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2007 CIO Summit Review

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October 01, 2007
CIO Summit Review
Kris Burnett - kris@hospitalityupgrade.com

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© 2008 Hospitality Upgrade. No reproduction without written permission.

2007 CIO Summit Review
The Inverness Hotel & Convention Center
Englewood, Colo.
September 5-7, 2007

(To view a group photo from the event, click on pdf above.)

What do mountains, networking opportunities, golf, informative sessions and juggling have in common? Surprisingly enough, Hospitality Upgrade’s 2007 CIO Summit.

This year’s event was held at The Inverness Hotel & Convention Center in Englewood, Colo. with 41 CIOs and hospitality technology experts in attendance. From global business expansion to mobile checkin to reservation modernization capabilities, the focus in each of the sessions seemed to turn to the guest experience and how important technology has become to the hospitality industry with regard to making a connection with the guest.

There were several return attendees including Jane Durment, CIO, The Marcus Corporation and Nick Price, CIO/CTO, Mandarin Oriental Hotel Group, who hold the distinguishing feature of attending all six Hospitality Upgrade CIO Summits, but there were also many new faces as well. As a first-time attendee, Darla Morse, vice president, Disney Cruise Line, said she will be back next year. “I think it is an opportunity that you will not get anywhere else, and to be able to network and to meet these professionals and have relationships you can develop long term, that is invaluable,” she said.

Denihan Hospitality Group CIO John Cahill had not been in a few years, but was glad to be back. “I was at the very first and second CIO Summits, and I missed it,” he said. “If you don’t have the ability to call your peer group, you miss an awful lot.  You can go to all of the conferences in the world and listen to all the speakers, but it’s the practical experience that ultimately is missing from those standing at the podium. If you can get on the phone and call these people (from the summit), they will tell you the truth.”

MGM MIRAGE SVP and CIO Tom Peck said, “With an event like this, it’s putting names with faces. The ability to shake a hand and get to know your counterparts and your peers so that in some point in the future when you have an idea or need an opinion, you have built that rapport and that relationship. What we find is we often have many of the same challenges, the same problems, and collectively we are smarter as a group. The more we can learn from each other the more it benefits the industry as a whole.” 

 The first day began with a golf tournament held at the Highlands Ranch Golf Club. Afternoon rain showers forced a few of the golfers to come off the course a bit early, but a few braved the rumbling in the distance to complete the round. The rain, however, made for a wet patio which sent the group inside for the opening reception that evening. Thank goodness, because they then had to stand in their socks.

The first ice breaker of the summit began not far into the welcome cocktail reception. Attendees all were asked to remove one shoe and place it into the bins at the center of the room. They then were each given a shoe (not their own) and directed to find the owner of the shoe to find out the most interesting place and farthest place that shoe had been. This made for great conversations and the announcement of longest distance from Marwan Al Ali, CTO of the Jumierah Group, who had traveled from Dubai (7,778 miles/12,518 km), with an honorable mention to Nick Price and Peninsula Hotel Group General Manager, Research and Technology Fraser Hickox, both from Hong Kong (7,482 miles/12,041 km).

The following morning the opening session began with an update on Project CityCenter from MGM MIRAGE SVP and CIO Tom Peck. Peck described some of the challenges facing his team in putting together the requirements and technical infrastructure needed for a 76-acre city within a city located on the Las Vegas Strip, including six high-rise buildings, 150,000 square feet of casino space, 6,000 rentable rooms, 1,350 residences and 500,000 square feet of retail space. The project will eventually employ an estimated 12,000 people. Peck said what is new is IP everything, and when CityCenter opens, the mobile phone will most likely be the top technology. MGM MIRAGE is working closely with vendors and focusing on a Six Sigma approach.

The biggest challenge he noted, was having to think about what will be needed in 2010 and planning for it now. The megaproperty opens its doors in November of 2009, presenting the need for forward thinking.

“I enjoyed hearing about CityCenter. It is on a grand scale, but they face a lot of the same issues that we all do,” said Carol Campbell Beggs, vice president, technology, Sonesta International Hotels Corporation. Morse said, “My favorite session was the Tom Peck session. I think what is so helpful is to look at people that have similar environments… the projects that we all are involved in and the problems that they deal with on a daily basis. It’s very, very much what we deal with.”

Following the update on CityCenter, our own Sally Kelly and Paul Reynolds, chief research officer of Performance Monitor, presented the initial results of the Hospitality Industry Information Technology Benchmarking Survey. It was at this same event two years ago that the idea for this benchmarking survey was born.

In 2005, 57 percent of the CIOs said the current spend data available was inadequate. “The purpose of this benchmark is to fill the identified information gap with the goal of providing an ongoing operational toolset for the industry,” said Kelly.

