect to the hotel's back office and make the appropriate entry, minimizing error and ensuring accuracy of customer's details.

Hotels have also adopted a more sophisticated system for tracking customer information. Hotels now use data warehouses and data mining tools to better understand their customers' individual preferences.

The Internet is used to communicate to their business partners -- travel agencies, airlines, government tourism boards, cruise liners, car rentals and global distribution channels -- and provide updates on room availability, rates and special offers.

Competition for a growing class of travel- and tech-savvy customers has forced hotels to adopt the latest technologies to ensure that partners are updated on the current hotel developments. The Internet has spawned a new segment of customers who use the Web to scout for hotel rooms and seek weekend bargains.
Key component

Chris Hartmann of global hospitality consulting firm, HVS International, said the technology used in the hotel industry has evolved. "To look at the state of technology in hotels and resorts today, it's important to understand that 'technology' today is not simply a network infrastructure, computers and the IT department. Technology is a key component of every aspect of hotel ownership. Management of, and a comfort with, today and tomorrow's technology is necessary in every department," said Hartmann, who leads technology strategies for HVS.

Technology investments require well-defined objectives aligned with overall business strategy. Whether it is a hotel redevelopment, acquiring or repositioning hotel assets, scores of decisions require technology insight and operational understanding. Failure to take into account the importance of technology at the onset will result in substantial costs associated with retro-fitting, last-minute implementations, and ongoing operational challenges resulting from poorly selected systems.

CIOs believe that the business of running an IT organization has changed significantly from what it was ten or 15 years ago. Shane Izaks, general manager, information technology at the Hong Kong and Shanghai Hotels Limited (best known as Peninsula Hotels) said to be an effective CIO today, you need to understand the business you are in to get business units to buy into your ideas.
High expectations

"You not only need to understand hardware and software from a systems point of view but from also from a business point of view. This is how IT is able to drive the business. Technology and processes have matured in complexity to the point that understanding the business is paramount to ensuring the successful integration of IT into the business. The CEO, CFO and COO have high expectations of the role that technology plays in the business of running a hotel," Izaks said.

Today's business unit manager, CEO, and his management team - CFO and COO - understand the importance of IT and expect the CIO to understand the business so that there is a tighter integration of technology into the business. The technologies today are much more complex and the resulting integration makes for a more successful alignment of technology to business.

Izaks says the question is not whether technology is sophisticated enough to match the business process "The real challenge lies in the IT team's ability to understand the interdependence of IT and business, and to build processes that would allow for the symbiotic co-existing of two different but interdependent systems," he adds.

Years ago, hotels had isolated islands of systems that didn't talk to each other. No one had a single view of the business; financial systems, CRM and bookings were on different systems that didn't talk to each other, and data was often rekeyed in to spreadsheets to make sense of it. This was the only way for hotel chains with properties located in many parts of the world to have some picture of what the overall business was like.

At that time, no-one was able to know in real-time precisely what was happening in properties within the hotel chain, how the business performed during particular periods, or was able to view and share customers' profile and service preferences.

Today, technology advances give us the ability to connect the different islands of information and enable us to understand what works, what doesn't, who customers are and what their buying patterns are. The Internet has become an accelerator for the adoption of sophisticated technology that will enable the delivery of greater customer service and higher productivity.

The Internet and VPN have allowed the connection of different systems, bringing the data back into a central repository and be able to understand what it all means, in real-time.

Lifecycles and priorities

"Those hoteliers who view technology as a cost center and afterthought to the successful operation of any property risk becoming out of touch with their customers. More dangerous, however, is that those who don't recognize and exploit today and tomorrow's technologies for their competitive advantage will quickly be overtaken by those who do," added Hartmann.

But just as Hartmann is right in his assessment of how business managers look at technology, CIOs like Izaks must continue to grapple with the issue of technology lifecycles and priorities. In good times and bad, budgets remain a constant in the life of a CIO.

Identifying the business priorities, evaluating and recommending one standard for the organization, and sticking to what's been given budget approval are part of the challenge. Advances in technology offer numerous temptations to throw out what's been approved. But most hoteliers will agree that changing the strategy mid-stream is not easily undertaken.

Technology is changing very rapidly. Things get replaced faster with each refresh and the rate of will even be faster in the future. Just as technology is an enabler of new business, it is also becoming an inhibitor. Izaks laments that the inhibitor then becomes getting the right technology into the business, even as that technology cycles through faster than our ability to integrate it in.

"This presents a challenge for the CIO: being able to identify the technology we need, as opposed to what we'd like to have, and allocating budget for it. We have a five-year budget cycle where we look at the technology we purchased last year and track its depreciation on our books. At the same time, we look at our business needs today and start preparing for technologies we might need three or four years into the future. To keep this picture top-of-mind as we work our annual budgets makes for challenging budget planning cycles."

The hotel industry, like others in the hospitality business, is in a constant state of battle readiness. The two gulf wars, SARS, avian flu, and the Asian financial crisis have forever changed the way the industry looks at its future.

The industry is accelerating the adoption of technology to reap the benefits it has to offer in the shortest possible time. The challenge for managers like Izaks is to stay abreast of the changes, keep an open mind to the future, and be prepared to lead every day, 7x24.
Convergence in a hotel suite

Thanks to the mobile phone, guests today avoid using the hotel's phone system to place international calls, causing a fall in hotel communication revenues. Because of this hoteliers have come to regard their voice communication infrastructure as a cost center rather than a profit center. In addition, with more business travelers demanding for Internet connection in the room, hotels have invested in data networking. But for how long will hotels keep spending on two different networks?

Shane Izaks believes that convergence is inevitable. "The Internet presents opportunities to introduce new ways to enhance customer experience and thus differentiate ourselves from the rest of the industry."

Communication technologies allow a certain yet needed differentiation, by offering more and more personalized services to this new wave of guests coming from China, Korea or Russia. Therefore, hoteliers are looking at building up their competitiveness by improving guest services, increase staff efficiency and maximize their return on investment.

Marc-Alexis Remond, director of marketing and business development at Alcatel, points to three beneficiaries of a converging network.

"Hotel guests want personalized services, fast answers, first call resolution and access to advanced communications and entertainment applications. Hotel staff and executives need mobility and collaborative solutions that keep them connected and available, with access to information, in real time and easy interactions with guests and colleagues.

"Everyone wants a highly reliable data and telephony solution that provides consistent user services across the enterprise while benefiting from the maximum operational cost savings for the minimum investment."

The trick is to identify the right technologies and applications and find vendor-suppliers with a strategy for deploying enterprise IP telephony solutions over any data network (LAN switches, routers, etc), whether provided by themselves or a third party. Staying with standards-based solutions will mitigate the risks of vendor lock-in.