Hospitality Upgrade's 8th Annual CIO Summit, Sept 9-11, 2009: Royal Sonesta Cambridge, Mass.

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November 01, 2009
CIO Summit Review
Kris Burnett

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The city of Boston, Mass., is an area rich in charm, history, great sports traditions, beautiful hotels, and on Sept. 9-11, several CIOs interested in the latest technologies, current trends and professional connections.

Wednesday, Sept. 9
Hitting the Links
Hospitality Upgrade’s eighth annual CIO Summit began with a bang. Over half in attendance participated in the annual CIO Summit Golf Scramble, this year at the prestigious Andover Country Club. The field was highly competitive, with Sheila Donahoe of Bluegreen, Richard Tudgay of Omni Hotels, Tom Pullen of Pure HD, Inc., and Vineet Gupta of Fairmont Raffles Hotels coming in with the lowest score. Ron Hardin of Davidson Hotel Company garnered the closest to the pin award, while Sheila Donahoe took home the prize for longest drive.

The Opening Barbecue with a Twist
As with tradition, the event’s opening night icebreaker commenced, this year in speed-dating style. All attendees were able to meet and talk with at least half of the others in the room by rotating seats and introducing themselves. A New England clambake with lobster and other specialties from the area followed. All attendees had the opportunity to get reacquainted with the others by answering a question posed by random game cards on each of the tables, with topics ranging from what other career would they like to have to favorite cars, most embarrassing moments, favorite job over the years, and favorite conference to attend – no contest there.

Thursday, Sept. 10
The Top Line
The first session began with Joe Buhler, social Web marketing consultant and senior destination marketing analyst, PhoCusWright, and his examination of mobility – mobile networks, mobile travel applications, etc. He and Katrina Lane, senior vice president and chief technology officer, Harrah’s Entertainment, discussed how mobile platforms have the potential to enable innovative personal interactions with travel customers, enhance the travel experience and enable travel companies to create top line revenue.
Buhler said, “Mobile has been talked about for many years, and over the last two years (especially with the introduction of the iPhone™), mobile is advancing.” There are over 4 billion users (more than half the world) with mobile phones, and according to Buhler, that number will increase by 1 billion in the next few years. “They have sold 30 million iPhones since 2007,” he said.

According to Buhler, as a result travel companies should treat mobile not as another channel, but as a new platform that enables different and innovative personal interactions with customers. Travelers need filtered information that is location and context sensitive; today’s mobile platforms are highly fragmented, and the near future will see a continuation of this fragmentation, therefore travel companies need a multifaceted strategy; and mobile applications will enable travel companies to reach new levels of operational efficiency, but enhancing the travel experience should be of equal importance.

With the continued growth and demand for the iPhone, travel companies will need to create location and situational-based applications that take advantage of the ease of distribution to iPhone users.

Buhler said that a mobile search is a reverse funnel approach. Traditional Web searches return general results, and then the user refines his or her search. With mobile searches, specific results are returned and then are expanded.

What companies should do:
  • Review mobile search engine results for your company (mobile and transcoded content).
  • Optimize mobile Web site for mobile search engines.
  • Prepare for context-aware mobile search results (e.g., develop LBS data strategy).
  • Consider the reverse funnel concept for both mobile search and travel search specifically.

Frequent business travelers are significantly more likely to use Web browsing for travel-related services. Smartphone users are significantly more likely to access sites to make or change reservations.

The main reason mobile may not be used for Web browsing functions is an unwillingness to pay for extra services. Frequent business travelers (44 percent) are less likely to object than others, and women are significantly less likely to pay for extra services than men.

Studies also find that frequent business travelers are significantly more willing to accept promotional text messages, and men, and people between the ages of 18 and 35, are significantly more likely to agree to receive SMSs from vendors.

“Many hoteliers wrongly believe that mobile has more to offer airlines,” Buhler said. “(But) more and more of the larger hotel chains are using mobile.”

Nick Price, CIO of Mandarin Oriental, asked for which mobile sector Buhler would develop technology. “Smartphones,” Buhler said. “Old-style mobile won’t be your target because (their owners) just don’t travel that much. Your customers are more likely to have a smartphone.”

