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Hospitality Technology Architecture - Looking Ahead to the Next Generation

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June 01, 2005
Next Generation | Architecture
Carolyn Viens - cviens@us.ibm.com
AmitavaChatterjee, CHTP- amitava.chatterjee@us.ibm.com

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© 2004 Hospitality Upgrade. No reproduction without written permission.

The hospitality industry is in the unenviable position of having to meet guest needs, owner/franchisee demands and employee expectations—all in the face of threats of terrorism, war and economic uncertainties. Guests seek differentiated experiences. Owners seek more timely access to information. Employees seek improvements in guest-facing applications. Yet, most guest-facing technologies do not contain the functionality and integration necessary to support service excellence. They simply have not kept up with the changing demands. The industry is struggling with a single source of the truth and single image strategies for inventory, guest information and marketing/operational content. How will this evolve?

This perspective on the evolution of technology in the hospitality industry advocates a centrally or regionally provisioned architecture to develop an above-property view of strategic property and guest-specific applications.

Facing Major Challenges
Hoteliers are forced to simultaneously focus in different directions. Their reactions to these challenges and how effective they are at juggling these factors will ultimately define how well they weather the storm. Key challenges include:

Commoditization: Brand capital is eroding and hotels are threatened by commoditization. Guests are becoming savvier—they seek differentiated experiences. The brand is no longer the driving force…increasingly more and more guests are becoming brand agnostic—their perception of limited brand differentiation further exasperates the issue. Guests are increasingly looking for niche offerings and personalized services that are delivered consistently.

Distribution: Relentless rate pressure brought on by rate transparency, online intermediaries and aggressive corporate procurement tactics are compounding the issue. Online intermediaries are driving a wedge between major brands and the brand-agnostic guest. These online channels are often popular with hotel owners who see them as an effective way to move inventory. Some hoteliers are combating this by pushing direct connect strategies to combat the effect in the corporate market, reducing the dependency on the global distribution systems and enabling a one-to-one relationship with the guest.

Owner/Franchisee Relations: Owners and franchisees seek greater transparency. They want better services from their franchisors. They seek access to operational information in near-real time, giving them a clear picture of how their portfolios are performing. They want a clear indication why they should align themselves with company A vs.company B.

Front Line Demands: There is greater pressure from employees to deliver service excellence, but preparation and training are limited. Employees seek the tools and technologies that are built around the tenet of service excellence—as front line deliverers of service, they seek assistance in meeting and exceeding guest expectations. Unfortunately, systems have not always been built on this principle.

How Should the Industry React?
Hotels should differentiate their product through differentiated experiences—transitioning from a focus on the product or destination to a focus on a personalized end-to-end guest experience. They must also respond to changing consumer dynamics by emphasizing niche products and services. Compelling points of difference that make one hotel stand out from another should be identified and marketed.

The Role of Next Generation Technology
The industry will rely heavily on a next generation technology architecture to address the challenges hotels are facing at present. This architecture will provide the underlying infrastructure and services that allow hotels to reposition their employees to focus on value-added guest interactions, by automating core transactions and providing consistent access to guest data. It will provide hotels with opportunities to leverage technology advances to improve the guest experience. Technology will be pervasive yet invisible.

Hotels will have the ability to quickly and flexibly innovate and react to market needs, wants and desires. New concept time-to-market will be greatly reduced, aided by adaptive technology. Hotels will standardize back-of-the-house and key front-of-the-house functions across business units, brands, regions and properties, by placing them on a single technology platform and implementing a common business process and organizational framework. External linkages will become easier—applications will draw on common standards libraries for information interchange among systems. Complicated, customized interfaces between systems and organizations will be passé. The operational and financial benefits will be enormous—cross-brand employee mobility and training cost reduction are some advantages.

A logical move for agile hotel corporations, next generation technology applications will be based around an on-demand technology infrastructure. IT services, applications and data will be available as and when needed. Hotel companies will be able to provide transactional-based models to their franchisees, owners and individual properties, which will only pay for services availed. Installing applications will involve downloading and running them within a browser window. Hotels will move to a variable cost structure where financial models are based on a per-use concept. Supporting and managing infrastructure that is not fully utilized will be a thing of the past. This will free up much needed capital which hotels can use to focus on their raison d’etre.

The New Hospitality Technology Model
The new hospitality technology model will place a greater emphasis on enterprise-wide standards. It will employ adaptable, reusable components that can plug into each other—applications will be easily configurable depending upon business size and scope. This new model will be based around a single image of guest information, inventory and content. Users will see the same data regardless of where they tap into the value chain. Hotels will regain control of distribution by limiting the use of indirect online channels; direct connect strategies in the corporate market will become the norm, rather than the exception.

Application services will be delivered above-property via on-demand solutions. They would include property management, point of sale, sales and catering, HR, back office and financials, resulting in improved services and a reduced technology footprint on property. Advances in network connectivity, reliability and security will allow these applications to be hosted centrally and made available through a browser-based front end. Where connectivity is an issue, local models will be supported—relevant data will be downloaded, used to support business processes, and synched with the central repository the next time network connectivity is made available.

The next generation hospitality technology architecture will bring tremendous benefit to the hospitality industry. An on-demand, above-property delivery of services will reduce IT costs and infrastructure investment at the property level. Standardized applications and a single image of guests, inventory and content will provide a consistent view across all touch points in the value chain. Linkages with external applications and organizations will be handled via common information interchange standards. Hotel management will have access to a common, centralized view of pertinent operational information that will be made available to them via customizable on-demand workplaces. This is an interesting future indeed.

Carolyn Viens (cviens@us.ibm.com) is the global segment executive with IBM’s Travel and Transportation, Hospitality and Travel-related Services industry, where Amitava Chatterjee, CHTP (amitava.chatterjee@us.ibm.com) is an advanced consultant.

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