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executive vendor summit • april 4-6, 2006

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June 16, 2006
Summit Review
Kris Burnett - kris@hospitalityupgrade.com

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New Orleans normally is prepared for huge events like Mardi Gras and Jazz Fest, but the city had no idea what it was in for when the Hospitality Upgrade Executive Vendor Summit came to town the first week of April. Over 50 presidents and C-level executives of technology vendors actively involved in the hospitality industry attended the much-anticipated event. The field of attendees had much to share with regard to current and future trends, as well as global business challenges. 

Jacob Dehan, president of Northwind Canada, Inc., said the best feature of the event is the open line of communication between vendors. "I think we have to focus on the reasons why the whole event started. It is an issue we need to continue to focus on – more opportunities to network. I think that is the reason why we are here."

Bruce Travis, director of sales for event sponsor TechTeam said, "The number one advantage for me first of all, is networking, because it is a totally different arena. It’s only the senior executives and everybody lets their hair down, so you really get to talk to them on a different level than you do in the business world. They let you really know what they are thinking about the industry and the future."

Bob Post, president and CEO of TravelCLICK, attended for the first time this year. He explained that he came because he was not only interested in the networking potential, but also in the interaction, and learning more about the connectivity of the vendors’ different solutions.

Interactive team exercises like the Hotel of the Future team activity were by far the most popular according to the post-event survey. Privacy and security are still big topics, and an interest in vendor distribution channels was also piqued. In one of his recent Technology Newsstands, Jon Inge wrote, "It was an intense couple of days filled with great networking, fascinating presentations and some highly stimulating discussions."

The Royal Sonesta New Orleans proved a perfect setting. This beautiful property provided great meeting facilities, terrific food and an ideal while tempting location – Bourbon Street.

A few of the topics covered in the sessions included: the hotel of the future, mergers and acquisitions, HITEC 2006 and the challenges of doing business globally. Attendees also had the opportunity to hear from a New Orleans Habitat for Humanity representative about the status of home building for displaced residents throughout the city in the devastating wake of Hurricane Katrina.

The summit began with the highly anticipated golf scramble. The beautiful course, Beau Chene Country Club was the setting for this heated competition. Participants had the opportunity to purchase mulligans to benefit the New Orleans Habitat for Humanity, and support it they did. With HFTP matching the donations, the group donated over $1,200. Ending the day with the lowest score was the foursome of TechTeam Global’s Jim Hoen, Galaxy Hotel Systems’ Dan Hogan, AltiusPAR’s Connie Rheams and Hospitality Upgrade’s Kris Burnett. Top individual honors went to Cendyn’s Bob Magliozzi for the longest drive and TechTeam Global’s Bruce Travis for closest to the pin.

After the tournament, the first evening began in speed-dating fashion, with attendees assigned one individual to meet and ask a series of questions before the night was over. Then the group enjoyed a Cajun feast including gumbo, jambalaya, po boys, barbecue and everything in between. The group favorite, especially for Southern DataComm’s Gary Eng and IDeaS’ Ed Booth, was definitely the pralines served during dessert. (By the way, Gary, the hotel found its silver tray, but is still searching for the missing batch of pralines. I have no idea what happened to them, but thank you, they were delicious.)

Royal Sonesta Vice President and General Manager Alfred L. Groos addressed the group during dinner, thanking each attendee for coming to the city. As devastating as Hurricane Katrina was last year, and the fact that parts of the city’s suburbs are still in need of extensive renovation, he explained how most of the French Quarter’s restaurants, hotels and shops are open and ready for business, and asked the group to spread the word and return in the near future.

The next morning opened with the attendee introductions. One by one, each attendee introduced another attendee to the group using the answers to the questions asked the previous night. I still have a visual of LMG Data Mining’s President Tom Littleton’s most embarrassing moment of driving into his garage with the roof-top storage container still attached. We found out how interesting this group of vendors really is and opened the sessions on a fun note.

As summit program coordinator Sally Kelly of BearingPoint pointed out, we struggle between wanting to become more efficient, but we realize the importance of human touch or interaction. This first session, The Hotel of the Future, included Michael DiLeva, EVP and general manager, KoolConnect; Hanns-Christian Hannebeck, director enterprise applications for GlobeRanger; Michelle Miller, commercial marketing manager for Cisco Systems; Ron Potter, senior director of robotics for Motoman; and Nalini Ratha, Ph.D, of the exploratory computer vision group for IBM.

