888.Net.Apps (638.2777) | 703.299.1580 | Netlink Resource Group

Hospitality Technology

The True Cost of Hospitality Innovation

Hospitality Technology recently ran a story about how the top rated hotels online are the ones with the most cutting-edge innovations. On the surface, this is something to applaud because it is a sign that technology is vastly improving the guest experience.

However, this study reinforces something bigger: premium hotels are the ones who can afford these innovation, which is creating a chasm between the tech “haves and have nots.”

The reality is that premium hotels attract a level of guests who are comfortable paying for luxury – from both room an amenities and technology perspective. The higher level of revenue can be used to invest in packages such as the “Selfies in Paris,” as offered by the Mandarin Oriental Paris.

When you pay more, you get more. It’s that simple. The challenge for lower- and mid-tier hotel brands is that the guest is used to finding the best deal, which ultimately drives down profit margins. When this happens, it is much more difficult to have the extra capital required to invest in new innovations.

The other challenge is that competition is fierce among this level of hoteliers, and the battle is always over price. In addition, hotel leadership – especially on the finance side – have a hard time keeping up with the new innovations and understanding the value of technology to officially green-light new implementations.

As they say, the rich get richer, and this is exactly what is happening with hospitality technology. Unfortunately, non-premium hotel brands do not have the revenue to justify new technology investments, which could be perceived as being risky by management.

In the coming weeks, we will be doing a series of posts that discuss these specific challenges, as well as opportunities for hoteliers to “get their feet wet” with new technologies in ways that won’t break the bank.

Using Data Analytics to Win and Keep Hospitality Guests

We are living in an era where ‘big data’ is driving key decisions and programs for multiple business sectors and even the federal government.  Thanks to new innovations for managing large volumes of data, as well as advances in algorithms and analytics, we are able to gain a complete snapshot of customers and end users.

The hospitality sector is also leading this new analytical approach for differentiating their guest offerings by mining into a deep well of data. Gary Loveman, President, Chairman and CEO of Caesars Entertainment, recently gave the keynote address at HITEC 2012 and discussed how smart customer data analytics drives the success of Caesars’ Total Rewards guest loyalty program.

Loveman said that competing on price alone for online booking engines is a losing bet for hotels. To help Caesars differentiate itself from other hospitality companies, he launched the Total Rewards program in 1998 using data collected on guest behavior to determine the potential value that a guest could be worth to the company. Although it’s important to give great service to all guests, it’s even more important to determine the potential value each guest could be worth to the company.

For example, it might not make sense to spend more on incentives for a customer who visits a casino only once, versus one who comes back again and again. The data analysis methods used in Total Rewards, though, pick up on more subtle cues to determine which customer would make the better investment.

Once Caesars decides to lure a guest, the Total Rewards program is designed to make that task easier by offering rewards that are actually useful to that particular customer.

In addition, offering benefits right away makes Total Rewards more attractive to customers because they will actually see a benefit from signing up. Total Rewards also uses its collected data to tailor offers to individual high-value customers, increasing the chance that they will sign up.

Gary Loveman clearly understands that data analytics can give a full picture on hotel guests. Thanks to his vision, the Total Rewards program has already yielded benefits to Caesars. In fact, over the 2000-2011 period, revenue per available room increased 20 percent, and the company outperformed the competition with +25 percent regional market wins per unit and +28 percent local market wins per unit.

 

Bisnow Lodging Investment Summit Brings Out Brightest Stars in Hospitality

Without a doubt, the Washington DC area has become the cornerstone for the hospitality industry — with Marriott, Hilton and Choice Hotels, as well as many lodging investment players, calling our region home.

So, it was no surprise that the folks at Bisnow Media were able to pull off a spectacular national event that drew together the “who’s who” of the hospitality sector at its Bisnow Lodging Investment Summit (BLIS) on May 9-10 at the Ritz Carlton in Tyson’s Corner.

We had the unique pleasure of attending BLIS, which brought together 500 industry players to hear 32 speakers discuss the future of the hospitality industry. Some of the highlights included Arne Sorenson, Marriott’s new CEO, providing his vision for doubling the hospitality provider’s overseas portfolio, as well as political pundit Tucker Carlson’s enlightening and entertaining speech on the state of politics and what to expect from the upcoming Presidential election.

