Don’t doubt that the hotel sector is in the middle of a technology revolution where innovators are trying to grab their share of a $3.5T global industry. As we’ve seen with technological change in other areas of our economy, this change doesn’t happen overnight and it takes time for the winners to emerge as the market consolidates into a handful of industry leaders. An example of this is the automobile industry, where 253 manufacturers in 1908 had boiled down to just 44 by the time the stock market crashed in 1929. Similarly, AltaVista was the leading search engine in 2000 with 17% of daily searches versus Google’s 7%. Fast forward to Feb 2021 and Google handles 92% of daily searches globally. We’ll see this same pattern play out with hotel technology over time.
There are currently almost 800 cloud-based property management systems alone to choose from despite less than 5% of hotels currently using cloud-based systems according to Jordan Hollander of Hotel Tech Report. This level of fragmentation is unsustainable in the long term so how can hotels be sure they pick vendors who’ll stay and excel in the long term?
Let’s look at the capabilities, trends and best practices that will separate the winners from the losers.
Cloud computing is becoming the solution that everyone wants, with the market forecast to grow 18% in 2021, but why does it matter for the hospitality industry? Because cloud computing offers cost reduction, security and reliability.
Cloud-based systems reduce the need for expensive hardware and the complicated configuration and maintenance it requires, and with the cost of the cloud coming down by almost 20% each year it will become increasingly appealing.
With the introduction of GDPR in the EU, the Privacy Amendment in Australia, and the rise of data protection laws around the world, it’s more important than ever that hotels protect the data of their guests. The cost of non-compliance is well publicized with Marriot being fined $25M for failing to keep customers’ personal data secure by the UK regulator last year. The big cloud providers employ much of the best software security talent in the world, which means better security than anything we can do on-premises.
Lastly, the cloud offers much more reliability. AWS commits to 99.95% ‘uptime’ – the percentage of time they guarantee their systems will work as expected. This essentially guarantees your systems will be down for less than 5 hours each year, a rate of reliability that’s extremely difficult to match with on-premises hardware.
The long and short is that the cloud is here to stay and, with Microsoft, Amazon and Google all investing in their cloud offerings, the list of benefits will only get longer. As a result, vendors that emerge as winners are almost certain to be cloud-based – so it’ll be a good indicator of future success amongst tech providers.
(click here for an intro to cloud computing courtesy of Cloudflare)
Cash Data Rules Everything Around Me
We’ve all heard the buzzwords and cliches – data is the new gold, big data, machine learning, real-time and even an adaption of a Notorious B.I.G song title, Data rules everything around me – and yet the value of data is simultaneously revolutionizing almost every industry in ways that would’ve been impossible to foresee 10 years ago. Many could have predicted the rise of data and analytics in process-driven sectors like manufacturing, but what about the rise of data and analytics in professional sports? Also, companies like Fuzzy Logix whose work with insurance giant Blue Cross Blue Shield predicted with 85% accuracy whether a patient who is prescribed opioids will go on to show patterns of abuse.
In the hospitality industry, we are seeing continuous innovation in how we use data to improve our businesses, whether its ever-improving dynamic pricing or better use of sentiment analysis in guest reviews. In addition to what’s happening in our core systems, we are seeing a whole hospitality data ecosystem emerge with an ever-expanding list of data service APIs available. For example, many systems now offer users the ability to monitor competitors’ prices thanks to reliable, inexpensive data feeds from companies like MakCorps.
Despite this continuous innovation, hotels now use more systems than ever with no one yet emerging as a one-stop-shop for all our technology needs. As this isn’t going to change any time soon, we are all going to need vendors who give us easy, dynamic ways to extract, analyse and integrate our data without the need for a big in-house tech team. Systems with third-party app marketplaces and expansive open APIs, like RMS Cloud, will almost certainly emerge as winners in this space as they make it easier to automate tasks across systems and analyze data.
RMS Cloud’s data capabilities were a key draw for us when we signed a partnership agreement late last year.
Automate The Low-Level Stuff
Everyone has mundane tasks they’d like to hand off to someone else, so they can get on with the work that feels important; the good news is help is on the way thanks to Business Process Automation (BPA) and the digitization of operations. BPA is sweeping through all major industries. For example, the leading BPA platform, UiPath, has grown from $8M in revenue in April 2017 to $600M+ today – that’s 75x in 4 years – and is due to go public at a $28B valuation!
And while companies like UiPath are rapidly building automation to help with industry agnostic tasks, the most transformative automation will inevitably be industry or target-market specific. After all, a retail outlet and a hotel will want very different tasks to be automated. In the next few years, we’ll see the further rise of low-level automation within the leading core systems – think end of day summaries, trigger-based actions and guest communications – but there’s a huge opportunity for tech providers to differentiate themselves here. Be sure to ask each system about their development plans for process automation – if we’re all still manually creating rotas, producing reports or responding to guest queries in 10 years I’d be amazed.
Speaking on roadmaps. Picking a technology provider for your business begins a relationship that can last for years – our clients have been using their current property management systems for about 7 years on average. If you spend 7 years working around, rather than with, your technology partners, it’s a sure-fire way to distract your team from the things that matter. It’s also an opportunity risk, so what can you do to ensure technology makes your work easier rather than harder?
One solution is to ask for transparency on a feature roadmap before signing up to a new system. Ask your tech provider how they intend to develop features such as core functions, reporting, system integration and automation. This way, you can be sure these plans add value to your corner of the hospitality industry. If you are seeking a system for a regional hotel chain but the prospective system’s roadmap features will mostly help independent hoteliers, you are unlikely to be a good fit for the long-term, regardless of your fit today.
Top tip: while you’re there, ask to see an old roadmap so you can get some insight on how well they are at executing their plans.
In summary, you should be looking for:
- cloud-based systems
- good data analysis capabilities
- continuously developing automation functions
- providers that suit your niche within the industry