The session began with a look at robotics and the current and future options available to the hospitality industry. Potter said, "Robotics is a $1 billion industry in the United States." There are 15,000 robots currently in use in the United States performing duties like welding car bodies, and other monotonous and fatiguing jobs.

"Motoman’s Robobar is designed to act as an assistant, not to replace a bartender," Potter said. "You have more, better, faster, but still have human interaction." Whether in housekeeping, as an assistant bartender or as a behind-the-scenes catering helper that can pour several hundred drinks in a relatively short period of time, robots can serve the hospitality industry very well, Potter said.

Miller took the stage to explain Cisco Systems’ business challenges. They currently include hoteliers and property owners who want to overcome their own challenges. Miller said, "The CRM information is there, but it’s not in the right hands." Two challenges are flexible and scalable in-room technology to address key customer requirements and maximizing employee efficiency while increasing attention to detail.

DiLeva with KoolConnect talked about the changes in technology over the years. DiLeva said, "In the past we had real keys for our hotel rooms, we bought actual airline tickets, our Internet speed was 28.8 (KB) and we had a color TV." A timeline of hotel room technology showed in 1955 we had a television, telephone and radio. Twenty years later, pay-per-view television was introduced. In 1995, fax dataports and ISDN lines came into play. In 2000, it was HSIA, and in 2006 and beyond it is high definition (HD).

Hannebeck, with RFID software provider GlobeRanger, was next. "What really matters is the application," Hannebeck said. "It is strategy, then process, then technology – never the other way around."

Some different applications for RFID include addressing the cruise industry’s short restocking window or golf balls with an RFID chip so golfers always know where their ball is. Another interesting application of this technology is a sensor that notifies the bartender when a guest’s glass is half empty. The cost of these systems is coming down – from about $1.00 to $.09 according to Hannebeck. "Get ready for the future," Hannebeck said.

Nalini Ratha, Ph.D., covered authentication technologies. Ratha said, "There is no substitute for biometrics. When properly used, biometrics enhance and protect individual privacy." Regarding in-house use, staff authentication would be a major use for biometrics.

Probably the most beneficial and popular portion of this session though, was the discussion from Carol Campbell Beggs, vice president of technology for Sonesta International Hotels Corporation, and Richard Tudgay, director of IT for Omni Hotels. Here the attendees had an opportunity to hear timelines and major areas of focus from the two hotel groups.

As fascinating as all of these potential products and services are as emerging technology, Beggs said there is still a challenge. "With the number of different products now, when we examine our IT budgets, how do we narrow it down to what to choose?" she asked. At the end of the day the friendliest staff is what people talk about. Thereby, back to the challenge and the fine line between technology and human touch.

Tudgay agreed with Beggs and the challenge of how far to go. "There is a fine line. Some guests think you are getting too nosey, using RFID for lost golf bags, or using biometrics on time cards to punch in because someone is cheating," said Tudgay.

Although still looking at a five year business plan, the greatest change these CIOs face is the strategy they take. Beggs said, "Reconstruction is four to five years. Base projects are five years. Existing properties – there is a three-year cycle and we review it quarterly." Tudgay said a seven-year plan is used on all capital purchases like POS and PMS, "but anything new, we are looking at the end of next year."

This was important information to Frank Wolfe, executive vice president and CEO of HFTP, who said, "The key point was finding out that they (hoteliers) have an 18-month window instead of five year or seven year (plan)."

During this session, attendees were teamed up and chose one piece of technology discussed to implement in their own hotel. The teams put together a strategy with the help of one of the panelists or facilitators present. Two deployment teams presented their plans to the group.

The first team chosen included Jon Inge, president, Jon Inge Associates; Rick Munson, president and CEO, Multi-Systems, Inc.; Greg Pesik, president and CEO, Passkey International, Inc.; Bruce Humphrey, director American operations, Miwa Lock Co. Ltd.; Tom Littleton, president, LMG Data Mining; Rick Kennedy, CEO, RedSky IT; and facilitator Mark Schneider, senior consultant, BearingPoint.

Bruce Humphrey spoke for the group. They decided to implement RFID bi-directional chips at their imaginary casino property. Basic information about the guests’ favorite games, drinks, cash purse on hand and amount of chips used at the tables would be gathered. The result of this technology would be instant knowledge of what money was at each table and which tables guests prefer.

The other team chose a different route – a cleaner one. Participating on the second team were Jacob Dehan, president, Northwind Canada, Inc.; Jeremy Rock, president, RockIT Group; Bas Blommaart, CEO, Hotel Concepts; Mike Schmitt, CEO, Clairvoyix; Mike Young, president, InnLink, LLC; Bruce Travis, hospitality, foodservice and retail for TechTeam Global; and panelist Carol Campbell Beggs.