According to PhoCusWright, mobile bookings are a small percentage of total online booking over the next three years. Hotel and car mobile bookings show superior growth as these product categories are more likely to be booked via a mobile device. To become a significant channel, travel companies must implement mobile-specific applications that are location, contextual and situational-based, using both the power of the network and the power of the advanced smartphone.

Buhler explained that after years of waiting for mobile technology to have an influence on travel, travelers worldwide are finally adopting advanced devices and networks that can support new mobile applications. He said that mobile communication should be viewed as a new platform that offers the opportunity to create applications that are context- and location-aware to enhance the travel experience.

He recommended that travel companies take a multi-pronged approach to mobile software development, both enabling mobile Web and creating downloadable applications.

Cost should not be an issue, he said. “Advertising and promotion can support mobile branding and offset costs associated with development and deployment.”

Buhler said technologies such as augmented reality, stored value and personalized behavioral support will continue to develop over the next few years.

Ultimately, current mobile technology enables a range of travel applications that can empower mobile travelers, improve efficiency and build ancillary revenue.

Katrina Lane said Harrah’s focus is not really business traveler-related, but is more leisure traveler-related, so they have to look at mobility a little bit differently. The company bases its current programs on a significant consumer data strategy. Opt-in texts, for example, allow Harrah’s to send guests messages to their phones. The company’s goal is the ability to link up to their core databases down the road.

What Lane’s group found, however, was of those who surf the Web on a phone, a few do it to prove an argument, but none click through ads that are promotions.

Customers can access rewards, information or offers (reservations, rewards, property information, room availability, casino locator) via Harrah’s wireless application Web site (WAP site), so they knew they would need to offer this for phones (mobile device).
Harrah’s uses interactive campaigns where each casino has its own identity and page. Interactive mobile campaigns are used to engage guests and drive opt-in.

Lane said that many leisure travelers are older, and generally do not have iPhones, so their promotions are sent in a different format. Promotions focused on night clubs, however, are sent in text format, as the general attendees are younger in these venues.

“We are focusing a lot of efforts (on applications),” Lane said. “But customers aren’t quite ready yet–SMS is far preferred over (app) download.”

Harrah’s hasn’t spent a great deal of money, but because of the low messaging cost and the ability to advertise expiring inventory, it has been able to drive profitability and reap a strong ROI, in excess of 800 percent in some cases.

Lane referred to an opt-in SMS campaign where Harrah’s was able to text guests throughout their stays. “We have market-specific campaigns. If someone signs up online, we know the checkout date and can stop texting offers at that point. If you download an application, they give us dates and we stop the offers. If you do a downloadable app, we know where you are, and can offer nearby promotions,” she said.

Todd Thompson of Starwood asked about the value of SMS. “Eight hundred to 2,000 percent ROI,” Lane said.  “Harrah’s is getting very high returns with 40,000 to 170,000 offers delivered.”

Jane Durment of The Marcus Corporation asked if Harrah’s was using mobile devices for advanced checkin. Lane replied that they are working toward checkin kiosks in the valet area where advance checkin candidates can arrive to find their key packets in the valet area.

The Top Line Exercise
In this session, Sandra Andrews, hospitality industry solutions director, Microsoft, and Laura Wyant of Infusion Development presented some  new technologies currently in use. Andrews described several new products and applications in use in several properties around the world, and described some tools to create this business case strategy. Wyant explained how Surface™ works in different environments, including a restaurant where you can slide and place different toppings onto a digital picture of a pizza. The table then submits your order to the kitchen.

“Consumers are paying more for cell phones (or mobile device) now than in January (over $100 per month). People would rather lose their wedding ring than their cell phone,” Andrews said. She recommended to attendees that they “think about how you embrace the technology your guests are bringing through the door.”

The second half of this session was a practical exercise where attendees worked in teams to create a viable business application that supports the investment in a unique, new technology, while simultaneously adding to the company’s top line. Each group received a sealed envelope containing the details of their specific projects and had 60 minutes to develop their strategies. The judges for this interactive exercise were Kris Singleton of Kimpton and Katrina Lane.

Millennium Hotels’ John Edwards presented his group’s plan with multiple touchpoints and the goal of presenting several interfaces with which the guest could interact. Services included food and beverage, cocktails, concierge (build itinerary before arrive), and media feed content–the ability for guests to go in, have a drink, create a buzz and share a good experience.