Reasons given for how the participants would use the survey results include best practices and improvement areas, internal support for budget items, preparing annual budgets and highlighting strong performance. The survey team developed metrics based on steering committee recommendations and discussions with participants. The advisory board/steering committee includes: Jeff Winslow, EVP/CIO, Accor North America; Jim Lamb, SVP IT, Global Hyatt; Andy Furrer, vice president, technology, Kimpton Hotels and Restaurants, Richard Tudgay, Todd Thompson, CIO, Starwood Hotels & Resorts Worldwide, Inc., and Mike Sutten, vice president and CIO for Royal Caribbean Cruises Ltd. Nearly 95 percent of participants reported they are likely to complete the survey. A large majority at 89 percent reported they are likely to purchase the results, and 95 percent indicated they are likely to use the results in planning.

With 124 asked to participate in June, 95 percent did say they are likely to complete the survey, with 76 very likely. Some of the preliminary findings are in. A majority of the respondents are from hotel/lodging companies. It is evenly split between public and private, more than half operate globally. Initial overall results from the first batch of respondents show that IT budgets average approximately 3.2 percent of revenues, but when you break them down to public and private companies, public companies spend approximately 6 percent and private companies spend closer to 1.4 percent on average. Approximately two thirds of the budgets is spent on running the business, while one third is spent on growing the business. Of the budget, 62 percent is spent on customer-facing or front-office technologies, with CRS, PMS and Internet/Intranet/Extranet in the lead.

With more data expected by the beginning of next year several relationships will be examined including the relationship between the IT spend on growth and customer satisfaction scores. Typical IT spending per employee is just under $1,250 and companies expect to turn over approximately 10 percent of their workforce within one year. The benchmark survey reopened Oct. 1 with some streamlining and additions made. Again, these are initial findings. More complete data is being gathered and results will be available early next year.

Following lunch and the ever-popular group photo (see front cover for those smiling faces), Kevin Short, vice president and client executive as well as electric guitar player, Bill Spilman, global manager strategy, portfolio and marketing, and Mark Scriffiny, all from EDS, lead the group in an updated while customized version of “Proud Mary,” entitled, “Proud SOA.” After “rollin’, rollin’, rollin, with the SOA,” the panel discussed how EDS is applying modernization capabilities to a multiclient reservation system for airlines such as Continental Airlines, US Airways and Virgin Atlantic, including a migration to an SOA-based open systems environment. As one of the largest providers of application development and infrastructure services to the airline industry with over 20 percent of the market, EDS is also one of the largest operators of airlines reservation systems.

In a little less than a year the message volume from the SOA trend analysis from this project has gone from a just over 70,000 messages per month to close to 32 million per month and is used by 10 airlines. Short described a client migration project, who, after a merger, needed a reliable interface between reservations and airport operations. Interfaces were created to move the reservation data using Web services through the EDS airline SOA, and the migration of data went smoothly. The system performance exceeded expectations and the project was completed in less time due to the SOA. According to Short, SOA requires a long-term commitment, but the ROI will be long term. Can this transfer as easily to the hotel industry? Good question.

Another company working on other options for guests is Marriott International. Barry Shuler, SVP and CTO for Marriott International, began the next session with an explanation of how the company is continuing its focus on outstanding guest experience from reservation through checkout with opportunities like self-service options. Marriott came up with ARRIVE (Accommodation Reservation Remote Interactive Virtual Environment), a seamless mobility checkin capability.

Marriott International’s ARRIVE  was tested at the Redmond Marriott Town Center in Redmond, Wash. and began with delivering a working prototype mobile checkin application. Marriott utilized the available wireless infrastructure and leveraged kiosk functionality as well as tested guest-owned mobile devices and remote connectivity to the PMS. Candidates with PDAs and other technical requirements had to stay at the Redmond Marriott Town Center multiple times during the test phase. The test group also had to be willing to participate in surveys and provide feedback. Then, an automated key dispenser as well as PMS integration were required to get the project off the ground.

Using PDAs, guest candidates were able to check in and choose preferences, number of room keys and various other options remotely. If the candidate’s room was available, the room number and a PIN to access a key from the automatic dispenser upon arrival were given. Before checkout, the checkout folios were also sent to the PDA.

After the start of the project, 100 percent said their checkin was successful, 100 percent said they were able to get a room key from the automatic dispenser without problems, and two-thirds said they believed there will be a demand for this type of mobile application for travelers.

Cahill found this session very informative. He said, “A project that has the practical implication of being able to drive additional revenue and customer loyalty, I find  those to be the types of things to stimulate thinking about development and what kinds of things my company can develop in the next two, three or five years out.”

