2016 CIO Summit Review

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October 25, 2016
CIO Summit Review
Kris Burnett - kris@hospitalityupgrade.com

Sept. 7-9, 2016 • Philadelphia, Pennsylvania

Hospitality Upgrade hosted its 15th Annual CIO Summit in the City of Brotherly Love.  More than 60 technology leaders from the brands, management companies, cruise lines and gaming organizations returned for high-level educational sessions and the best networking opportunity in the industry.  As Page Petry, CIO - Americas for Marriott International, said, “There's a lot of energy when you're with your peers, and it's a great opportunity to just talk about issues that are current, but also to re-energize yourself.  Sometimes when you're in your own camp every day, you lose that sense of opportunity, and I think coming and meeting with my peers and talking to them really opens up new thinking.”

This year's pre-conference event was an urban scavenger hunt, throughout downtown Philadelphia.  Forty participants braved the lines at Pat's and Geno's Cheesesteaks, The Reading Terminal Market and the steps at the Philadelphia Museum of Art.  In the end, the winning team who made the best use of its scavenging skills was Phranklin's Pholly - Andrew Arthurs of Destination Hotels, Deuce Sapp of Al J. Schneider Company, McLean Xavier of Westmont Hospitality Group, Paul Major of Aspen Skiing Company, Matt Schwartz of Sage Hospitality, Peter Holmes of The Rainmaker Group, Enseo's David Simpson and HU's own Geneva Rinehart.

Another unique venue on the week's list was that of Lincoln Financial Field - home of the NFL’s Philadelphia Eagles.  On the last evening of the summit, attendees were treated to time on the sidelines and dinner inside the Eagles' locker room.  The remainder of the event focused on a full schedule of educational while highly interactive sessions.

 
Session 1: Unintended Consequences
Greg Duff, Owner and Chair of the Hospitality, Travel and Tourism Practice Group at Garvey Schubert Barer

When looking at the top six trends in technology that are “disrupting” the hospitality industry, this open discussion of intended consequences versus unintended consequences promoted quite a bit of debate amongst the attendees.  Attorney Greg Duff, a very popular speaker at HU's events, examined not only the unintended consequences that many of us don't even think about, but the potential legal ramifications of said results.

While discussing the sharing/on-demand economy before examining these trends, the group debated how Airbnb and Uber have disrupted the travel industry.  While the intention of these (as noted by Ron Hardin of Davidson Hotels and Gustaaf Schrils of White Lodging respectively) can be thought of as exploitation and more competition, the unintended consequences of this area can include: an expansion within the cottage industry, more extensive disruption as Page Petry of Marriott pointed out (especially for the taxi and lodging industry), change in the barrier to entry, risk due to lack of control, and an increase in the cost of housing within local markets.

The shared economy is definitely disrupting the ability to analyze the rooms market.  As Paul Major with Aspen Skiing said, “(Regarding) the inventory created by Airbnb and Uber - there are a lot more people renting rooms than we even know about.  It's impossible to predict (the numbers accurately) from an analytical perspective.”

From trends like artificial intelligence (IBM's Watson) and augmented reality, to drones, the Internet of Things, robots and virtual reality, while many of these innovative initiatives are exciting to implement (just ask your marketing team), there are unintended ramifications of their implementations, which can stress the technology department, among other areas of the business.

Trend 1 - Artificial Intelligence (AI): When asked about the first trend, approximately six of the 60 in the room said they are exploring AI.  The intended consequences of AI can include speed, optimization (targeted services) and improvement in guest experience, while the unintended consequences can include maximized return on investment (as Schrils suggested) and effect on guest satisfaction that may not be what was intended when the guest feels deceived that he or she thought they were talking with a real person but were really talking with a robot or automated system.  Additionally, as Duff mentioned, those who created AI at Dartmouth College in 1956 probably didn't intend to displace the $15 per hour workforce.

Trend 2 - Augmented Reality (AR): The majority in the room admitted they were using AR in some form.  As contributed by the group, certainly the intended consequences include increased foot traffic and the importance of promoting content for the sales and marketing teams, but AR can sometimes result in accidents/trips to the hospital, trespassing, invasion of privacy, and content and intellectual property abuse.  (Pokemon GO is just one example of many.)

