The Hospitality Upgrade Annual Investment Survey Results – 2021

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April 20, 2021
Survey
Sally Kelly

As an industry, we are familiar with adversity and financial downturns. 2020 showed us that adversity and financial downturns could achieve a heretofore unknown scale. Heading into 2021, 68% of respondents believe that the hospitality industry is entering a “new normal” with 57% reporting that their number one investment priority in the “new normal” environment will be in Guest Trust Initiatives (e.g., Contactless Service, Mobile Key, Funding Enhanced Cleaning Protocols).

The precipitous drop in revenue forced companies to pivot quickly to react to the changing environment as evidenced by the responses received to the 2021 Hospitality Upgrade spend survey.

  • 54% of survey respondents report that, on average, 23% of their 2020 IT budgets were diverted to pay for pandemic related expenses.

Budgeting Processes & Spending Plans

Given the backdrop of all that has happened in 2020, in the 2021 survey Hospitality Upgrade asked if respondents planned to spend more, less or about the same on technology in 2021 as compared to 2020. And the survey says: That decreases in spending are anticipated by 44% of respondents, more than double the 20% of respondents that anticipated decreased spending in 2020. 23% of 2021 respondents anticipate a spending increase, while 31% expect to spend roughly the same amount. The takeaway for 2021 is that companies are approaching spend cautiously as they try and anticipate how and when the market will recover. Anecdotal conversations with CIOs also reveal that budgeting, for the foreseeable future, will not be an annual process. Rather, budgets will be examined monthly, quarterly or at other predefined intervals to assess where spending levels should be.
Separately, it should be noted that 2020 spending plans were disrupted by the pandemic, with 54% of survey respondents reporting that, on average, 23% of their 2020 IT budgets were diverted to pay for pandemic related expenses. 57% of respondents report that the largest single pandemic related expense was investment in Guest Trust Initiatives (e.g., Contactless Service, Mobile Key, Enhanced Cleaning Protocols), followed by 36% investing in cable and internet services upgrades.

In this year’s CIO survey, we asked respondents to describe how their organization approached budgeting for IT expenditures. For 2021, the most common method (44% of hotel companies in the sample) is to create a separate budget for Corporate and a single budget for all hotels. The other two budgeting methods, Enterprise Budgeting and separate Corporate and individual hotel budgeting tied this year at 28% each.

These numbers represent a significant departure from 2020 numbers. The change from 2020 to 2021 can be explained by the types of hotel companies responding to the 2021 survey and the skewing of the numbers this year to a focus on branded full-service hotels (51% of total 2021 sample) vs. branded limited-service hotels (67% of 2020 sample).
In a separate question, respondents were asked if they had been given any guidance regarding when to begin capital spending in 2021. The majority of respondents offered an optimistic response and stated that capital spending should begin again in Q1 2021.
 
Conclusion
 
This year's report represents a survey of leading CIOs representing more than 16,000 hotels and approximately 1.5 million rooms. The study examined staffing, budgeting, outsourcing and broad investment priorities at the enterprise and hotel levels. The report then focused on the changes introduced by the COVID-19 pandemic; its impact on 2020, its projected impact on 2021, and how that anticipated impact shifted investment priorities.

Key takeaways from the 2021 survey are:

Doing More with Less: Doing more with less is one of the key themes of 2021, reduced revenues and a lean staff are the expectation for the coming year. 44% of respondents anticipate spending less overall on IT than they did in 2020; 67% of respondents reported an average 38% reduction in staff in 2020 and 63% of respondents do not expect staffing to return to pre-COVID levels until 2022 or beyond.

Information Security Rules: As the sophistication of threats increase so does the threat of brand and reputational damage. 62% of respondents reported spending more time on information security than in previous years. 44% of organizations now report that they have a Chief Information Security Officer (CISO), who is responsible for the organization’s security initiatives. There is a shift in 2021 to have in-house teams handle more of the information security work taking over the work done by specialist, outsourced teams. Will these in-house teams have sufficient funding, skills and tools to handle the continued barrage of security threats?

A New Normal: 68% of survey respondents believe that the industry has been reshaped by the pandemic and is heading into a new normal. The Top 3 areas of investment for 2021 are, Guest Trust Initiatives, Marketing Messaging/Demand Generation and Revenue/Channel Management. 57% of respondents plan to invest in guest trust initiatives to stimulate revenue/demand and offer market and brand differentiation. 31% plan to invest in marketing messaging to redesign demand and identify new market segments to fill rooms left vacant by business and event travelers. 28% plan to invest in revenue/channel management to drive business to direct channels to assume more control of the booking experience
Traditional Investment Continues: Traditional investment in PMS, POS, sales management, etc., will continue but at a slower pace.  Companies in the short term are choosing to leverage existing PMSs and other systems while focusing on the addition of new services and personalization to offer market and brand differentiation.

Big Data: Big Data moved up in importance as hotel companies recognize data as a corporate asset that will offer them competitive differentiation in the market by helping them to make data driven decisions, identifying new guests to fill the void left by business and event travelers and expanding share of wallet for existing guests.

Hospitality Upgrade would like to extend a special thank you to BlueprintRF for sponsoring this industry research, Sally Kelly, Principal KConsult LLC, for her analysis of the data, the hotel chains across the world who participated in the survey and Geneva Rinehart, Elizabeth Vogan and Melissa McCawley on the HU team for bringing it all together in
this publication.


This is an excerpt of a 16-page annual study by Hospitality Upgrade on technology investments for the coming year.

©2021 Hospitality Upgrade
This work may not be reprinted, redistributed or repurposed without written consent. For permission requests, call 678.802.5302 or email infor@hospitalityupgrade.com.


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