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2012 Executive Vendor Summit Review: April 11-13, 2012 – Hotel Valley Ho, Scottsdale, Ariz.

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June 01, 2012
Executive Vendor Summit Review
Kris Burnett

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“It’s all about networking, meeting new people, catching up with existing friendships... Getting a feeling for how technology is evolving in the industry and where people see opportunities...”

That’s what the attendees had to say and this definitely was not a session of summer camp; it was Hospitality Upgrade’s 8th Executive Vendor Summit, held April 11-13, 2012, at the Hotel Valley Ho in Scottsdale, Ariz. Retro, funky, fun – call it what you will, but it was just a great venue for this group of technology leaders. At this annual event, hospitality technology executives meet for the incomparable networking activities and educational sessions.

Blueprint RF’s John Blake said, “The summit is an indispensable opportunity to meet with industry leaders and form meaningful relationships that will advance not only company objectives but industry advances that will accelerate the future of hospitality.”

Nowhere else can technology executives meet in a non-selling, noncompetitive environment and gain so much benefit. “It’s the best opportunity to discuss business with peers without the pressure of customers and prospects in attendance,” said Mike Schmitt, CEO of Clairvoyix.
For those who arrived early on Tuesday night, April 10, Microsoft hosted a reception and sneak peek at some of its new products at its original Microsoft Store location.

The first day of the conference began with the annual golf tournament at the Arizona Biltmore, a beautiful course flanked by the mountains and desert of Scottsdale. Following the tournament, attendees were treated to an opening night dinner on the roof of the hotel with spectacular panoramic views of the surrounding area.

Day two began with the first of the educational sessions.

Session No.1:
with Jan Freitag, senior vice president, Smith Travel Research (STR); James Filsinger, general manager, EZYield, a TravelClick Company spoke for John Rovani, senior managing director, The McLean Group, LLC; and John Burns, president, Hospitality Technology Consulting.

The opening to this session examined global hotel room supply, demand, customer bookings by distribution channel and RevPAR over the past year and projected through the end of 2012.

“Life is pretty good in the hotel industry and will continue to be (for the remainder of 2012 and into 2013),” said Freitag. However, he said that the Middle East/Africa were hit hard with the unrest across the region, but China was booming. “Everybody is focusing on China,” he said. “This is where people are building.”

Tom Littleton of LMG Data Mining asked what the high water mark was for occupancy. Freitag said that occupancy is at about 64 percent. “U.S.-level occupancies are not going to hit any higher,” Freitag said.

The challenge is the pricing that has been passed down. “You can’t increase rates as quickly as you discount. The discounts we inflict will be with us for quite a while,” Freitag said. Regarding U.S. occupancy, hotels are filling 7 out of 10 rooms. “Certainly on the upper end of the market, the occupancy is very strong (but they are discounting),” he said.

Freitag provided a forecast for 2012. He said, “In this year, there is very little new supply, but more rooms than ever are being sold. Demand growth is more normalized, which gives us pricing power. The upper end of the market continues to dominate."

Jan Freitag: “The global hotel industry is recovering and all eyes are on China. Western chains are expanding and it will be interesting to watch if they grow with their own brands, through joint ventures or by buying a Chinese brand outright. • The U.S. hotel industry is in the second part of the recovery cycle, where RevPAR growth is driven by ADR increases. We expect this to continue throughout 2012 and 2013. • The channel distribution study is an important first look at the impact of channels and the revenue potential for each. OTAs are 8 percent of industry revenues, but 88 percent of the conversation.”

Filsinger spoke for The McLean Group, examining hospitality vendor mergers and acquisitions in the past year and looking at the year ahead.

“There were a lot of transactions in 2011; some of the cash is starting to be freed up,” he said. “We saw a good mix of strategic buyers and private equity groups.”

According to Filsinger, the stock market is returning, there is good confidence and companies are willing to spend money.

SaaS companies are outperforming others and the public is seeing value in this type of business model. Filsinger said many are really seeing this as the future.

Regarding M&A, “Customers are saying, I just want this one single provider,” he said. “I want one vendor that I can go to and say; you are accountable.”

Filsinger said currently there are more buyers in the market, which means it’s a seller’s market. He cautioned the attendees that they need to get ready and prepare, for that. “You may actually see more sellers in the market as it starts to get more active,” he said.

John Rovani was unable to attend, but sent a reminder to the attendees of the things buyers seek. According to Rovani, amenity-based revenue streams and long-term, service-based contracts are very valuable to potential buyers.