Trend 3 - Drones: While drones can create a clearer picture of the area around a property or the property itself, they also can incur several of the unintended consequences of AR as noted above.

Trend 4 - Internet of Things (IoT): For one example, as Duff pointed out, a phone can do so many things, but how many do you really use?  While it's cool, how many guests want to control their drapes, lights, etc., with their phones?

Trend 5 - Robots: As part of the service industry, a hotel's ability to become more efficient or save on labor costs as well as improve guest service is welcome; companies like Starwood and Hilton are looking into this trend.  (See the article on page 40 by James Lingle for more information on some robots that are making a difference in the hospitality industry.)  One unintended consequence would be that the quality of service could also improve.

Trend 6 - Virtual Reality (VR): This trend is definitely more of a marketing tool with its wow factor.  While the intended consequence is to improve the guest experience and make more content available to the guest, the unintended consequences can include motion sickness and potential injuries... not really a good effect on the guest experience.  Best Western partners with Google Street currently.  As noted in the session, if a property does not provide VR, guests may go somewhere else - a direct effect on distribution.  Duff said that it is a matter of time before Expedia will roll out VR and get access from Google.

There can be other challenges with VR, as Todd Wood of Mandarin Oriental Hotel Group added, “The ability to deliver (a good VR experience) can be very inconsistent.” But he does agree that any hotel will need VR to effectively promote its properties.

And with regard to services offered and pricing, commoditization definitely has impacted the industry.  As Ken Barnes, CIO of Omni Hotels, said, “A limitedservice hotel (today) has more services than it did five years ago.”

But as Duff suggested, “Does the $15 per hour worker still exist 5 to 10 years from now if we adopt these technologies?” It’s an interesting thought when as he said, we will need a $60 per hour worker to support them.

 
Mini Session v1: Shadow IT - IT Projects without IT Involvement
Moderated by Brian Garavuso, EVP & CIO of Diamond Resorts International

When asked by moderator Brian Garavuso of Diamond Resorts International if they had ever experienced a time in their organization where another department made a decision about an IT project without consulting the IT team, and then needed the IT department's help, the hands of every attendee in the room went up in the air.  That's shadow IT: solutions requested and deployed by departments outside of IT.

As Garavuso suggested, lesson learned; IT will many times be blamed for issues, so the bottom line is, IT needs to get involved. As Mark McBeth of Starwood explained, frequently someone in marketing or sales may read a press release about a new technology, but IT ends up fixing it if it doesn't work.

But, as Peter Chambers of Viceroy Hotels said, the intention is normally good.  “This is from people who want to innovate,” he said. “In most shadow IT, it's coming from a good place.” His team now channels these ideas into a funnel to raise an evaluation or place them into an area where the ideas can be reviewed before taking a dangerous step. He said his company has eliminated shadow IT quite a bit.

Additionally, there are areas that do concern IT but other departments don't realize it.  As Wendy Mertz of Hard Rock International explained, “With social media, marketing thinks it's them, not IT.”

Shadow IT can also be caused by the IT department itself, however.  As Nelson Garrido of Brookfield Hotel Properties/ Thayer Lodging said, depending upon the team, some IT departments can become “the department of ‘No.'” If the sales and marketing teams feel like their requested projects are getting shut down constantly, they may go out on their own to find solutions.  His team had to embed IT leaders in each department to prevent this, but this initiative is helping educate the teams about issues like data security and other concerns.

In response to the impression some other departments may have that the IT team is difficult, Laurent Bortoluzzi of Luxury Resorts & Hotels said, “We have to start thinking of new ways to do things... I think it's important that we stop being IT and preventing people from doing things.” One example he mentioned was that many young employees are more familiar with Gmail vs. Outlook (“why make them change?”), and suggested other areas where the different departments could try to compromise.

The concern Hardin and Garavuso had over compromising too much is the stress placed on the IT department.  ‘‘It depends upon how your organization does things,” Garavuso said.  ‘‘If you have 6,000 devices that we support with five or six people, we can’t have too many systems or our help desk would need to be much bigger.”

Another challenge is with owners and properties bypassing the management company on technology decisions. As Hardin and McBeth noted, sometimes a property renews a contract before they (the management company or brand) sees it. ‘‘For a 5-year renewal contract, they (may not) know that we don’t trust that vendor anymore,” McBeth said.

