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CIO Summit Review: Denver, Colorado

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October 25, 2017
CIO Summit Review
Kris Burnett

©2017 Hospitality Upgrade
This work may not be reprinted, redistributed or repurposed without written consent.
For permission requests, call 678.802.5302 or email info@hospitalityupgrade.com.

After 16 years, there are several traditions at Hospitality Upgrade’s Annual CIO Summit. While the Tuesday night immediately before the conference used to include anyone who happened to be in the hotel lobby around dinnertime, this night has grown into a planned and organized event, with more than 60 participants this year before the Summit even began! Special thanks to HFTP and HTNG for helping sponsor the pub crawl created by Red Lion’s own Jeff Parker, and a fun trip to Coors Field to see the Colorado Rockies play the San Francisco Giants.  
 
This year’s event not only had a record number at the pre-conference activities but also at the event itself, with more than 70 technology leaders from the hotel, hotel management, time share and gaming worlds, plus an amazing group of speakers. All of these leaders converged on the Hotel Kimpton Born, a brand new property in the very trendy LoDo area of Denver. And for one last activity before the conference began, 48 willing participants took the once-in-a-lifetime opportunity to drive “supercars” through the beautiful canyons around Golden, Colo., before joining the rest of the Summit attendees at the welcome dinner (see page 57 for a sneak peek). The supercars included Lamborghinis, Porsches, a Ferrari and a McLaren, among other amazing machines.
 
Each year, the welcome dinner is an opportunity to reconnect and meet some new faces. This is the most popular facet of this event every year for the attendees. As Marriott International’s Vice President IT, North America Mark McBeth said, “The CIO Summit brings together the best mix of hospitality IT leaders, to share their insights in a collaborative and engaging way. This conference has the most diverse group of IT pros in the industry – from the largest brands to boutiques, and management companies large and small. The CIO Summit offers a great environment for peer networking and sharing of ideas, in great venues, all while having a little fun.”
 
Another tradition at the beginning of the CIO Summit is the awarding of the 10-year attendee bobbleheads. This year’s recipients were Mike Dickersbach of HEI Hotels & Resorts, Gustaaf Schrils of White Lodging and Paul Major of Aspen Skiing (see page 148 for a picture of these three with their doppelgängers). But, The CIO Summit is not just fun activities and catching up with old friends. As Jeff Parker said, “There is no other place to get the leaders of our industry in a forum where they feel comfortable to share their challenges and their successes. The voices in the room offer experience, insight and knowledge; you can’t help coming out of this event energized about all of the things you can accomplish.”
 
And that’s where we begin the educational sessions. First off, “Who’s Coming to the AI Party,” with Bryson Koehler, chief technology officer – IBM Watson and IBM cloud, general manager and distinguished engineer-IBM. It’s no secret that artificial intelligence has its uses within the hospitality industry, but what do today’s hospitality companies need to do to prepare for its use or not waste its value. Koehler focused on augmented intelligence, or cognitive computing, and examined innovations within travel and hospitality.
 
“Technology continues to transform and augment the ways companies engage with consumers in real time,” Koehler said. “Travel and hospitality make for especially rich use cases – and profound opportunity – to leverage cognitive systems to elevate the baseline and transcend the traditional.”
 
Koehler suggested AI (augmented intelligence) is not about replacing people but helping them. “There are trillions of data points all around us (that can help personalize that guest journey),” he said. 
 
But, you have to be prepared in order to use that data. “You need a really good cloud infrastructure to bring AI to life,” he said. “Machines don’t just randomly learn. As Elon (Musk) said, ‘The computer does what we tell it to.’”
 
Koehler described artificial intelligence as the ability to reason like humans, machine learning as the ability to learn without explicit programing, and deep learning as the ability to learn new datasets autonomously.
 
“With machine learning, it can learn from data without us telling it what to do,” he said. “(It is) constantly learning and the systems are constantly adjusting themselves ... With deep learning, the computer looks at a set of data and decides what to do.”
 