Next was the annual afternoon break. It wasn’t yoga or handicapping horses like in past years, but a juggling class. Much to our surprise, Richard Tudgay, John Edwards, Mike Sutten and Darin Pinkham, vice president, technology for Ginn Resorts didn’t need much instruction. While they rivaled the talents of the instructor, the other attendees learned the finer techniques beginning with a warm up, and then tossing one, then two and finally three balls. The CIOs, especially Marshall Andrew, CIO of Station Casinos, Dennis Morgan, vice president of technology for Columbia Sussex Corporation and Michael St-Laurent, director of information technology for Gemstone Hotels & Resorts, really got the hang of it by the time the CIOs had to head back to the meeting room. Next year we will have to add a fourth ball.

The last session of the day was lead by two future technologists: Paul H. Dietz, Ph.D., research and development program manager – applied sciences group, Microsoft Corporation, and Kaan K. Katircioglu, Ph.D., research relationship manager – travel and transportation with the IBM T. J. Watson Research Center. Kaan discussed the potential of nanotechnology, the science and technology of precisely manipulating the structure of matter at the molecular level. The term nanotechnology embraces many different fields and specialties, including engineering, chemistry, electronics and medicine, among others, but all are concerned with bringing existing technologies down to a very small scale. Outside of the summit, there has been talk of using nanotechnology to reconfigure rooms per guest wishes, transmogrifying the furniture, fixtures and decorations. In the hospitality industry, it can change the whole hospitality industry appearance. It can affect the exterior of a building, interiors and just about all other products use to serve the word hospitality. This segment sparked several conversations by attendees regarding the potential pros and cons as well as hidden dangers of some nanotechnology as used in relation to fixtures in hotel rooms and bathrooms.

Dietz has worked on some unique projects at various companies including Walt Disney Imagineering Research and Development, Mitsubishi Electric Research Labs and currently, Microsoft. He described several different products and prototypes that he and his teams had developed including location-sensitive smart toys, multiuser touch interface pieces for ordering and glasses with RFID chips that signal the server when a patron needs a refill.

The products he described, again all focus on the guest experience, whether improving service and shortening table turns, or making the visit memorable for the whole family with interactive pieces. “Information is front and center when creating the guest experience,” Dietz said. “It is less about information and more about creating an emotional connection with the customer.”

Campbell Beggs said that even though some of the technologies discussed by both were far into the future, they were still motivating. “The two future technologists really got you thinking about how things start as sort of way out there and then work their way to a current classification, to get you out of your day-to-day thinking,” she said.

The first full day of sessions was capped off by the annual gala dinner, with many groups rehashing some of the day’s content. Our own Richard Siegel served as moderator, sharing some fun anecdotes, and the Inverness sommelier sharing some interesting facts about the wine choices for the evening.

The final session the following morning focused on global business, not only U.S. companies doing business across the world, but also the challenges faced when international companies come into the United States. It was by far one of the most interactive and probably could have gone on for another half-day if time had allowed. Panelists included Gustaaf Schrils, vice president global technology for InterContinental Hotels Group, Marwan Al Ali, CTO of the Jumierah Group, Oliver Bernet, SVP information technology/CIO, Möevenpick Hotels & Resorts, and Fraser Hickox, general manager research and technology, Peninsula Hotel Group. Centralization and integration issues as well as the need to work with vendors in other areas of the globe were on the forefront of the discussion.

Al Ali explained how his company has plans to grow from 12 properties to 57 by 2011. His goal is to ensure these new properties are open and ready in record time. He described some of the problems facing a company like his when it ventures into the United States. After taking over the Essex House in 2005, Jumierah found it was a protected historical site and had to go through a very lengthy approval process for upgrades.
Like other companies, however, he experiences problems closer to home as well. “Huge bandwidth is not an issue in New York, but in Dubai, it is expensive,” he said. Jumierah also found that culture can be an obstacle too, but quickly found a remedy for that. “We have 101 nationalities on our workforce. When we open a property, we have someone familiar with that culture (on property),” he said.

Hickox said that in his company, he is lucky because brand awareness is fairly strong in any market. “When Tokyo opened, people lined up,” he said. “We have a standards committee that looks at every aspect of the room, and we do not deviate from the standards in the room,” he said. “We have people from each hotel help open new properties for six months. The personal experience is more than on paper.”

Hickox described technology issues when in Japan. “In Japan, we have three television systems with three different tuners. We had to go to Sharp and rewrite the television software and it took a bit of time to do it,” he said. Hickox said the cost of programming as well as the cost of broadband there is an issue as well.
Language is another issue. “The PMS needs double-wide characters in Japanese. It is difficult when wrestling with a vendor because they don’t do that in America,” he said. In Macau, there are two currencies – another problem since most do not want to use the Macau currency.