One way Diamond Resorts is trying to prevent shadow IT projects is by centralizing its systems.  “Field techs support regional properties,” Garavuso said.  “All systems are centralized.  No technologies are on the properties at all other than PBX.”

Additionally, Marriott International is keeping an open line of communication by having some IT team members serve on regional teams.  Petry said, “It really helps us understand what (other departments) are more broadly trying to accomplish.”

Session 2: CIO to CEO: Is It Even Possible?
Carlos Flores, President & CEO, Sonesta International Hotels Corporation

CIO to CEO - that's exactly what this session was about, and yes it is possible. Carlos Flores of Sonesta began his career in hospitality technology and described his experience and the transition to becoming president and CEO in January 2015.

Since the mid ‘90s, Flores has been what he calls, “an IT guy.” Prior to joining Sonesta he served as VP/CIO for The RMR Group, an asset management company, and VP/CIO at Five Star Quality Care, a hospitality and healthcare company.

Some of the tips he shared included: “Be careful what you wish for,” actually possess “expert authority,” develop your business knowledge and acumen, become a highly skilled communicator, demonstrate leadership skills, the importance of credibility and political capital, seek opportunities, and lastly, one of the most important points Flores made to the group was that if you are interested in the CEO seat, you have to make that intention known.

 
Mini Session v2: Brand vs Owners: Who Pays and Why?
Moderated by Gustaaf Schrils, SVP & CIO, White Lodging

As moderator Gustaaf Schrils said, “We have to coexist.  Brands can't grow without owners wanting to spend tens of millions of dollars building and developing hotels.”

Several in the audience shared some of their success stories and challenges in finding ways to work together.

Best Western allows its owners to choose from multiple property management systems. Between the cost and the time involved, however, it can take anywhere from 8 months to 12 months to implement according to harold Dibler of Best Western.

As Schrils suggested, Petry said the brands should all do a better job of transparency for the management companies.  She also stressed the importance of advisory committees to her company.  “All representatives of the owners have a very active voice; it’s very collaborative,” she said.  “(Encourage) your CEO to sit on those councils – the success of the councils is critical to Marriott. (And while Marriott has the final decision) many of these councils have been fully engaged and help in the vendor selection.”

A concern was expressed that many of these CEOs would not know enough about the technology, but Garavuso replied, “It’s the CIO’s job to educate them then.”

 
Session 3: Losing Sleep over Cybersecurity?
Chris Novak, Director, RISK Team, Verizon Enterprise Solutions

Session speaker Chris Novak was able to share quite a bit of information from the 2016 Data Breach Investigation Report. Sixty-seven organizations contributed to the report, which included 100,000 security incidents spanning 82 countries.

As Novak said, “Global cyberthreats are continuing to increase in frequency and scale, making the need for cybersecurity and resiliency one of the most dominant issues facing hospitality companies and their boards of directors today.  Protecting confidential client information is critical to building a trusting relationship with them and upholding a company’s brand.”

Point-of-sale system intrusions accounted for 74 percent of hospitality breaches, while 20 percent are due to denial of service/intentionally swamped networks that come to a standstill.  The remaining 2 percent is attributed to insider or privilege misuse of information.  “Hospitality companies, and all organizations, must take steps to strengthen security to better serve their guests, especially among today’s digitally oriented consumers,” Novak added.

To read more about this eye-opening report and the data Novak and his team collected, please see his article on page 50.

 
Mini Session v3: Understanding the Digital Journey
Moderated by Shannon Knox, Vice President IT Field Services & Strategic Sourcing, Hilton

Shannon Knox led this session focused on the guest’s digital journey, especially interacting with the guest throughout the lifecycle of his or her journey through activities like digital check-in, the use of mobile keys and other services.

Messaging came up first in the fine of discussion.  Knox noted a few possible challenges, however.  ‘‘You set an expectation with a program like this,” he said.  ‘‘Do you have operators and are they empowered? If the guest texts (with a maintenance or housekeeping problem) and the property doesn’t respond for three hours, it defeats the purpose.” He also explained that some guests would be opposed to location-based messaging due to privacy issues.

At Starwood, McBeth and his team have found a way around that.  The SPG app for loyalty customers is an opt-in program where the guest has been sent a letter confirming their participation.  Starwood funnels every guest interaction through that app - it is being used in 13 different hotels in seven different markets currently.  “It allows you to (follow) the guest in the hotel,” he said.

