An Argument for Fewer Standards

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June 01, 2016
Standards
Larry Hall - LWH@msn.com

How many times have we in the age 55 and over category used the expression “back in the day…”?  Too many! But, in this case, my argument for fewer technology vendor standards, I can think of no better beginning.

Before I provide you with a glimpse into the early days of hotel technology at a major hotel brand, let me put forward my thesis. I believe major hotel companies have reached a crossroads in technology.

I would argue that by holding on to the mistaken belief that maintaining “corporate” control over all categories of technology and the vendors that provide products benefits their organization when, in fact, just the opposite occurs. By maintaining tight control over every aspect of technology, they stifle innovation, loose focus on the things that matter most, and they harm their organizations.

“Back in the day” when I, as a senior technology executive at The Sheraton Corporation, and my team made technology decisions, we worked very hard to make certain our decisions became the standard for the corporation. We learned how to sell the benefits of vendor standards to our franchise properties, and we convinced and cajoled our corporate hotels to follow our lead. This strategy worked well when the only technology on the market included PMS, POS and the occasional back office system. Back then, not even DARPA, the government agency following technology advancements for the military, conceived something as vast as the internet. We argued that a common PMS platform enabled us to move people around the corporation with ease because they could leverage their training and the corporation’s operating standards built around a single technology vendor standard.

The world has changed since the early ‘80s, yet many hotel brands and mid to large management companies seem convinced that controlling every aspect of technology for their properties somehow makes sense. It does not!

As one example, systems or application training, for the most part, no longer represents the deep investment of time and money that a company must protect at nearly all costs. The art of the user experience and users’ unwillingness to pick up a manual and study an application have largely rendered traditional training obsolete. Applications have become “walk up and use simple.” A second example includes speed to market. New applications emerge with extraordinary speed today, largely due to the growth of cloud computing and contemporary design and development models. 

INNOVATION
Let’s review a few specific arguments that support my thesis. My first argument concerns innovation, a topic near and dear to me. Entrepreneurs take risks. They develop ideas, and they deploy capital, often their own, to bring their ideas to market. Then, in the hotel industry, they hit the wall. Innovation needs trial, error, adaptation and scale, and when the large brands and management companies make it too hard to “win” their business, innovation dies because young companies fail to gain traction. Too often I see large corporations taking many months to years to make decisions because they need to define “the standard” for the corporation. Poppycock! Dispense with the vendor standards notion and begin to trial innovation for the sake of innovation!

FOCUS
As I look at the global hotel industry today, I see consolidation on a massive scale, and I see the recent “Direct Booking Wars” building up a serious head of steam – two events that have the potential to fundamentally shift the technology landscape in our industry. These observations suggest to me that the major hotel brands and management companies need to stay focused on three technology-related things, and three things only: Distribution (CRS and channels), CRM (the customer) and pricing/revenue management (what to offer and what to charge). Let go of everything else. When it comes to technology, the brands and management companies need to do fewer things better rather than many things with mediocracy. Let the local properties make the PMS or POS decisions, among many other categories of technology, but define the methods with which these technologies interact with the brands. Make more effective use of APIs to define how any technology platform communicates and interacts with the mothership.

The brands and management companies will win by keeping the main thing the main thing, and this means the customer and their needs (CRM), distribution (how and where they buy), and price (what they pay), all else represents tactical operations matters that remains best left to the individual properties where innovation and trial and error can thrive.

When competition becomes fierce, companies must become nimble to remain competitive. It appears the me that the emerging direct booking wars represent fierce competition between the OTAs and the brands, and technology will play a central role in this war, for example. We see this dynamic occur in a variety of other industries, not the least of which includes financial services where we continue to see innovation that fundamentally changes the way we bank. Adapting the notion of becoming nimble to the hotel industry suggests that brands need to do what they do best – CRM, distribution, and pricing, and hotels need to do what they do best, operate. Brands and management companies need to make it easier for properties to try new things, to test innovative ideas, to use a particular technology that suits their needs best without making it so difficult for a new entrant to gain corporate approval.  In an era of consolidation where the big get bigger, loosening vendor standards becomes even more important.

In order to make fewer, tightly controlled, technology vendor standards by the larger brands and management companies a benefit to our industry, we must support our industry’s organization that has as its mission the facilitation of interoperability between technologies.  To this point, I believe HTNG can play a vital role in guiding the brands and management companies toward a strategy of a greater use of APIs and fewer corporate technology vendor standards. HTNG has an opportunity to reorient the technology providers, hotel brands and management companies to think differently about interoperability by leverage their success and moving toward an environment of defined APIs built and deployed with speed to reflect the highly dynamic and competitive environment in which we now live.

We operate in a very complex industry with a very complicated and often confusing ownership, brand and operator model. We cannot change the fundamental structure of our industry, but we can do whatever it takes to simplify the adoption of new technologies and support innovation in our industry by making it easier to do business in the global hotel industry. One sure way to make this happen involves a reduction in corporate technology vendor standards and an increase in the use of contemporary APIs to help the brands and management companies stay focused on what they do best; distribution CRM and pricing.

Following the sale of Springer-Miller Systems in November 2015 where Larry Hall served as the firm’s CEO, he rejoined Trillium Services Group. For comments on this article, he can be reached at LWH@msn.com.

 

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