Koehler recommended that hoteliers stay agnostic in the cloud approach. “Don’t let any vendor lock you into any one approach, because you don’t know where your next business is coming from,” he said. “You’ve got to get your data right, you’ve got to get your infrastructure right, you don’t want to lock into one cloud.”
 
Additionally, Koehler touched on the role of cognitive computing in realizing new revenue. As he explained, “The true potential for cognitive computing in the travel industry is to accelerate transformation ... True cognitive transformation will change the way customers interact with the company’s core digital and physical services.”
 
Koehler also suggested the attendees may want to create some new roles if they are not already in place. “Airbnb has AI, data scientist and cognitive scientist openings all across its job listings. Do you? ... if you do not, you should talk to your board.”
 
Lastly, Koehler recommended they be prepared for what’s coming. “The key is to get that infrastructure level sorted out,” he said. “Solve those security issues now.”
 
Questions posed to the audience:
1) Do Watson and broader AI technologies represent broader opportunities for hospitality technology? (92 percent yes, 2 percent no, 6 percent maybe)
2) Have you started to explore the use of AI in any active or planned projects? (Tied – yes and no at 41 percent each, with 18 percent researching)
 
Continuing the discussion of AI (in this case artificial intelligence) in the session, “Hey Alexa, book me a room at...,” Greg Duff of Garvey Schubert Barer’s hospitality practice, discussed some of its uses and whether the industry should be excited, nervous or both. Topics included privacy and data security, contracting and potential liabilities associated with the use of these devices. 
 
Duff said, “One in every 10 people owns a smart speaker (per Jacobs Media TechSurvey13).” Amazon’s reach alone into the travel industry with Alexa includes trip planning through KAYAK, travel updates with Expedia, destination weather using Big Sky, car service through Uber, translation by Translated and guest services by Volara, among others.
 
No wonder virtual assistants like Cortana, Siri and Alexa are so popular; the number of third-party skills available for Amazon’s virtual assistant Alexa exploded from 135 skills in Q1 2016 to 15,000 in Q2 of this year. As Duff said, “Amazon’s Alexa is a fast learner.” 
 
While virtual assistants provide benefits like inclusive technology, allowing multitasking, and promoting a uniform method of interaction and trust, as Duff reminded, don’t forget to read the fine print – or terms of use – and what this means to hoteliers.
 
While these products provide a hefty list of conveniences, Duff noted a few concerns including personally identifiable information (PII) that might be exposed, recordings or records themselves held in the cloud, data security with regard to the information that may be recorded and any information that may be apparent through third-party requests.
 
For a more detailed look at the legality and risks associated with artificial intelligence, specifically virtual assistants, you can view the session in its entirety by scanning this page with the layer app on your phone or by going to http://www.hospitalityupgrade.com/Gallery
 
The next session, “Shape Customer Behavior Using Data & Predictive Analytics,” was led by Blair Linville, chairman and CEO of Tectonic. While the group had examined data and its uses through augmented and artificial intelligence, this session focused on how data can drive decision-making when a more rounded view of the guest is available.
 
But, as many in the room know, that’s not always an easy process. “Building the platform to source needs is a multistep process,” Linville said. “One widget won’t service your needs regardless of what one company tells you.”
 
He suggested making the technology relatable. “If millennials are running your front desk or sales,” he said, “we made a Facebook-like feed for another interactive experience.” 
 
A 360-degree view of the customer can aid in promotions and marketing, potentially raising revenue across the board. One successful example given by Linville showed the Chicago Cubs using third-party data plus their own internal data to drive increases in season ticket revenue.
 
Common trends suggested by Linville among those who have had success maximizing their data included embracing the cloud, using an agile and iterative behavioral story approach, cross marketing, technology and data teams working in tandem, focusing on the action side of analytics and remembering that every interaction is an opportunity to create new data about your customers.
 
“Every time you interact with a customer, it’s an opportunity to create new data,” he said. “Did this guy just buy a gin and tonic from the hotel bar? If so, add that to his profile.” 
 