Mike Uwe Dickersbach’s group decided to create a lounge with incremental revenue and functionality. From virtual juke boxes and song lists available for purchase, to interactive reservation services from the table, this group was focused on the next generation of customers.

The Role of the CIO
Tom Murphy, formerly of Royal Caribbean, and currently the SVP and CIO with AmerisourceBergen, and Todd Thompson, formerly with Jet Blue, and now with Starwood, were on hand to discuss the changing role of the hospitality CIO during the current economy.

Murphy said, “(The role) tends to switch back and forth between tactical and strategic. This recession is an opportunity for investment. What we have to do to keep the engine running and (come up with the next great idea.)”

He explained his current company, AmerisourceBergen, which “operates like we are in a recession all the time, we operate on a very thin staff.” His company is taking advantage of this time to differentiate itself through its significant IT spend and by working with its staff. The company has no planned layoffs, has increased the company’s 401K, and continued other benefits. The efforts during this economy are definitely paying off for his company. “We are the only company this year that split its stock (up 15 percent this year),” Murphy said.

Murphy then mentioned the importance of investing in the industry. “It is easy for customers to pull up another screen and choose someone else,” he said. “I think this is a great time to invest in IT.”

He also recommended that attendees look outside the industry for different ways of thinking about technology, and said, “Nothing will make you more credible than shining in an otherwise dark time.”

He told the audience to communicate effectively–responding to changing market demands and the expectations of customers. “Balancing services with strategy,” he said. “It is really the application of technology to the company that makes the difference. That’s where we have an opportunity.”

Thompson mentioned that Starwood has been working on its central reservation system initiative, Valhalla, a significant rewrite of the company’s reservations and loyalty system. The company also is in the process of the first phase of IT outsourcing.

He described the importance of getting involved within the industry and events like this. “I participate at HTNG and this summit because, this kind of participation at events, getting together and helping to raise the profile of the industry to our providers is a responsibility we have,” he said.

And, ultimately, the goal of the audience members is to help their company’s make money. “We need to wrap our hands around business,” Thompson said. “We really need to move revenue. What is it about our business that we can change. What really drives revenue to the business.”

Thompson recommended sharing solutions whenever they can, the need to buy when they can until they change the cost structure in the industry, and looking at where they can use partners to drive better value to the industry.

Scott Gibson of Best Western asked what things Starwood is outsourcing and what events brought that decision?

Thompson said it had been a three-to-nine-month process to outsource all of the back end of IT. (Support, applications, the running of every system above property and half of development. QA is also outsourced.) After trying internally for quite a long period of time, Thompson said, “I felt I could get higher quality resources, (and) significant cost savings. We felt like taking the focus off the maintenance of systems and running of systems, and we could focus on innovation and moving forward.”

The discussion turned to CRM, as Durment asked what seemed to be the most important focus in recovery time.

“Knowing who your customers are (having profile info.),” Thompson said. “If we leverage that, there’s a lot of power there. We want to do CEM the way that Harrah’s has done it; it’s really important that we look at best-in-class case studies outside of our industry.”

Price of Mandarin Oriental asked both where they thought they would be in five years, in hospitality or elsewhere.

Now outside of hospitality, Murphy said he misses the proximity to the customer that he had in hospitality.

Thompson said, “I wouldn’t go back to airline over hospitality. I really like the hospitality industry; the opportunity we have that technology affects the guest experience.”

Whassup?
This CIO-facilitated session allowed the attendees to share their opinions and experiences via an automated response system. The format provided for open discussion and feedback on current industry practices and trends being examined by those within the room.

The CIOs who moderated the four parts of this session included: Michael Schubach, CIO, Trump Hotel Collection; Jane Durment, CIO, The Marcus Corporation; Ken Barnes, vice president of information technology, White Lodging; and Brian Garavuso, executive vice president, chief information officer, Diamond Resorts International.

Schubach manned the open-table discussion, beginning with the question, “To whom do you report.” 59 percent said the CEO/COO, 24 percent said the CFO and 17 percent said God. Schubach said, “I personally believe there is no wrong answer. It is what works best for your company,” he said.

