2014 CIO Summit Review: Milwaukee, Wisc.

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October 01, 2014
CIO Summit Review
Kris Burnett

When it was first announced that this year’s CIO Summit, Hospitality Upgrade’s 13th, would be held in Milwaukee, I have to say, there was apprehension over whether this city would be able to live up to the others that had hosted the event before. From Washington, D.C., to Lake Tahoe, to San Diego and San Francisco, and Boston and Denver, how would Milwaukee match up?


Monika Nerger, CIO of Mandarin Oriental Hotel Group, said, “The time coming out to Milwaukee was well spent… I too am impressed with this great city.” The weather was perfect, and the venues were absolutely beautiful and provided great fun for all in attendance.

Nerger wasn’t the only one who fell in love with the Midwest on this trip.  The early arrivals had a chance to tour Lakefront Brewery and take a short walk to Wolf Peach for dinner.

Those who enjoy driving had a special treat the following day. This year’s pre-event activity was a trip to Road America (see pages 60-61 for some exciting pictures from the event). Here the attendees had the opportunity to compete in different events in teams of four. The three main driving activities included the ATV off-road adventure that took drivers over rocks and trees, and right in the middle of a few mud puddles. Muddiest honors went to Brian Garavuso of Diamond Resorts International and John Edwards of Dolce Hotels & Resorts. Next the teams competed against each other in the Champagne Slalom. A tennis ball was placed in the middle of a plate on the hood of the car, and the drivers had to take a loop around the course including through some cones. The team with the quickest total team time through the slalom was Marty Stanton from Destination Hotels & Resorts, David Thomson from Pineapple Hospitality, Michael St-Laurent of Gemstone Hotels & Resorts and Jon Inge of Jon Inge & Associates. Last, but not least, all participants had the opportunity to race go karts. The team with the shortest single lap time was Ken Barnes of White Lodging (who had the fastest lap), Peter Chambers of Viceroy Hotel Group, Lori Block of Cendyn and Predrag Krstajic of Karisma Resorts de Mexico.

For a little slower pace later that evening, the group enjoyed the opening dinner at a venue overlooking Lake Michigan at sunset. Villa Terrace provided a beautiful location for the opening night ice breaker and welcome reception.

Thursday morning began with the first of the educational sessions, “Security: More Important Now Than Ever.” During this session, Rob Kraus, director, security engineering research team, and Jon-Louis Heimerl, senior security strategist, both from Solutionary, Inc., provided a glimpse into current strategies for the hospitality industry.

Both covered lessons to be learned from the recent security breaches over the last 12 months, and shed some light on how hackers operate. They also examined how some organizations are preparing for threats and how others are not, but should be.

Of the top 10 attack destinations, the United States is in first place at a whopping 76 percent; China/Hong Kong is second at 17 percent. By industry, the hardest hit are the finance industry at 20 percent, technology at 16 percent, retail at 14 percent, business services at 9 percent, and hospitality/gaming comes in at 8 percent, tied with healthcare. The remaining industries noted included energy and utilities, government and manufacturing.

The leading vulnerabilities by type include patch management at 37 percent, application configuration at 34 percent, firewall configuration at 22 percent and policy management at 7 percent. Other vulnerabilities mentioned included operating system configuration and application development.

Regarding loyalty after a major breach, Kraus said that in general approximately 3.3 percent of customers from other industries leave, with close to 2.9 percent leaving after a breach in the hospitality industry. As Kraus and Heimerl explained, three of the reasons that the hospitality industry is hit by hackers are that hospitality is extremely transaction based, there is high quantity and quality of personal information, and the information does not change often. Another area of concern – keyloggers on public hotel computers in business centers, as the U.S. Secret Service warned earlier this year. Kraus also mentioned a recent story from Sky News where a security consultant and hacking expert took control of 200 luxury hotel rooms in China, changing the light settings, blinds and temperatures. He found a security flaw after using the iPad® provided in his room. After changing the IP address, he then was able to control other devices in the hotel. The good news is that he contacted the hotel’s parent company and it said the issue has now been secured.

Nerger posed an interesting question to these two speakers who primarily focus on business security. She asked, “What do you do to protect your personal information that we might find helpful?”

Kraus said he never leaves his computer in a hotel room; he always takes it wherever he goes, and he absolutely never uses a hotel’s Wi-Fi no matter what. Also, he has specific, dedicated credit cards that he only uses for travel.