Spokesman Bas Blommaart said robotics was chosen for foodservice and basic cleaning tactics. A recommendation was made to test the robots on two floors of their 1,400-room New York hotel, in order to be careful with the hotel’s initial investment. It was estimated that 50 percent of housekeeping expenses could be cut, and they would plan to implement them throughout the entire property after the trial period.

After the panel discussion with the hotel CIOs, many of the attendees agreed this interactive session was a great way to discuss new technologies available and work them into a property.

Between sessions, one of our sponsors said a few words. Bruce Travis of TechTeam Global said the percentage of IT spending for outsourcing has increased from 26 percent in 2002 to 29 percent in 2004, with projections near 33 percent for 2007. Like many companies, TechTeam is interested in expanding what they are currently doing. He examined opportunities to increase revenue, closer relationships with clients, opportunities to help clients, controlling clients’ perception of systems solutions, and the inside track for new opportunities.

After the update from TechTeam Global, the next session began. With Daylight and Newmarket two of the most recent examples, it is a very real possibility that members of the audience may very well be working together in the near future. Panelists Mark Holzberg (CEO of Hotel Technology Solutions, LLC), Bob Post (president and CEO of TravelCLICK, Inc.) and Barry Logan (president of Squirrel Systems) were on hand to discuss the process of mergers and acquisitions in this industry.

Post explained the three types of buyers: strategic buyers, financial buyers who "take it, make money and flip it," and the classic seller’s buyer, better known as the stupid buyer. He explained how the strategic buyer looks at the market, and at the end of the day, it's revenue and profitability or how much of the market it controls. "Two out of every three mergers are unsuccessful," he said, "and actually destroy stockholder value."

Holzberg explained how integration was the most important aspect. "You have to plan for it and execute, or it’s an absolute nightmare," he said. "Plan for integration. In some ways it’s like going to war. It is important for the seller to realize, important to get inside the head of the person and see if the chemistry works," he said. Companies should focus initial efforts on communication Holzerg said.

All three agreed that the buyer and the seller have to do their own due diligence, especially for the seller if it is not an all cash deal. "It’s an incredible amount of work. You have to start with the client and work backwards through it," said Post.

Ron Tarro asked about vendors and what objections there are. Post explained that the biggest issue in any industry is communication first. "If you are acquiring a company and it’s larger and financially stronger, it’s usually good. If you don’t set the expectation, they will create their own. You know who your client base is if you did your due diligence. It’s not the fact that it happens, but how you handle it when it does, and it will," said Post.

Regarding global business, Logan said, "Strategic partners can be very valuable. Someone has to be point guard in those positions."

Whether global or domestic, these transactions may be on the horizon for some in the industry.

Attendees then had the opportunity to hear from Bob Marye of New Orleans Habitat for Humanity about a different kind of acquisition, new homes. Normally, he explained, New Orleans Habitat for Humanity builds around 50 homes per year, but this year following Hurricane Katrina, they plan to build between 150 and 200 in the area. He thanked the group again for their generous support of Habitat for Humanity New Orleans through donations made at the summit.

After a quick break, and with 2006 HITEC looming, Frank Wolfe, executive vice president and CEO of HFTP, and 2006 HITEC Advisory Council Chairperson Carol Beggs took the stage to address the group and answer questions about the upcoming event. The pair explained protocol, the priority and selection process, and opened the floor to questions.

With all booths sold at press time, HFTP has another big event on its hands, and is readying for its two new features. This year GUESTROOM 2010, a pavilion featuring some of the latest and near-future technologies for the modern hotel room, and "Top of Technology," a fundraising event/dinner to benefit HFTP-supported schools will premier.

After the 2006 HITEC session, attendees took time to get some much needed rest, catch up on e-mails, sightsee or shop. Attendees then compared notes at the pre-gala cocktail party.

After an excellent meal, Chris Thomas, chief strategist for Intel, took the podium. Even though the gathering went well past 11 p.m., Thomas really sparked some animated discussions around the tables. Frank Wolfe of HFTP probably said it best, "In spite of the fact that we were in New Orleans on Bourbon Street with the casinos blocks away, we were still engaged at 11:30 p.m."

Thomas discussed that changing technologies are affecting how travelers are now getting their information, and there are several unique ways to reach travelers now. Thomas said, "90 percent of business is spent on after checkin. Between reservation and checkin, the biggest opportunity is here (to upsell)." This requires the solution providers to integrate these potential opportunities into their systems, he explained.