With the continued concern over data breaches affecting the hospitality industry as well as the Equifax data breach fresh on the attendees’ minds, our first session on day two examined cyber insurance and its uses within the hospitality industry. For many in the room, cyber insurance is now part of their contract requirements. Mary Guzman of McGriff, Seibels & Williams, discussed the scope and standards of coverage as well as what hoteliers and their vendors should be buying.
 
“The number of recent hospitality breaches shows how much you are being targeted,” Guzman warned. 
 
“These breaches can get very expensive ... You’ve spent potentially millions of dollars before you’ve even been sued.” Guzman outlined that the financial hit following a breach can include expenses to forensically investigate the breach, the data released/lost/damaged, and the potential parties affected; PR and legal costs to prepare notice letters and to communicate with the media; costs for call centers, websites and other communication resources; loss mitigation offers for credit monitoring, ID theft protection, ID theft rehabilitation, etc.; legal fees for class actions or suits brought by card issuers/banks whose customers were harmed by the breach; costs to respond to regulatory investigations (PUC/PSC, state AGs, FTC, HHS, etc.); regulatory fines/penalties; contractual fines/penalties (i.e. PCI DSS); expenses to restore your damaged information assets (software apps, data, etc.), and other fees.
 
“If you are the owner and I gave you my information, I don’t care if it’s someone else’s fault,” she said. “You as the data owner have the responsibility of notifying the client.” 
 
According to Guzman, there are currently 60 companies offering cyber insurance in the United States, most likely driven by a 50 percent surge in policies in 2016. With more than $1 billion in ransomware losses and the European Union data regulations set to take effect in 2018, she expects the need for cyber insurance to grow even more. In the United States alone, the cyber insurance market is worth more than $3 billion and is expected to more than double, potentially above $7.5 billion, in the next three years.
 
These policies are written to fill gaps in traditional property and casualty policies, and can include breach response, privacy liability, network security liability, privacy regulatory defense, media liability, cyber extortion, business income/extra expense, data asset reputation harm, contingent BI and/or theft/loss/corruption of IP/trade secrets as Guzman noted. 
 
“The vendors that hoteliers choose and the requirements and liability are important,” she added. And not just PII, but the potential hacking of operational and building systems is scary, she said.
 
Guzman suggested that hoteliers should categorize their vendors as low, medium or high risk according to what service they are actually providing (per their statement of work in the contract) or the level of access they have to confidential information. “Contracts with vendors can be tailored so that the indemnification, information security standards and insurance requirements actually protect your company’s interests,” she said.
 
Greg Duff added that vendors have become more sophisticated on this issue. “The contracts have become far more explicit,” he said.
 
However, the continued concern throughout the room was still evident as Marco Trecroce of Four Seasons Hotels and Resorts echoed what every nodding head in the room was thinking. “This is the one thing (a data breach) that will get us fired instantaneously,” he said. “It is the biggest risk in the industry that we have as CIOs today.”
 
Over the years, HU has added a series of mini sessions led by the attendees themselves that focus on topics submitted by the CIOs. While they are considered “mini sessions,” they are mighty and probably the most popular sessions of the conference each year. In addition to the very popular last session, the CIO Roundtable, they promote the most interactive discussions, and provide an open forum for sharing of challenges, solutions and the ability to find common ground with the other attendees. 
 
While we can’t reveal extensive details of these sessions due to the sensitive nature of the discussions, we can provide a sneak peek at the topics and a few general comments.
 
The four mini sessions at this year’s summit were led by Mark McBeth of Marriott International, Bernard Gay of Delaware North, Jeff Parker of Red Lion Hotels Corporation and Jim Lamb of Interstate Hotels and Resorts. 
 
Mark McBeth’s mini session, “Transitioning Flags and Migrating Platforms,” focused on how the IT organization is affected during a flag or brand change. Attendees discussed the successes and challenges in actual transactions they have experienced in the past and still experience today. 
 