When Bernard Gay of Brookfield Hospitality asked what additional actions they could implement to protect their guests, Kraus said there are Wi-Fi capabilities that can detect when something strange is happening, but it would be a budgetary concern for most. He did add that creating a more secure Wi-Fi network through advanced capabilities would make a great marketing promotion to guests.

He added that like all businesses, hotel systems must be updated, and the staff has to support the effort. “The real cost is in maintaining these controls; how do we verify updates are being done… was the antivirus program turned off and why,” he said. One system that can be guilty as an easy gateway is the AV system. Kraus said in some hotels, the AV systems are part of the corporate systems, and the routers and switches can be compromised, allowing someone to patch into other hotel systems.

Heimerl added his top six list for preventing security breaches. He recommended know your business goals and how security enables (understand what your critical information is); know your risks and greatest impact areas (understand what of that critical information is at risk); know your architecture and how it supports data and security; know avoidance beats response (do your basics including patch management and other processes); know you are vulnerable, so have a tested incident response plan (don’t wait until you have been breached to do anything about it); and know that security works best when you have a plan (think of security as a journey, not a destination).

Kraus left the group with his No. 1 takeaway from the day: “Make sure you have that tactical and strategic plan.”

Next, one of the most popular sessions, “Getting the C-Level Perspective,” featured three CEOs from the hospitality world and gauged their take on the current role of CIO and the role this position should play as part of an executive team. The panelists included Steve Joyce, president and CEO, Choice Hotels; Jerry Cataldo, president and CEO, Hostmark Hospitality Group; and Joseph Khairallah, COO, Marcus Hotels & Resorts.
 
The panel discussed how they see the role of technology today. Joyce began by describing how the technology department worked in the past. “Several years ago… the IT group worked on a project, threw it over the wall to the business group, and they said, ‘That’s not what we wanted at all,’” he said. “Todd and his group (Todd Davis, CIO of Choice Hotels) are re-evaluating how we do things. Todd is much more of a business partner (and helps focus on more strategy). The business has changed so much… Todd is in every major strategy session now – they are more connected.”

Representing a smaller operating company, Cataldo agreed and said, “The tech team is making things work. Today it is a much more strategic role… To deliver information to our guests, clients, (etc.) there has to be a strategic involvement with IT.”

Khairallah echoed what the other two panelists said. “Peter Engel is CTO and reports to me as COO, but I (really should) report to him,” he said. “I see him as a strategist… and gatekeeper. Protecting clients is important to us, but also (following) what the brand mandates… trying to follow the standard, but protecting the Marcus interest.”

The panelists described the challenges of working with legacy systems and doing fewer things with a bigger impact. Cataldo sees one of the biggest challenges of the CIO role and the IT team as the budget. He said, “There is never enough (and it’s tough to get them what they need).”

When asked what their companies are currently focused on, Joyce mentioned distribution and its relationship with TripAdvisor, and what they can do to help their franchisees by creating revenue-generating ideas for them. Cataldo said his team is focused on delivering operational services to the company’s clients. “We have looked at other industries – financial, healthcare – they have unique issues in their industries, but they also have work forces that have similar challenges to our workforce,” he said.

Coming from a management company, Khairallah said, “I think mobile; I think social media. You’ve got to pick and choose what you do. You have to protect your company and your investment, and you have to protect your end user.” His team has to be familiar with the different things the brands are doing so they can support them. “One brand may do one thing this year and change the next,” he said. “We have to make the technologies work on all the different systems (the different brands) are using.”

Next, Imran Sayeed, chief technology officer, NTT Data, as well as entrepreneurship and innovation faculty member at the MIT Sloan School of Management, revealed some emerging technologies and how they might affect the hospitality industry.

Sayeed took the opportunity to really show the attendees how much technology has changed for the consumer over the last few years.

In India, mobile Internet traffic surpassed desktop Internet use in May of 2012. Sayeed said this trend will follow in other countries as well. At the beginning of 2013, there were 6.8 billion phones used by 3.2 billion people globally. To show how smartphone usage has grown, Sayeed said 38 percent of U.S. households use mobile broadband only and surprisingly, 38 percent of two-year-olds use mobile devices.
 