James Filsinger: "Acquisition activity picked up in 2011 with both strategic buyers and private equity groups loosening their purse strings.  This trend is expected to continue in 2012, and SaaS-based companies in the hospitality industry can expect to see favorable multiples as a result.”

John Burns closed out the session with a look at consumers’ decision making, social and video behaviors, and the increasing number of venture capitalists who have dipped their toes into the world of hotel ownership.

There are many options for how a hotel makes its presence more visible to the market. “OTAs have been good for us. They were incredibly useful in 2011,” Burns said. But this does not come without a warning. Burns said, “Sometimes we panic when times get bad. With fragmentation and OTA’s strength in the business cycle, we are giving away more than we should. Are we smarter, and have we learned? I think a lot about transparency,” he said. “(In the past) rates were hard for guests to compare. We now have rate transparency that is unparalleled.”

One struggle with technology purchases is that many hotels don’t want to replace something unless it is fully broken, and there may be new staff to train. Burns applauded vendors who are focusing on screen design and usability.

Private equity has come in and made a big difference, according to Burns. Revenue managers are very focused on different things than they have been in the past. Now revenue management is part of distribution. “In the future, sales will report to revenue managers… the general manager will become a revenue manager,” Burns said.

He reminded the group that you can’t get away from the impact social media outlets are making. One example Burns gave was Pinterest and its travel recommendation influence to people within a close community of designated "my" people.

The topic of Groupon also came up. “I think Groupon was a flash in the pan; for six months it made life hell,” Burns said.

John Burns: “The hotel industry’s ‘high anxiety’ with online travel agencies has its roots in our sometimes lackluster negotiating skills and our too-frequent unwillingness to say, ‘No.’  • We have recently seen considerable merger and acquisition activity among hotel technology vendors. My opinion: it’s not through yet.”

Session No.2:
Why Can’t We Be Friends?
with Jon Inge, president, Jon Inge & Associates; Rick Munson, president and CEO, MSI (Multi-Systems, Inc.); Don Hay, founder and CEO, Digital Alchemy; Frank Pitsikalis, founder and CEO, ResortSuite.

Moderated by Jon Inge this session delved into systems integration, standards and how combining efforts with partners can make it work. Inge referenced that several in the room had attended the HTNG Annual Conference.

“The interface to the guest has to be seamless,” Inge said. “Building working relationships is important to building unique interfaces,” he said.

MSI has developed more than 2,300 interfaces. “In my 22 years in this industry, it has been really difficult to figure out how to interface with other technologies,” Rick Munson said. “It’s about the relationships in this room and between our engineers.  And, what we have done with cloud technology, it has allowed me to think outside the box.”

Rick Munson: “When two or more people get together, and share their thoughts from an authentic and transparent point of view, new ideas are created.  This open sharing and communication of new ideas creates trust, which helps build a solid foundation for a new relationship.  The creation of the relationship is what brings solutions to our industry.  This helps us solve our problems... technology and otherwise.”

Don Hay talked about one collaboration we all can relate t Apple® and Microsoft. “In 1997, Apple had less than a year of life left,” he said.

According to Hay, Steve Jobs went to Microsoft because Apple was creating a new Mac, but it needed Microsoft® Office. “If they don’t get that in place, Apple dies,” Hay said.“ Jobs was talking with Bill Gates and convinced him to invest $150 million in Apple. Microsoft was willing to make Apple part of its world.”

Hay pointed to the importance of integration throughout the hospitality community. “Without data from the PMS, spa system, golf, etc., we don’t exist,” he said. “They could develop that capability, but they would be creating a new business model. We have to coexist and share data.”

HTNG has contributed to the benefit of many technology vendors. “How quickly we can implement things (in terms of HTNG), it has changed the world,” Hay said. “With XML, it took two days for Digital Alchemy to interface with Genares. (with the help of HTNG standards).”

Don Hay: “I’m a strong believer that we as vendors are stronger when we work together.  XML in general and HTNG in specific has provided a much easier, faster and more effective way for us to get more creative as an industry by integrating our services.  The first benefit we have seen is in interfaces being developed in a fraction of the time compared to the previous generation.  Now we are starting to see much more tightly coupled integration between different systems.  One vendor can offer the services of another by adding a button or a screen to their application that causes the other vendor to render the result.  The next few years are going to be very exciting.”

Frank Pitsikalis finished out the panel and reminded the group of a discussion from a previous Executive Vendor Summit. “A few years ago at this event, I could sense some latency or frustration about HTNG. We have to have a voice within HTNG as a vendor community,” he said.

