Tech Talk

Recent posts

I continue with the third part in my series on enterprise system pitfalls and now discuss the problem of what I call the infrastructure imbalance. I have two previous posts that introduce the topic of pitfalls of enterprise systems and discuss the pitfall of over abstraction.

Today I continue my series on enterprise system pitfalls and discuss the problem of over abstraction. Be sure to read my previous post which lays the foundation for this series.

Are we getting the economic return we should be with new technology innovation? In this article, I’m starting a series reflecting on common weaknesses in enterprise systems development, and am going to try to unpack as concisely as I can these pitfalls we fall into.  We’ll analyze why we stumble into these problems, our struggle recognizing the root causes, and the results.

HU talks with Bob Diachenko, the cybersecurity expert who discovered the breach, about steps hotels can take to prevent data incidents

A groundbreaking new report by the Urban Land Institute in Washington, D.C. explores sustainability in the hospitality industry and examines ways in which hotels are incorporating eco-friendly best practices into both operations and construction. The study includes insights from leading hotel owners, developers and investors.



want to read more articles like this?

want to read more articles like this?

Sign up to receive our twice-a-month Watercooler and Siegel Sez Newsletters and never miss another article or news story.

x
 

The Saga Continues: When You Play the Game of M&A, You Win or You Die

11/23/2015
by Michael Schubach

Despite some extensive public hand wringing for the past few days, there’s one certain ray of sunshine amidst the dire speculation racking the hospitality industry: there are now many more hotels that will accept your points if you’re a member of Marriott Rewards or a Starwood Preferred Guest. The bigger question, of course, is if you aren’t a loyalty club member, an employee, a supplier or a shareholder, did anything of any significance actually happen during Marriott’s annexation of Starwood.

Let’s face facts: we occupy a spot on the time/space continuum that favors the mega-corporation. In and of itself, being plus-sized isn’t a bad thing – it’s just one other way of being. The stakeholders of such companies – as well as every other kind of company in the galaxy – have an expectation that the business they’ve invested in will grow, prosper and produce a significant return on that investment. Mega-corporations can’t meet this requirement through constant and sustainable growth; after all, how do you go up from already there? For the giants that dwell amongst us, growth happens primarily through mergers and acquisitions.  M&A activity doesn’t always yield the hoped-for organizational and financial objectives – in fact, statistics show that it fails in those areas more often than it succeeds – but you can’t deny that Marriott just grew. Their property count leapt by an astounding 30 percent. To quote Arne Sorenson, president and CEO of Marriott International, “The driving force behind this transaction is growth.” 

How will Marriott manage this sudden growth spurt? According to the joint press release issued on November 16, “Marriott expects to deliver at least $200 million in annual cost savings in the second full year after closing. This will be accomplished by leveraging operating and G&A efficiencies.” For those who of you who do not speak Mergerese, “leveraging operational and G&A efficiencies” translates into English as “we will convert them to our purchasing program and IT systems, and then we will eliminate their accounting team in favor of our own.” Everything that is redundant will be made redundant.  

And what about the changes in both company cultures? Not a problem, according to the press release: “This combination brings together two of the most talented teams in the industry. Together, they will combine their innovative ideas and service commitment to deliver unforgettable guest experiences.” Again, allow me to translate: “We will send them a copy of our procedural manuals.” 

Let me be very clear here: I’m not Marriott bashing, I’m M&A process bashing. It’s a long, tough path but when all is said and done, Marriott will have significantly expanded its global footprint and will leverage and grow the lifestyle brands that Starwood brings to the table.  Marriott will continue to march toward management deals and away from direct property ownership. “Marriott expects Starwood to continue its capital recycling program, generating an estimated $1.5 to $2.0 billion of after-tax proceeds from the sale of owned hotels over the next two years. The hotels are expected to be sold subject to long-term operating agreements.” Will the stakeholder/investors applaud the deal? You tell me: “In 2015, Marriott expects to return at least $2.25 billion in dividends and share repurchases to shareholders. Marriott believes it can return at least as much in the first year following the merger.”

But what will really really happen? Nuances will be lost in translation. People will quit or be fired, retired or released over changes they didn’t foresee or can’t adapt to. The guests who loved things just the way they were will probably feel the great disturbance in the Force the most acutely. They will look back nostalgically to the time when Starwood was Starwood, much as I like to remember a time when air travel was fun. And to quote the ancient Romans, this too shall pass.   

Nonetheless, I suspect it would somehow be more satisfying if the situation were more dramatic. As a nation of Game-of-Thrones addicts who are more drama-dependent than anyone cares to admit, we constantly search for some deeper mystery, some hidden agenda or some covert conspiracy that is attempting to rob us of our last chance to Starwood before we go on to our greater Rewards. To satisfy that urge, I offer my synopsis of the current season of Game of Beds, as well as a preview of the upcoming seasons, if you can’t find time for binge watching:

  • The third largest hotel corporation in the world bought the eighth largest hotel corporation in the world.
  • As one unified singularity, the Kingdom of Wood-Riot becomes the largest hotel company in the world.
  • Good times are coming, followed by bad times… Or vice versa.
  • Everything will work out nicely unless something serious happens. 
  • If something serious does happen, they will fix the problem unless, of course, they can’t. 
  • Hotel companies will continue to buy each other, or sell themselves, or both.
  • There will always be the 10 biggest hotel companies in the world; they will just be different companies with different names and brands.
  • Everyone continues to award and collect points, but during a sudden and severe economic downturn, impoverished guests are forced to exchange their points for bottled water and barely warm chocolate chip cookies. 
  • In the series finale, old King Willard the Elder of Wood-Riot lies on his deathbed – a pillow-top Heavenly Bed with adjustable levels of mattress firmness.  He is surrounded by his sons, Crown Prince Conrad, Prince Sheraton (who had at one time been given up for dead) and the little upstart, Prince Yotel.  King Willard turns to them and says, “You know, my sons, a hotel company is only as good as each guest’s last stay.” He then closes his eyes and with his dying breath mutters his last word: “Rosewood.” The befuddled princes have no idea what this cryptic message means, but one can practically feel the beginning of the dynastic wars that will rock next season’s series sequel, Beds, Brands and Beyond.

Fade to checkout.

About The Author
Michael Schubach




Michael Schubach is a regular contributor to Hospitality Upgrade.

 
Comments
Blog post currently doesn't have any comments.
Leave comment



 Security code