Some of the observations that McBeth shared included:
  • No two transitions, migrations or exits are the same.
  • The task list can number in the hundreds.
  • Timing is key. How long is the transition window?
  • The right talent from both/all parties onsite is critical to success.
  • A leadership gap can add to the chaos.
  • Security requirements vary widely with transitions. Financial processes and security requirements can create a significant time drain.
  • New management often doesn’t have access to required business tools. Flag exits can be significantly easier than transitions, as long as it’s not hostile.
  • Who “owns” the problems after transition? Almost everything relies on IT resources to “figure it out.”
Bernard Gay said, “The acquisition of a company is very different from a flag transition … and sometimes issues become IT problems.” 
 
Parker stressed the importance of reaching out to the legal team early during these types of transitions. “Sometimes they go in and rip everything out,” he said. “We really need to work together as a team (with the legal guys).”
 
Steve Johnson of Stonebridge Companies agreed and added, “It would be wonderful if they would involve IT from the very beginning of the process.”
 
Bernard Gay’s mini session examined the “Evolution of the Next CIO – Preparing the Next Generation of CIOs.” Gay recognized all those in the audience and said, “We found our way out of the machine room and into the office with windows.”
 
He recommended sharing the responsibility of training and leading the next generation of leaders in hospitality technology, and also posed the question, “Do you have a succession plan when you want to move on?” He asked three attendees to give their take on these areas. First up: Mike Blake, CEO of HTNG and former CIO of Commune Hotels and Hyatt Hotels Corporation, followed by Paul Major, longtime CIO of Aspen Skiing, and John Wimmer, CIO of Xanterra Parks and Resorts.
 
Blake said he is trying to work with hospitality programs to remind them of the importance of technology in the industry as well as address the mid-level gap – those that report to the CIOs in the room. He also noted the importance of conferences like the CIO Summit “for not just the content, but for the breaks and 
the networking.” 
 
With 20 years under his belt at the technology helm of Aspen Skiing, Major focused on his team. “Most of the people we hire do not have technology backgrounds,” he said. “(Most of us in the room) take great technicians and turn them into lousy managers (that need communication skills) ... We need to teach our people not the what, but the how.”
 
Wimmer explained how he is in a different position than most in the room as less than half of his company’s revenue comes from hotels (this includes restaurant, retail and cruise). He said, “At the C-level, I’m probably the only person who works with all of these (divisions).” Wimmer believes it benefits his team to be exposed to all the Xanterra divisions as it helps with development and future transitions. He also believes in education, and teaches graduate-level classes in IT strategy at the University of Denver.
 
In the third mini session, “Alternative Ways to Communicate with Guests,” Jeff Parker asked the question, “How important is it to communicate with guests?” 
 
“Elderly people don’t want technology in rooms,” said Brian Garavuso of Diamond Hotels and Resorts. “Guest surveys are rarely about the lack of guest technology, and mass technology doesn’t seem to work. As techies, we know what we want: Don’t block the HDMI port in the room; make it accessible and useful.”
 
Shannon Knox of Hilton said communication can be beneficial as long as it is making the guest experience better. “Mobile app experience is the way we go,” he said. “Not everyone wants or has apps, they communicate other ways ... so long as you are enhancing their experience and impacting their trip.”
 
Monika Nerger of Mandarin Oriental Hotel Group expressed concern over too much communication, however. “We can’t control every channel of communications with the guest,” she said. “It’s like the tail wagging the dog.”
 
Jim Lamb moderated the last of the mini sessions, “Brand, Manager and Owner – Supporting and Balancing the Interests of all Constituents.” Lamb mentioned a time when an individual from his company took another job and Lamb decided to re-evaluate his company’s technology positions and structure. His team found out it was responsible for 80 projects per month of which they were not aware. It was a beneficial exercise that helped him make the decision to restructure his team.
 
Communication is key – especially when it has to do with new technologies, but when dealing with multiple properties and flags, it can be a challenge. “It’s definitely a balancing act,” Lamb said. “Some of the brands in the room do a great job of listening to the managing groups.”  
 