He explained that landlines were surpassed by mobile phones in 2002. Today there are 7 billion mobile phones and 1.5 billion smartphones. Encyclopedia Britannica went out of print in 2012, and Microsoft shut down its Encarta Encyclopedia in 2008. Wikipedia was founded in 2001, and today has 485MM monthly unique users. Data itself is projected to grow 66 percent through 2017 to 11.2 exabytes per month, and mobile phones are projected to consume more data this year than PCs, tablets and other devices combined.
According to Sayeed, some emerging consumer megatrends include autonomous cars, the Internet of Things, wearables (like Fitbit®, Jawbone®, Pebble and Google Glass), 3-D printing, alternate payment systems and holograms for entertainment, games and user experience. Emerging enterprise megatrends include digital video (tele-presence and training), cloud-based development environments and digital disruption of business.

Sayeed finds that today there is faster innovation in the consumer space, faster adoption of consumer trends by enterprise and faster maturation of startups taking advantage of these two factors, making the cycle of innovation much faster. A great example is when you look at how much time it took the following to reach 500MM users: radio took 38 years, television took 13 years, the Internet took four years, Facebook took 3.5 years, Instagram took six months, and Angry Birds took 35 days. Times have definitely changed.

The following session was led by Tarik Taman, general manager of human capital management and cloud enterprise resource management at Infor. As the session’s title suggested, one of the most challenging tasks in any industry is “Attracting and Retaining Quality (and Affordable!) Talent.” This was a hot topic for the CIO Summit advisory council last year, and proved to still be relevant to all in the room. As Taman mentioned, according to the Conference Board CEO Survey & World Economic Council, in 2013 talent was the No. 1 concern worldwide, followed by operational excellence.

“We all have to start thinking about talent as our biggest liability,” Taman said. “HR has spent the last 20 years trying to figure out how to get to the top table.”

He recommended that with easy access to policies and procedures, people become much more engaged. “Make sure your employees have access to every bit of data that applies to them,” he said. “All of these things drive employee productivity and engagement.”
 
Referencing Hackett Group, Taman said, “By excelling in talent management, the average Fortune 500 company can generate a nearly 15 percent improvement in earnings before interest, depreciation, and amortization (EBITDA), netting almost $400 million annually.” That definitely shows how important retaining good people can be to a business.

The last session of the day had a creative format where John Burns, CHA, ISHC– president, Hospitality Technology Consulting, and Robert Cole, founder, RockCheetah, had the opportunity to cover topics in rapid-fire succession only to be stopped by the bell. Topics ranged from mobile devices, to the importance of revenue management and guest engagement, to the importance of leveraging mobile, the cloud and big data. Quite a bit of information – and opinions – were covered in this speed dating-style session.

After the day’s sessions ended, attendees had the opportunity to experience some high-end tailgating at Miller Park and a Milwaukee Brewers game that unfortunately did not result in a win for the home team.

The final day began with a thought-provoking session on “Using Technology to Enhance the Guest Experience and Win Loyalty,” with David Van Kalsbeek, president, DVK Enterprises. Van Kalsbeck posed the question of whether hospitality companies are harming their business in some cases or are embracing and using some technologies to the fullest to build loyalty and guest satisfaction. He pointed to the most important factor, “experiential engagement that results in social value and advocacy.”

As he mentioned, the new loyalty paradigm is about advocacy – with sites like Yelp and Urban Spoon, it’s about written reviews. “People believe strangers as long as there are enough of them,” Van Kalsbeek said. “It’s about the story – you have to build a story for them.” He finds that rewards and points are not the catalysts they once were; the experience is.

One key concern is how to reach Millennials. He said they are brand receptive, but not loyal; they are not monogamous; they are more approachable; they require less privacy and their barriers are lower. They are event oriented and prefer experiential trips over transactional; they love social media value and are looking for a journey or story.

In order to earn guests’ loyalty, he said that something unique has to happen. “It doesn’t take much to delight a guest,” he said. “Feeling special is a very broad spectrum.”

The social network Asmallworld.com was one example he described that combines a business and social network for those who travel. “They use partners (hotel companies, car companies, other luxury goods companies) to create relevance 365 days per year, not just the three days of your trip,” he said. It takes into account relevancy, advocacy, community – all these things the Millennials are looking for.

Van Kalsbeek gave a few examples of brands that focus on experience and said, “People don’t buy what you do, they buy (how/why) you do it. Apple is a great example. Apple computers (has said), ‘Every day we challenge the status quo. We think differently to help you think differently.’ You are buying into that culture.” 