In 2010, Pitsikalis called Doug Rice, executive vice president and CEO  for HTNG, and talked about finding a way for the vendor community to have a voice. In 2011, the vendor advisory committee was approved. “HTNG has been so hotelier driven, we need to make sure we are all aligned,” Pitsikalis said. “There’s some good progress being made. At the end of the day, we will have adoptions, better tools that can make the guest experience that much better. We realize that hotels need to have a choice as we may need to integrate our spa or golf system with another PMS or other systems.”

Session No. 3:
Cloud 2.0
with Michael Infante, global hospitality alliance and industry director, Microsoft; Arif Gursel, global technical strategist, Microsoft; Doug White, senior vice president, NTT Data; Greg Duff, owner and chair of hospitality, travel and tourism practice, Garvey, Schubert & Barer; and Victor Vesnaver, senior vice president, sales and marketing, PAR Springer-Miller Systems.

This session examined the challenges and considerations associated with migrating to the cloud, how to choose a hosting partner, the legal implications of moving to the cloud and what customers will expect.

Infante and Gursel asked the audience how many were using some component of a cloud-based solution. Of those in the room 56 percent said software as a service, 9 percent said platform as a service, none said infrastructure as a service, 31 percent said all of the above and 3 percent said none of the above.

Gursel discussed demystifying the cloud, and began by explaining to half the audience who answered they have a solution hosted in a data center, that it is actually infrastructure as a service. “When you look at your business, you really have to determine what you need,” he said. “I always ask how do you interface with others, how do we make that easier? The cloud offers some advantages.”

MSI has been a Microsoft partner for 17 years and Munson asked who will take responsibility for client data, especially financial data.

Gursel said, “Compliance is a really sticky issue. We are not going to let auditors come into our data centers. We have secure aspects in place to protect it.

“The true value of the platform as a service is not having to manage anything, redundancy is built in,” he said.

Doug White opened his segment by focusing on one of the industry’s top concerns. “Security is a big issue. It’s the integrity and reputation of a company if something happens,” he said.

The primary concerns when evaluating this process include if the environment is secure, confidential and highly available; management and compliance control; the cost for compute, storage and network pools; SLA; compute and storage resource flexibility; resiliency I/O intensity; latency sensitivity; hardware architecture sensitivity; and integration with standard system management tools.

Some of the advantages of a public cloud include shifting public data to an external cloud reduces the exposure of the internal sensitive data; cloud homogeneity makes security auditing/testing simpler; clouds enable automated security management; and redundancy/disaster recovery.  White said, “The advantage of a private cloud is its dynamic environment and its cost.”

Doug White: “Cloud computing is more than a technology that if leveraged correctly will transform every aspect of IT.

Greg Duff added to the cloud discussion by providing some extremely useful information about contracts and privacy legislation, and was one of the most popular and question-provoking sessions of the day. Duff said that companies should think about changing from a technically managed solution to a contractually managed solution. He also stressed the importance of allocating risks and uncertainties to a third party, and reminded the group that the cloud is constantly evolving.

“The average cost of a security breach is between $7 million and 8 million per breech,” Duff said. This amount includes fines to state, federal and local governments, depending upon where the data is at the time.

Duff said there are two questions to ask: Can I move this data and these functions to the cloud? Once I do this, who is liable if there is a breech? “Under most trade secret laws, you must keep your trade secrets secret,” he said. “By moving to the cloud, you could be underpinning this.”
Duff also warned to take a close look at license agreements to see whether you are authorized to move it to the cloud. When considering cloud contracts, Duff recommended due diligence regarding security, contract formation and modification, term and termination, reservation of rights and confidentiality and warranties.

One resource he pointed out was the Cloud Security Alliance (CSA), a group of 120 corporate members dedicated to cloud security guidelines. “Most cloud vendors will reserve the right to change the terms at any time (i.e., pricing, key functionality, etc.),” he said. “If you don’t like the terms, you may have to cancel.”

Duff said, “Ask for written certification because sometimes even after data is destroyed, remnants remain.” But, he warned, most cloud service providers will not issue a warranty.

By examining its own case study, PAR Springer-Miller’s Victor Vesnaver touched on the advantages of the cloud and matching demand as well as PAR Springer-Miller’s success in working with Azure.  “We were absolutely convinced that our new product was purpose built for the cloud,” he said. “(PAR Springer-Miller) is selling cloud services to our customers, but we are also cloud consumers.”  The cloud enables the company to match demand as it happens and allows it to increase capacity when needed without having to buy more servers.