Todd Wood added that Mandarin Oriental has also been looking at direct messaging. “We plan to (implement) this globally by next year,” he said.

The group also discussed guestroom entertainment.  Knox said, “My kids are just as happy to watch on their phone; now I like the big screen, but I'm old.” And he's right - demographics comes into play, which is why several in the audience are testing different entertainment options including casting currently.  As Petry said, “It's evolutionary right now; our customer base is one way or the other.”

Session 4: Vendors - The Necessary Evil
Moderated by Ken Barnes, CIO, Omni Hotels and Resorts; Panelists included Stewart Applbaum of Infor, Lou Paonessa of Comcast Business, Jonah Paransky of SkyTouch Technology, Mark Holzberg of Cloud5 and David Simpson of Enseo.

Now, come on, how often would you as a hotelier, like to have your vendors lined up against a wall ready for you to barrage them with questions?  Well, that's what we did... and they came willingly.  This session showed how important the open line of communication between technology suppliers and hoteliers is - plus it turned into a rather fun, open discussion.  Ken Barnes of Omni Hotels and Resorts proved a very worthy moderator, having dipped his toes in the vendor community recently after his previous tenure at White Lodging.

Barnes discussed misconceptions and what the panel wanted to share with the attendees, many of whom they might call on in the future.

Panelist Mark Holzberg of Cloud5 said it can be a complex process.  “We've got to talk to the brand, the owner, the management company (and the culture can be very different),” he said.  “Nothing worth doing is really easy.  But selling technology today is a lot easier than it was 10 years ago.  What we all do is very important to these people (they need their phones, reliable networks), so this is the greatest time to be selling in this (industry).”

One attendee from the hotel side said that frequently, technology providers spend a considerable amount of time selling to the end user and not the decision-maker, which can waste a great deal of time.  “It’s part of the responsibility of the person selling,” he said.  “We tell our own sales people, ‘Who ultimately is booking the rooms?'”

David Simpson of Enseo, another panelist, agreed with both.  “It's great developing products that these people are looking for,” he said.  “It's incumbent upon us to go out and find out what's going on.  We need to find the right decision-makers.”

A few of the panelists touched on the challenge of coming from different industries into hospitality.  The schedule is definitely one difference.  As panelist Jonah Paransky of SkyTouch Technology said, “Most enterprise businesses can shut down on a Saturday night because they are closed.  That's not the case for hospitality.  In hospitality, the 24/7 pressure is different.”

Mark McBeth of Starwood agreed and said, “To add to that, Friday and Saturday are even more critical to us (as often they are hotels’ busiest nights).”

Panelist Stewart Applbaum of Infor noted another difference in the hospitality industry – different priorities at the properties themselves.  “When you take a tour of a hotel and you walk through it with the president and he says, ‘Can you believe I spent more on that chandelier than all of your technology?’ I don’t see that in other industries – those price cuts for technology.”

Like many, in Viceroy Hotel Group’s case, Peter Chambers said low cost definitely is a factor.  “It drives almost every purchase we make,” he said.  He did add that hoteliers could do a better job with communication though.  “Three months/six months/nine months into the relationship – we should see where we are – and demonstrate some value to all of the parties (both sides of the table).”

Simpson agreed that relationships are important and said, “What we really need to do is work as partners.  This will make the SLAs an easier process.”

And, it’s important to make sure everything needed is in the contract. “If we expect more than what the contract says, is it their fault?” asked Andy Ross of Canyon Ranch.  “If sales says we’re going to get gold-level service but the contract says silver-level service, is that the sales person’s fault?  No!”

Attorney Greg Duff agreed and added, “You need to invest that time.  Yes, the service levels are implied, but at the end of the day, if it’s not in the contract, (it’s not guaranteed).”

While they understand that the sales reps for technology providers are just doing their jobs, as many of the hoteliers explained, it is extremely difficult to sort through all of the calls they get when more pressing challenges arise.  Jeff Winslow of G6 Hospitality said, “If an alarm goes off, our CEO gets notified within 3 minutes and I get a call… I work 10 hours a day; it’s not my job (to help you – the technology providers).” As he said, many sales reps send emails that request a quick call and it’s hard to sort through all of these.  “I get 200 of these and I don’t have ‘time for a quick call.’ Ten minutes each for 200 emails (just isn’t possible).”