Is the trend moving toward the CFO? No, according to the group in general, it is shrinking, with the trend moving toward the CEO/COO. His second question to the audience was, do you feel like you report to the right person? Eighty-two percent of the attendees said yes, and 18 percent said no.

He then asked, what is the view of IT by management? Forty-eight percent said business as usual, 24 percent said more important than ever, 16 percent said less strategic, and 12 percent said there should be cuts soon. Schubach discussed how the role is more important because of efficiency and security needs, and less strategic due most likely to a lack of funds.

Schubach next posed the question how the audience views strategic initiatives currently. At 49 percent, close to half said they are the next big thing for their companies, 37 percent said at this time, they are really just performing maintenance (no new technology planned), 12 percent said they are in survival mode with not many strategic initiatives planned and 2 percent said cuts are planned instead.

Durment then took the podium and opened up discussion regarding succeeding in turbulent times. She examined budget constraints and how two years ago, operating budgets were 1.5 to 3 percent of revenue. Last year there was a significant change, with most moving closer to 1 percent.

The first question she posed to the group was, “What is your current IT spend (operating) for full service properties?” Forty-one percent said less than 1 percent, 16 percent said 1 percent, 25 percent said between 1 and 1.5 percent, and 18 percent said greater than 2 percent. For select service, 67 percent said less than 1 percent, 20 percent said 1 percent, 7 percent said between 1 and 1.5 percent, and 7 percent said greater than 2 percent.

When asked if they were going to cut their operating budgets, 22 percent said they were planning to reduce head count, 10 percent said they were reducing benefits and compensation, 17 percent said they were working to standardize their systems, 22 percent were centralizing their systems above property, 7 percent are planning to off shore, and 22 percent had other various options planned to cut costs.

Alan Zaccario, vice president, information technology, New Castle Hotels LLC, said his company was obtaining rebids on other services, and they are renegotiating with vendors.

The group discussed that since revenue is down, IT spend is reduced, with less monitoring, less on property, reducing licensing and stalling a lot of anticipated increases (raise freeze).

Thompson asked the group which systems they are centralizing. Parker replied that Magnolia has centralized PMS, accounting and payroll, all which reduces the  security footprint and total costs.

Vivek Shaiva said his company has centralized its PMS and PBX which has resulted in a reduction to one quarter of the cost with the centralized PBX.

Ken Barnes then addressed the group, “Who is driving technology standards for the industry?” Forty-three percent responded that vendors are driving technology standards, 33 percent said Alpha hotel companies (i.e., Marriott, Hilton, Hyatt, IHG, etc.), 15 percent said HTNG and 9 percent said CIOs/CTOs.

Best Western's Gibson said he thought it was maybe a combination of larger and smaller hotel companies–the purchasers of those systems. “As an industry, we don’t really do a good job of setting standards,” he said.

And, Ron Hardin said, “The brands are going to do what they want to whether it works or not–what is in the best interest of the brand.”

Hoffmeister(Marriott) agreed that hoteliers can have standards across brands. “It is a timing issue,” he said. “But, a lot of that is not aligned unless we are all ready to do it (above-property PMS).”

A surprising discussion was opened when Barnes posed the question, “What is HTNG’s staying power?” An alarming number, 74 percent, said HTNG would be gone in the next 10 years. (Forty-two percent said four to five years, 30 percent said zero to three years, two percent said six to seven years, and only 26 percent said HTNG would be active past 10 years.) Many thought it would still be around for a long period of time, but would be named something else.

On the vendor side, Tina Stehle, senior vice president and general manager, Agilysys, Inc., said, “We very much hope HTNG is successful. (We spend) development dollars on adhering to (its) standards and will continue to do so. It is interesting what the CIOs (here) are saying.”

Barnes had spoken with HTNG Executive Vice President and CEO Doug Rice the week before The CIO Summit. “I joined one of the workgroups and had to justify my position to be on the group. Doug admitted they haven’t done a good job of getting things to market quickly,” Barnes said.

Gibson said Best Western is very active with OpenTravel Alliance. “We have spent a lot of money to create an OTA-compliant reservations system,” he said.

Durment reminded the group that the major brands are participating in HTNG as well as management companies. “The original idea was so we didn’t have to deal with integration issues at the property level,” she said. “That is a worthy objective.”