The event also showcased some of the challenges that the industry faces, such as what will happen to RevPAR as consumer confidence continues to decline, as well as managing growth in a global economy that is still in a state of turmoil.

At NetLink, we have always believed that the best way to enhance growth, in even the most challenging of economic climates, is to ensure that all IT investments support business growth. For example, be sure to check out this case study about how Marriott International developed its online gift card effort, which resulted in $35 million in additional revenue.

As the lodging sector continues to move forward, it is exciting to see that the industry is coming up with unique strategies for business growth. And, plenty of opportunities still abound for those selling solutions to hospitality providers.

Posted by: Diann Turner, Director, Business Development, NetLink Resource Group

HFTP Promotes Innovative IT Approaches for Enhancing Guest Experiences

 

Recently, the DC Chapter of Hospitality Financial and Technology Professionals (HFTP) hosted a roundtable that highlighted new innovations in the area of guestroom technologies. Industry leaders gathered to share their perspectives on technology as it relates to the “guest” experience, as well as what leading edge hotels are doing to improve this experience.

Some of the emerging trends that were discussed included:

  • The ability to check-in to a room prior to arrival by using a smartphone, tablet or guest loyalty card
  • Interacting with guests via multiple channels including email, text, in person or an app
  • Knowing guest room preferences — including the temperature of the room, the number of towels, food and beverages, movies that were rented — and having the room ready upon arrival
  • Using a smartphone or tablet to control the TV

It is exciting to see the hospitality sector embracing new forms of customer service that will enhance profit during a time when leisure travel is down. It would seem that hotels could achieve a competitive advantage by implementing these types of solutions.

And, kudos to HFTP for promoting these innovative solutions. As the hospitality sector continues to embrace new innovations that enhance customer loyalty, we will continue to shine a light on hoteliers that are moving the needle when it comes to implementing IT solutions that provide true business value.

 

Posted by: Diann Turner, Director, Business Development, NetLink Resource Group

Hospitality Providers: Top Five Tips for Achieving Maximum Technology ROI

As we head into 2012, it is important for any sector to maximize its technology investments to ensure the most effective business outcomes.  And, in no other industry is this more important than the hospitality world.  With fierce competition to capture guests’ attention, coupled with the ongoing challenges of a lagging economy, it is vital for hospitality providers to make the most of their IT spending.

Based on our experience in working with leading hospitality providers, we have provided the following top five tips for maximizing IT in 2012:

1. Align IT with Business Goals: When embarking on a new IT initiative, it is critical to align these efforts with business goals.  As such, hospitality IT leaders need to be fully connected to the C-suite and have deep insights into the overall business goals and strategies and use these to guide all efforts.

2. Use IT for Competitive Advantage: Hospitality providers need to gain competitive advantage by providing unique offerings, which will allow them to be differentiated from their peers.  In essence, every IT project has to support efforts to eclipse the competition – whether it is building out a new CMS, simply enhancing your core web site with more features and functionality or developing a mobile version of your web site.

3. Use Innovative Project Management Approaches: When working with IT vendors and integrators, it is important that your technology partners offer a project management approach that is highly effective and mitigates any risk of derailing a project.  One key approach is to make sure that your partners provide results early and often throughout the project management process – as opposed to presenting a solution at the end of the project lifecycle.

4. Be Realistic About the Level of Complexity and Associated Costs: When considering going for Commercial-Off-The-Shelf (COTS) as opposed to a custom IT solution, it is important to be realistic about the costs and complexity associated with this decision.  The greater the complexity, the greater the chance that custom solutions are required, though as we have highlighted before, this is not always a “black and white” decision.

5. Remove Any Barriers Between Hotel Technology, Marketing and Operations: As highlighted in a recent white paper by Amadeus and RockCheetah, hospitality providers should consider creating the “IT Pathfinder” role.  This person can create a greater alignment between corporate business and technology objectives, as well as identify appropriate solutions and implement the initiatives that create the greatest economic value.  In addition, it may be more cost-effective to rely on an outside partner to serve as the “IT Pathfinder.”

Information Technology is clearly a major business driver for the hospitality sector.  When used appropriately, it can create major competitive advantage and ultimately drive additional revenue.  The key is to use your IT investment wisely, align IT with your business goals and make sure you are using the right partners and solutions to meet these objectives.

Posted by: Diann Turner, Director, Business Development, NetLink Resource Group