Victor Vesnaver: "Unlike a private cloud or purchasing infrastructure as a service, Windows Azure provides an unmatched operating environment and allows us to scale our expenses as our business grows. This translates into a more scalable and cost effective solution for our customers.”

Session No. 4:
And They’re Off…
with John Doyle, professional horseplayer, spokesperson and partner for Horse Racing Labs and 2011 North American Handicapper of the Year.

As an annual tradition, the summit team had a fun, unique and nonindustry-related session up its sleeve. Surprisingly one of the most popular of the conference, session four was an afternoon treat that hopefully garnered some great benefits at the track.

After a past life including 10 years with IBM, Doyle found his true love in horseracing. Doyle brought a little bit of the racetrack with him just a few short weeks before the Kentucky Derby, and showed not only important things to look at when evaluating horses, but how some of these observations can translate to business. A highly entertaining and popular session, Doyle did a fantastic job of not only giving the inside track on the Derby, but relating it to those in attendance.

He said the Derby is unlike any other race. Aside from the people, the environment, the food, the dress code, the pomp and circumstance, it is a longer distance than most; it has a much higher purse by far, reaching upwards of $2 million on average; and the field size is much larger, with as many as 20 participating horses.

Doyle explained a wide range of factors he and his partners use in evaluating horses. Most in attendance were surprised to hear that a horse's blacksmith is equally as important as evaluating the horse's trainer and owner.

Based on our post-conference survey, Doyle was one of the three most popular speakers this year. I wonder if some in attendance were linking this session to the how-to-make-an-exit-from-your-company segment the following day…. Which brings us to the last session of the conference.

Session No. 5:
White Space
with James Filsinger, general manager, EZYield, a TravelClick Company; Ashish Gambhir, founder, newBrandAnalytics; and Bryson Koehler, operating partner, hospitality and leisure, Exigen Capital.

Gambhir began the session by focusing on the trend of structured data becoming unstructured data. Commentary is going from solicited to unsolicited on many different channels. “Consumers are not doing a survey where they rate from one to five,” he said.

Gambhir and his partners read the feedback on Citysearch.com™. “There was a tremendous opportunity (to use) this commentary and to use the commentary about their (the locations’) competitors,” he said.

The goal is to bridge the gap from the consumer who does not like structured commentary, then take a stream of data and put structure into it. “All of a sudden, if you put structure to this unstructured data, you flip social media upside down,” he said. “I do believe existing systems are going to build out some kind of link,” Gambhir said.

Ashish Gambhir: “Guest feedback is shifting in two important ways: 1) It is evolving from solicited to unsolicited commentary, and 2) feedback has gone from structured to unstructured.  Unsolicited feedback is arguably data in its truest form and can serve as a compelling barometer/ROI indicator for initiatives on a local level.  •  The hospitality industry is evolving from a transactional approach to social media (i.e., read and respond) to a holistic assessment (i.e., utilizing online mentions to understand drivers of lifetime loyalty.”

I don’t think horse racing came into play for Filsinger when readying EZYield for sale in 2011, but some ingenuity, partnering with solid financial advisors, and some extensive preparation certainly did. After posing the question to the audience, 90 percent in the full room answered that they were the owners of their companies. Eight said they had thought about an exit.

“Your role in the company is ending, but you have (built) a great deal of value,” he said. “The value of your company is your people. Product and intellectual property forms the foundation for the value of your business.”

Filsinger said it is important to have the company’s value points clearly documented, as well as your vision for the future of the company. Diversified customers are also important. “If 80 percent of your business comes from five companies (customers), that will stand out to a potential buyer (negatively),” he said.

He also said properly forecasting is essential. “You need to be realistic. It sends a better signal to the buyer,” he said.

Clear master service agreements (MSAs), as well as an experienced management team are also important. Filsinger had been on the buyer side before, which helped in the diligence process as the seller (EZYield in 2011). It can also be helpful to have a very strong and experienced HR manager. Another recommendation is to build in some management transitional period or pay-to-stay process. “The buyer wants to make sure that once you close the deal, your management team doesn’t run off,” he said.

Bruce Bensetler with Data Plus Hospitality Soultions said, “With all the concern today about liability, I have found it is difficult to get someone to agree to be a director; some put together an advisory board.”

Filsinger said, “I think that’s a great idea. You are showing the buyer you are not looking at this in a myopic way. You have assembled experts in the field to advise your company.”

James Filsinger: “It’s vital to get your house in order and have a buyer’s perspective if you’re considering an exit event. And bringing in a professional manager with operational and M&A experience can help you accomplish that.”