Barnes then asked, “What new percentage of IT investments are meeting HTNG standards?” Schubach said he goes to the vendors and has them make the product do what he needs it to do whether it is HTNG compliant or not. When pushed most CIOs agreed on this point.

The last portion of the open-table session was led by Brian Garavuso. He asked the audience a more general question, what topics they would like to discuss, CRM, GDS/IDS or above-property PBX. Above-property PBX was selected by 55 percent of the respondents.

Shaiva explained that his company has been investigating for the last year and they are trying to centralize everything possible, including the PBX which has virtually paid for itself. He said the interfaces are working very well, and the auto attendant is also centralized. Other calls can be directed to a standardized voice mail if the property is closed due to hurricane or other issues.

Corporate Wi-Fi was chosen over social networking by the majority in the second of Garavuso’s questions. Barnes said, “As a limited/select-service after Sept. 11, 2001, we made a strategic error by supplying Internet for free. We need to get more bandwidth to the hotels.”

Cocktail Reception and Gala Dinner Cruise in Boston Harbor
Cruising Boston’s harbor on the beautiful Odyssey yacht, attendees experienced breathtaking views of Castle Island and Boston Light, as well as a close-up view of the historic Naval Yard and the U.S.S. Constitution—all while networking with peers.

Friday, Sept. 11, 2009
GOYA

This session on personal well being and improving health in general was one of the most popular, and definitely had the most follow-up questions. Guest speaker, Dr. Roy Siegel, world-renowned chiropractor and brother of Richard Siegel, offered practical insights into wellness that will help all be more effective on the front lines of business and at home.

Two important recommendations Dr. Siegel said were taking time to nurture your physical and mental being, and the subject of the session, GOYA – “Time to get off your ‘bum’ and take some action steps, eat nature made and laugh more so you live better, longer, healthier and happier,” he said.

Dr. Siegel said, “Health issues can be caused by trauma, toxicity, insufficiency, and can be influenced by genetics, lifestyle, occupation, environment and nutrition.”

Seventy-five percent of health issues are caused by genetics, but as he said, “You can override genetics with lifestyle… Laugh at least 15 times a day. The more you laugh, the more you will upgrade your immune system. Laughter is very, very, very healthy.”

Dr. Siegel said even simple things like improving posture (holding your head over your torso), having mini-meditation breaks during the day by just closing your eyes, dancing or wiggling, improving diet, taking supplements and daily exercise can all improve one’s health and stress level.

“The nation spends about 25 percent of its total health care tab, or about $250 billion a year, on medical care for unhealthy habits and other modifiable health risks such as smoking and obesity, a new study says,” said Siegel.

He stressed the additional necessity of a good night’s sleep. “The body heals during sleep,” he said. “You are making brand new tissue. Unhealthy habits are costing us a lot of money, and making us unhealthy."

Approaching Data Security in the Current Economy
Vivek Shaiva, CIO of LQ Management LLC (La Quinta), discussed the steps his company is taking to keep its data secure, the effect the turbulent economy is having on attempts to breach systems and how they are approaching PCI compliance.

Along with the informative content that Shaiva had to share, this session proved to be interactive as well.

LQ is a level-two merchant requiring self assessment; (starting in 2010, it will need an external assessment). It is a 6- to 8- month project with significant investment in technology and changes to operational processes. The company evaluated third parties for PCI assessment, but decided to leverage credit card company resources for guidance and used internal IS resources for the project.

PCI compliance had a wide ranging impact on all areas of IT. The benefits of compliance include: enforces many IT and security best practices, secures infrastructure against viruses, and others.

Shaiva said that with the recession there has been a higher incidence of virus attacks, credit card fraud and increasingly sophisticated attacks.

Gibson said, “If the customer books online, the PCI is up to the (GDS) to be compliant… and it is not your problem.”

Durment mentioned the importance of making sure third parties are compliant as service providers, not just as merchants.

Regarding personal data privacy, Schubach said when booking through a Web booking engine, there is a perception that the guest has given his credit card information to your hotel, not a third-party booking engine.

When the discussion turned toward franchisee relations, Gibson recommended that if you can’t be sure if the franchisees are secure, then stop sending them credit card reservation information. Barnes said the liability stops at the hotels (at the router or server).