He then described the challenges of entering the U.S. market. “The U.S. was a challenge. As a Hong Kong company, we can do anything, but in New York we were told, ‘you can’t do this in New York,’” he said. From union approval to speed to spelling inconsistencies between the United States and other countries, (favor versus favour), he is finding that in the United States, they can build one room in one day, while in Hong Kong, they are building five to six rooms per day due to the difference in work ethic and red tape.

Nick Price, also stationed in Hong Kong agreed. Mandarin Oriental started out as a small company with 12 hotels, now it has 20 with 25 under development. They plan to reach 50 in the first phase by 2011. Like Jumeirah, Price explained Mandarin Oriental’s belief in giving each property its own cultural experience sets it apart. “We view every hotel as we do a unique discreet experience. We never replicate. We are creating something new each time,” he said. “We expect a guest to wake up and know where he or she is (in a Mandarin). We observe the different things in a new country. We are not in the place to replicate. That is very much the American way – replicate and recreate it.”

He did say there are two countries where replication could work, however for some companies, China and India. “They have a strong potential for replication. With the development potential of these countries, you could take an American model, drop it in, adapt it to the country and replicate it.”

Price explained why so many international companies are reaching into the United States. “Luxury brands from outside the U.S. are lapped up by the U.S. They get far more press for a hotel they build in Boston or New York than a larger one in Tokyo,” he said.

Mandarin’s philosophy includes staying very involved with their projects. “We have to be strong participants of the developing projects and surround the developer with people who know what Mandarin is (so we can ensure the product). But that alone isn’t enough,” Price said. He focuses on smaller vendors so he does not get lost with the larger chains. “I expect very high standards from them (the vendors) and expect them to have a partnership,” he said. “Most vendors are not ready to go into some of these countries.”

Mandarin operates with a considerable amount of bandwidth through three regional centers, common hubs for data synchronization and exchange, in Boston, Hong Kong and London. Through its mesh network, any site can talk to any site, but the hotels have to exist independently.

InterContinental Hotels Group (IHG) has properties in over 100 countries, and has three regional corporate offices in London, Atlanta and Singapore. Shrils explained they run the China operations from China with 68 hotels in the area and 125 planned by 2008. “China is a very big growth area for us. They built 20 regional airports in the last 36 months,” he said. “We developed a franchise model that would work in China. (It took the last five years to do that.)”

Shrils also agreed with Hickox, and said, “We shouldn’t underestimate the importance of double-wide characters, not only in guest-facing, but back office environments.”

Shrils finds that many countries have regulatory or cultural issues barriers. His example is that a cinnamon roll in the United States isn’t as appetizing a breakfast in Mexico. “Adapting standards to local interests is something we constantly do,” he said. “Even our franchising models have to change occasionally because of this.” He also explained how changes in the political environment in some countries like Venezuela can cause problems. There, IHG cannot convert the local currency to U.S. dollars. The hardware available in the U.S. is not available in Brazil – another challenge when operating on a global level. Preferred vendors in those different areas of the world alleviate some of these problems. Even though he would like to centralize everything in Atlanta, Schrils knows IHG is very far from that.

Möevenpick has about 60 hotels in 23 countries throughout Western Europe, Africa and Mid-Asia), with 100 planned by 2010. Bernet said the biggest challenge for his company is brand awareness. “Not many of you have probably heard of us,” he said.

Bernet explained how at Möevenpick they also set up project teams on the technology side and include IT standards as much as possible in plans.

One thing all five panelists agreed upon was the need for the CIO Summit and professional organizations like HFTP and HTNG. “We need to talk amongst ourselves through HTNG (and other groups) or at these types of events. The basics of the process is good communication,” Hickox said.

Many of the attendees agreed including Peck. “This is a great opportunity for us as leaders in our industry with very diverse backgrounds, diverse companies, different needs and wants, to get together and share ideas,” he said.

Cahill said, “Used properly, technology can be a tremendous benefit or aide in achieving these goals (profitability), but if you don’t know what you are doing, you can make multimillion dollar mistakes, and not coming to an event like this intensifies the probability of you making those kinds of mistakes.”

Cahill then summed up his experience at the event. “After 38 years in the industry,” Cahill said. “It is just wonderful to see how technology has made a difference.”
And that it has.
Thank you to the 2007 CIO Summit event sponsors: Agilysys, Capton, Inc., Microsoft, NCR/Teradata and HFTP, and travel sponsors: Digital Alchemy and Four Winds Interactive, without all of whom we could not have hosted such a successful event.
-Submitted by Kris Burnett, Hospitality Upgrade

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