Bryson Koehler rounded out the white space discussion and focused on why ERP is needed in the industry. “The brands are spending tons of money on technology. We’ve got so much complexity, it makes it difficult. Brand owners want to update IT systems to respond to OTAs but are unable to commit capital in an uncertain business environment,” he said. 

Intermediaries like GDSs/OTAs are expected to contribute 50 percent of hotel revenues by 2015. OTAs are the fastest growing channel, but the least profitable. “We’ve invested in all of this technology (revenue management, yield management), yet we are allowing the OTAs to be the least profitable,” he said.

Koehler estimates that the average hotel uses over 50 different IT systems from over 100 vendors; each vendor has its own protocol, pricing model and business objectives. “With all the different processes that go into a hotel, those business (solutions) may not be aligned with what the hotel owners need to have happen,” he said.

Investment firms want to spend money on technologies or solutions that can make a differentiation for a hotel (like a mobile property app), but often times there’s no money left after property maintenance and day-to-day operations.

He said the travel industry needs to find ways to provide a holistic solution. “We’ve got all these silos and they aren’t talking together. They aren’t integrated together, and we have reached the pinnacle value of these silos,” he said. “Bring it above property and truly make it a Web-based application, and shield the hotel staff from the complexities.”

Bryson Koehler: “We are building a next generation Ecosystem for the hospitality industry that is based off the fundamental view that a holistic, integrated, above property solution will be required for hotels to compete in the new era of third party distribution and review driven guest expectations.”


That was the last of the sessions and the 2012 Executive Vendor Summit ended with rave reviews.

Cendyn’s Bob Magliozzi said, “There is no industry event like this. If you want to meet and interact with the movers and shakers of the hotel vendor community, This is the place to be.”

Patrick Van der Wardt of Brilliant Hotelsoftware agreed, and said the biggest benefit of the summit is meeting with peers in a relaxed but professional atmosphere.

We would like to extend a special thank you to HFTP, The McLean Group and Microsoft for their support of this year’s event. For more information, please visit www.vendorsummit.com.  

- By Kris Burnett, Hospitality Upgrade

To view some great video clips from the 2012 Executive Vendor Summit, please visit www.hospitalityupgrade.com/HUTube.  
©2012 Hospitality Upgrade
This work may not be reprinted, redistributed or repurposed without written consent.
For permission requests, call 678.802.5302 or email info@hospitalityupgrade.com.


Executive Vendor Summit Attendees – 2012
Michael Infante, Microsoft; Rod Jimenez, Whiteboard Labs; Jon Inge, Jon Inge & Associates; Kristin Intress, InnLink, LLC; John JB Blake, Blueprint RF; Ron Dressin, RedRock Software; Bill Linehan, Sceptre Hospitality Resources; Mike Baldinger, Evention; Bruce Bensetler, Data Plus; Mary Siero, Innovative IT; Jon Dulude, DuVoice Corporation; Laura Kirby-Meck, Merchant Link; Ted Horner, E Horner & Associates; Michael L. Russo, MICROS Systems, Inc.; Patrick van der Wardt, iTesso; Rick Munson, MSI; Mike Schmitt, Clairvoyix; Paul Rantilla, Passkey; Murat Ozsu, innRoad, Inc.; Vanessa Ogle, Enseo, Inc.; James Filsinger, EZ Yield, a TravelClick Company; Peter Klebanoff, LodgeNet Interactive Corp; Jeff Venza, Venza Group, Inc.; Sunil Ippagunta, Adaco; Arif Gursel, Microsoft; Evan Brown, ENG Infotech Corp; Steve Gelb, MaximRMS; Victor Vesnaver, PAR Springer-Miller Systems; Sherry Marek, Datavision; Jeff Kiehn, Cenium; Juli Barter, POST Integrations, Inc.; Matt Koch, Telkonet, Inc; Tom Littleton, LMG Data Mining; Trevor Warner, Warner Consulting Group; Mark Hoare, The Prism Partnership; Keith Cotton, DerbySoft; Stewart Applbaum, Infor Global Solutions; Robert Magliozzi, CENDYN; Don Hay, Digital Alchemy; Todd Thompson; Rory Fagan, SAS Institute Inc.; Frank Pitsikalis, ResortSuite; Mark Swanson, Immersion Technology Inc.; Kyle Buehner, NAVIS; Cris Davidson, FCS; Luis Segredo, MTech; David Perkins, IQWare Inc.; Michael L. Waltman, Interactive Sites, Inc.; John Burns, Hospitality Technology Consulting; Gregg Hopkins, Libra OnDemand; and Jay Troutman, APTECH.

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