Thomas encouraged the audience to remind clients to get beyond the Web as soon as possible. Helping hoteliers utilize current trends to reach potential clients is a great way to increase awareness, he explained. From text messaging to mashups like that on Kayak.com, resources are out there, the vendors just need to decide which are the best use of their efforts at this point in time.

After the gala dinner, many in the group ventured out to Bourbon Street. Luckily after at least a few hours rest (for most that is), the last morning’s session proved to be the most interactive and animated of the whole conference.

This session was themed around Thomas Friedman’s book, "The World Is Flat." Panelists included Chris Thomas, John Bray, vice president advisory services, PhoCusWright and Scott Southall, managing director, BearingPoint.

Bray began the session by explaining that in the travel industry, hoteliers need to look at the user perspective. "(Hoteliers) need to focus on value creation instead of cost reduction," Bray said. Over 50 percent of travel was purchased online this year, but the growth of Expedia and Orbitz has slowed. "Expedia lost about 40 percent of their market value," Bray said. Hoteliers need to find new ways to reach these people.

As Thomas discussed the night before, travelers are getting their information differently due to the changing technologies available to them. Developers are thinking outside of the box and providing Web sites with groupings of public information that can be very useful to the hotels’ potential guests. They are doing this by opening up hotelier databases and then allowing searches of items like room rates, features, hotel facilities and services in a very easy to use format.

Thomas mentioned the example of the home inspection system that was able to combine satellite systems with housing data the night before. Zillow.com is another example of the approach. Zillow provides public housing records and property taxes, and matches it with Google maps to calculate estimated home property values.

This can also be done by hoteliers. One example Thomas mentioned is with Web site store locators. Mobile consumers have created a mashup – the fastest way to information needed – instead of sorting through other ads or information on a site.

Kayak.com is another example that combines information from various sources. "It allows you to get flights, hotels and lowest fares inside Instant Messenger," Bray said. Buzz also was mentioned. "It (Buzz) is a site that allows you to say ‘what is the furthest I can go for $300 round trip… or the lowest round trip from point X’, and it’s all flattened out to one map," Bray said.

In the near future Kayak will launch a Web site for the hotel industry with a map and a calendar. Bray said, travelers can prompt for an itinerary such as, "Give me the best combo of the 10 days I am in (X city), price, etc. in a mashup on one page." All three agreed that you’ve got the consumer where you can upsell them.

Thomas made some pretty bold statements about changes on the horizon. "The attitude in the world right now is that things are free. I predict in five years we won’t see operating systems anymore," he said.

Like many in the room, Brian Kretzmer, CEO and president of Hotel Information Systems, Inc., expressed how tough it is to get hoteliers to try new things though. Kretzmer said, "We have enough trouble getting hotels to change out technology within three to five years. How do we as technologists enable hotels? We aren’t going to make this happen – it’s the hotels who are going to demand it. How much of this technology is being implemented in hotels? Competing in China – the business plan is 50 years – ours is five years. It’s a hard sell…"

John Springer-Miller, president of Springer-Miller Systems, said that like many in the room, he deals mostly with individual properties. Even though they offer free updates, most hotels are either understaffed, don’t make time to do it or don’t want to use something new. Therefore, he said, maybe one in three customers implement the new technology.

Harry Rivkin, president of The IDT Group, Inc., explained that the guest experience is more about the marketing side than technology. "It is self-directed, testimonials… you try to control as much as you can. You sit back and hope you have created a user experience," Rivkin said.

It was the most popular and heated series of discussions at the summit. Jon Inge put it this way, "We need more informed, passionate debates like this with vendors, hoteliers, distribution companies and other key players committed to finding new business models that work for everyone."

We heard about some fascinating technology over the two days and some creative ways to help hoteliers reach their audiences.

Rich Siegel thanked the attendees, sponsors and staff for another great event before the shuttle headed to the airport. The group had one last look at the French Quarter and the repair work of the Super Dome roof, river front hotels and surrounding neighborhoods. New Orleans welcomed us and is well on its way to a strong rebirth. We know our attendees did their part to support the economy on Bourbon Street.

Based on the post-event survey results, a vast majority of attendees who responded were very satisfied with the event in general and planned to attend the conference again next year. The program format and level of participation were above average according to most of the responding attendees, and the facilities were a hit. Exceptionally high marks went to event organization, staff and peer-to-peer networking, with 9 out of 10 respondents saying networking was by far what they liked best about the conference.

-Submitted by Kris Burnett, Hospitality Upgrade

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