From a brand perspective, Jeff Bzdawka said, “It really is a delicate balance with any of our stakeholders ... to our owners, we are presenting it as technology enabling change; it’s really up to us to educate our owners.” 
 
Lance Kobza announced that his company is growing very rapidly. He said right now there are two sides for his team: The management side and the hotel side. “For the management side, it’s getting the systems all under one umbrella, operating systems, etc.,” he said. “On the hotel side, we let our owners drive it and we use a third party to help with that. I talk to the brands less now, but that does require the owner to have people on their team that understand (the processes).”
 
Mark McBeth shared his experience at Starwood/Marriott. “I think we have a pretty good approach to this,” he said. “We have a strong management group in Atlanta and we would work with them hand in hand (not only the ownership group but the franchisee group). I got the opportunity to speak at every one of these meetings and I think it worked well. You’ve got to create those relationships and present it at the right level. You can’t just geek them out (with technology speak).”
 
And, with brands, there can be other challenges. As Richard Tudgay of Highgate Hotels said, “The brands want their hotels to be exactly the same. If things are going wrong, you have to go to the brand sooner rather than later. Thirty-five hotels want to do things 35 different ways, but when you put the brand on it, you have agreed to follow the rules.”
 
Last but not least, truly the most popular and interactive portion of The CIO Summit each year, the CIO Roundtable moderated by Jeremy Rock of RockIT Group. This session is private, but the main discussion focused on how the attendees can position their organizations for success and the leadership, technical, strategic and tactical things that have worked in creating a win-win for their businesses.
 
We can’t reveal all of the comments, but some recommendations from the group included getting more involved in other events outside the industry; taking more active roles at “the table”; don’t wait to be invited to meetings, and be vocal; it’s not an IT problem, it’s a business problem; operate more as a CEO within my own organization (IT); run our department as a business and market our great staff (IT) internally; get the buy-in to build cool stuff and build cool stuff; figure out how to add value, not just run the engine; use business terms not IT terms so business will invite you to the table; hire hospitality people before IT people because they understand the business; look at business practices and approaches from outside the hospitality industry; we need to be in these hotels and be more vocal, walk the halls, work in every single department, make the beds, work the front desk; make the data center people realize they work for a hotel; get involved in the community and help book group business; create a brand within a brand by recording or promoting things your department is doing.
 
Phew! And that’s only what we could tell you. As Alan Zaccario of New Castle Hotels said, “We can all read about a topic or technology, but this is the best opportunity to engage your peers and see how and if it actually works. That knowledge is invaluable in how we should spend our time and resources. The ability to meet and interact with a wide gamut of peers and companies is invaluable.”
 
Hospitality Upgrade is truly grateful to all of the attendees and sponsors, and for the continued support of the technology leadership within the hospitality industry. We look forward to another great CIO Summit in 2018!
 
Special thanks to CIO Summit sponsors Comcast Business, Datavision Technologies, Edge Communications, Enseo, Infor and POST Integrations. Additional thanks to industry partner HFTP and this year’s transportation sponsors Amadeus, Cendyn, HAPI and VENZA.
"Thank you for bringing a great group together and keeping the event fun and relaxed without losing its professional context and focus on attractive topics. The CIO Summit by HU is a unique opportunity for all hospitality information technology leaders to meet each other, share their opinions about trends across the industry and learn how others are approaching shared challenges. It is also a place where one can receive advice from peers. The event had been growing and improving ever since I was a first-time attendee eight years ago. Every year I look forward to attending the summit again, to get to see known and inspiring peers who I have met in past events, but also some great new people among first-time attendees, speakers and sponsors. I’m pleased to be able to share a few days with the group every year and to enjoy the carefully prepared program by the fantastic HU team. After 16 years of growing the group, HU has proved to know the perfect formula to balance the event between networking, education and fun. The CIO Summit is a must-attend event in my calendar and I highly recommend it to all those who are lucky to be invited."
– Predrag Krstajic, Karisma Resorts de Mexico 

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