The last session of the summit was a highly interactive roundtable of sorts. Jeremy Rock of RockIT Group moderated an open discussion between all attendees. Everyone was seated in a circle to encourage discussion, and in some cases, debate. Topics covered included what a CIO should do to stay relevant, how IT is evolving in the hospitality space, the changing role of the CIO, and challenges in sourcing and modernization.

Speaking about the program content and the conference itself, Kris Singleton, CIO of Omni Hotels and Resorts, described how important it is to have opportunities to talk about what is happening in the world of technology and what is going on in the world of hospitality – what’s taking place in the industry, what are the movements. “It so is great to be able to talk to your peers and get their perspective on things (at The CIO Summit),” she said. “We don’t always agree, which is great; we get healthy debate, and that’s part of what I love coming back here is not only the good sessions that we get, good content and speakers, but also the opportunity to bounce some things off of peers that obviously I highly respect and want their opinion.”

Well, it’s going to be tough to top this year’s event, but you know the team at Hospitality Upgrade will come up with something interesting by next September. For more information, please go to www.TheCIOSummit.com.

Special thanks to event sponsors Infor, Enseo, HP, Duetto Research, Comcast Business and HFTP. Additional appreciation goes out to NTT Data for program facilitation and Newmarket and Cendyn as the event transportation sponsors.

By Kris Burnett – editor, Hospitality Upgrade
 

©2014 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.

 

2014 CIO Summit Attendees
This year's attendees included: Jim Lamb, Interstate Hotels & Resorts; Brian Garavuso, Diamond Resorts International; Kris Singleton, Omni Hotels & Resorts; John Edwards, Dolce Hotels & Resorts; Martin Stanton, Destination Hotels & Resorts; Todd Davis, Choice Hotels International; Stephane Magnat, Club Med Americas; Bradley Koch, HEI Hotels & Resorts; Mark McBeth, Starwood Hotels & Resorts Worldwide; Jeffrey Stephen Parker, Stout Street Hospitality; Bernard Gay, Brookfield Hospitality; Rich Jackson, Hilton Grand Vacations; David SanClemente, Sonesta International Hotel Corp; Andy Tjan, Rosewood Hotels & Resorts; Seth Cenac, Trust Hospitality; Mike Blake, Commune Hotels & Resorts; John Wimmer, Xanterra Parks & Resorts; David Hunt, HP Enterprise Services, LLC; Bill Martin, Royal Caribbean Cruises; Ken Barnes, White Lodging; Greg Taylor, Kimpton Hotels & Restaurants; Michael St-Laurent, Gemstone Hotels & Resorts, LLC; Martin Thell, Scandic Hotels; Laurent Idrac, Accor; Predrag Krstajic, Karisma Resorts de Mexico; Charles Bureau, Groupe Germain Inc; Steven Stout, Hospitality Financial & Technology Professionals; Oscar Edholm, Nordic Choice Hotels; Sam Selim, First Hospitality Group; Laurent Bortoluzzi, Luxury Resorts & Hotels (LXR); Mike Dickersbach, Thayer Lodging, Brookfield Hotel Properties; Simon Eng, CTF Development, Inc.; Jeff Linden, Red Roof Inns; Jeff Winslow, G6 Hospitality; Lance Kobza, Pillar Hotels and Resorts; Jon Inge, Jon Inge & Associates; Daniel Dick, 1859 Historic Hotels; David Sjolander, Hotel Technology Next Generation; Jeremy Rock, RockIT Group; Peter Chambers, Viceroy Hotel Group; Rajiv Castellino, Great Wolf Resorts; Rick Warner, InTown Suites; Shannon Knox, Hilton; John Burns, Hospitality Technology Consulting; Merrie Bird, Canyon Ranch; Vivek Shaiva, La Quinta Inns and Suites; Paul Major, Aspen Skiing Company; Ron Hardin, Davidson Hotels and Resorts; Darren Clark, Standard Hotels International; Jeff Bzdawka, Hyatt; Eric Tagliere, Marriott International; Darrin Pinkham, Highgate Hotels; David Thomson, Pineapple Hospitality; Tony Gaeta, Benchmark Hospitality International; Monika Nerger, Mandarin Oriental Hotel Group; and Peter Engel, Marcus Hotels & Resorts.

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