Regarding wireless, Shaiva said, “We keep our guests’ high-speed wireless on a separate network. Our corporate wireless we have to keep secure.” Shaiva said they also have eliminated card swipes at the property level and take manual imprints now as an additional security measure.

At the end of this highly interactive session, Rich Siegel closed the summit with a special thank you to Carol Campbell Beggs of Sonesta International Hotels for hosting the event, and to event sponsors, HFTP, Agilysys, Datanamics and SAS, as well as transportation sponsors, MTech, Pure HD and HP.

The overwhelming response and attendance was truly motivating during this economic time.  “There is no other venue that provides the same opportunity to make connections with others facing the same challenges and opportunities,” Campbell Beggs said. ”Oftentimes the value of attending the meeting is not realized at the meeting, but long after when you can reach out to someone with a question or for a reference.”  

- By Kris Burnett, Hospitality Upgrade

 

2009 ATTENDEES:

Chuck Marratt, MTM Luxury Lodging; Jane Durment, The Marcus Corporation; Venky Rangachari, Wyndham Worldwide; Yu Jin, Four Seasons Hotels & Resorts; Brian Garavuso, Diamond Resorts International; Sheila Donahoe, Bluegreen; John Edwards, Millennium Hotels; Vineet Gupta, Fairmont Raffles Hotels International; Alan Zaccario, New Castle Hotels LLC; Vivek Shaiva, LQ Management LLC; Paul Bushman, Interstate Hotels and Resorts; Nelson Garrido, Noble Investment Group; Richard Rabinoff, Xanterra Parks & Resorts; Carol Campbell Beggs, Sonesta International Hotels Corporation; Kris Singleton, Kimpton Hotels & Restaurants; Ira Greenfield, Extended Stay Hotels; Scott Nowakowski, Denihan Hospitality Group; John Malenfant, Saunders Hotel Group; Bernard P. Gay, Sr., Kerzner International; Andy Ross, Canyon Ranch; Mike Blake, Hyatt Hotels Corporation; Lyle Worthington, Horseshoe Bay Resort; Terry L. Price, The Grove Park Inn Resort & Spa; Walter Zalewski, Al J. Schneider Company; Paul Major, Aspen Skiing Company; Jeffrey Stephen Parker, Magnolia Hotels; Simon Eng, CTF Development, Inc.; Bruce Hoffmeister, Marriott International; Ken Barnes, White Lodging; Richard Tudgay, Omni Hotels; Bradley Koch, HEI Hotels & Resorts; Martin Stanton, Destination Hotels & Resorts; Rajiv Castellino, Great Wolf Resorts; David Barbieri, Red Lion Hotels Corporation; Mike Uwe Dickersbach, Thayer Lodging Group; Tony DelMastro, Loews Hotels; Scott Gibson, Best Western International; Michael Schubach, Trump Hotel Collection; Todd Thompson, Starwood Hotels & Resorts Worldwide, Inc.; Alexander Danon, Grupo Posadas; Jim Hansen, Larkspur Hotels & Restaurants; Bill Martin, Royal Caribbean Cruises Ltd.; Gustaaf Schrils, IHG; Myles Cyr, Carnival Cruise Lines; Ron Hardin, Davidson Hotel Company, Martin Scheidl, Orient-Express; Nick Price, Mandarin Oriental Hotel Group; Katrina Lane, Harrahs Entertainment.
 
 
 

 “In no other conference will so many attendees from diverse backgrounds have similar issues that can be analyzed from different angles and multiple solutions and results shared among a peer group.”
- Gustaaf Schrils, VP, global technology Americas, InterContinental Hotels

 

“The CIO Summit is an excellent forum to meet other technology leaders from the hospitality industry and to discuss the issues facing all of us today.”
- Bruce Hoffmeister, senior vice president, sales and marketing information technology, Marriott International

 

Factors Influencing Mobile Adoption:
  • The growth of smartphone and 3G adoption will continue to drive the need for more mobile travel applications 
  • With app stores from Apple and Google now in place and new app stores planned for T-Mobile and RIM – Web enabled downloadable applications will become the norm
  • New 4G networks will be implemented in 2010-2012 improving mobile Web speeds and reliability

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