It is hard to believe, but when asked if they have walked away from a deal for reasons other than price, the panelists said there are some cases where it’s in their companies’ best interests.  Paransky and Applbaum agreed that it is technology solution providers’ responsibility to identify these disconnects.

Session 5: Technology Is the New Hot Water
Rick Garlick, Ph.D., Global Practice Lead Travel and Hospitality, J.D. Power

In his session, one of the most popular of the summit, Ron Garlick of J.D. Power revealed some fascinating details from a recent study about guest experience in hotels.  He said, “Guest satisfaction has never been higher since we started measuring it.” But currently, it has leveled off; value perception has also stopped increasing.  “A year ago it was worth $12 per night to have (a flat-screen TV in the room),” he said.  “What you gave yesterday became today’s expectation.”

He said creating value will help improve guest satisfaction.  The two examples he mentioned are improved service quality and innovative technology.

Per the study, the top five most important amenities to guests (in order) are: complimentary Wi-Fi, complimentary breakfast, free parking, luxury bedding and a refrigerator/ mini fridge.

While problem types differ by generation, bandwidth issues and dropped connections top the list of complaints – especially for the younger generation.  As social media has become such an important marketing tool to the hospitality industry, especially in hotels, Garlick said, “The connection has to work so they can post.”

The most interactive part of Garlick’s session was when he suggested different types of technologies and asked whether the audience thought they were “keepers or not.” The group reviewed the pros and cons for each, and also discussed active projects where these technologies were in use.  Examples included: Virtual and augmented reality/virtual tours; virtual and augmented reality/proprietary apps; Facebook 360 (allows the user to see a 360-degree view of the property); mobile check-in/checkout; mobile hotel keys; beacon technology; and in-room tablets.

As Garlick said, “Technology is a great tool for enhancing the guest experience… the trick is to identify ‘the keepers.’”

Session 6: Interactive Roundtable
Moderated by Jeremy Rock, President, RockIT Group

This is the one session that is truly built for the attendees, where they can debate openly and have the opportunity to talk without reservation behind closed doors.  For a third consecutive year, Jeremy Rock moderated this lively session.

Some interesting notes from the survey HU sent to attendees before the summit that Rock covered with the group include:
  • 40 percent have been in their positions more than 10 years, and just under 20 percent have been in their present positions between 5 and 10 years.
  • The top three areas of focus were improved financial position, guest experience and information security/cybersecurity.
  • More than 70 percent plan to increase their IT spend in 2017, fewer than 20 percent have no plans to change their existing spend, and 10 percent plan to decrease.
  • The top mobility priority by far was customer engagement at 73 percent, with property management in distant second place at 11 percent.
  • While 18 percent said they were moving their systems to the cloud, a whopping 82 percent said they were not moving all systems within the next 12 months.
  • The top three reasons for this decision were that the cost was not justifiable (43 percent), followed by the belief that company processes do not benefit from using the cloud and latency (data delays) – both at 36 percent.

Other topics discussed included problems with project rollouts; how they address misfires or rollout challenges; the process of inserting IT into projects in advance; whether they are able to chime in on marketing, sales or operational issues as the voice of IT to prevent any future issues or potential shadow IT problems; ransomware attacks; and moving to the cloud… or not.

We’d love to give you more details, but we can’t.  However, you can get a more detailed look at the survey as well as the responses provided by many of the technology leaders from the hospitality industry in Jeremy Rock’s feature article on page 14.

Another CIO Summit has come and gone, with new relationships made, some truly enlightening information shared and great fun had by all.  As Jeff Bzdawka of Hyatt said, “It’s great to come in and network, and have an opportunity to share thoughts, ideas, share common problems, talk about the challenges that we’re experiencing as an industry.  And then for me, I’m with one of the larger chains – it’s also an opportunity for me to interact with some of our ownership groups that I don’t typically have a chance to interact with on a regular basis.  So it’s a very nice forum; it’s intimate and it’s a valuable experience.”

Special thanks to event sponsors Cloud5, Comcast Business, Enseo, HFTP, Infor, SkyTouch Technology, and transportation sponsors Amadeus, Cendyn, The Rainmaker Group and VENZA.

 

©2016 Hospitality Upgrade
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