NEW YORK — The hotel industry has a reputation, at least internally, of being behind the times and slow to adopt new technology, but hotel brand executives said that’s not necessarily the case.
Technology is like speed dating in that everyone comes up with an idea, and those ideas need some weeding, Kevin Jacobs, chief financial officer and president of global development at Hilton, said during a general session at the NYU International Hospitality Industry Investment Conference.
“That’s a burden, too, because you now have one more thing that you can do, almost infinitely more things that you can do, and then you have to choose which one of those you’re going to do,” he said.
Prioritization is the most important part because throwing thousands of things in front of guests will just confuse them and make things worse, he said.
The hotel industry isn’t holding back on investing in technology, said Elie Maalouf, CEO of the Americas at IHG Hotels & Resorts. It’s probably the single largest budget item his company has, and he expects other hotel brand companies have similar tech budgets.
Hotel brand companies always have to find the intersection of whether it makes sense for owners to invest in, will it get a return and will guests benefit from it, he said.
“It’s not an infinite set of choices that meet that intersection,” Maalouf said. “There are a lot of great ideas that appear every day, people trying to sell you things, but it’s our duty as leaders to really differentiate between the things that make a difference to our guests and provide a return to owners and the things that are just kind of nice to have but are going to go away.”
Geoff Ballotti, president and CEO of Wyndham Hotels & Resorts, said his chief information officer’s department gets more capital than any other in the company. Hotel companies want to invest their money into technology, he said.
“You see very few of us up here right now buying brands or buying real estate,” he said. “Investing in technology or investing in our apps — I don’t think we’re holding back at all.”
One of the factors holding back technology in hospitality is tech debt, Jacobs said. All the legacy infrastructure across hotels, airlines and rental companies installed years ago creates a lot of tech debt that takes time and money to update.
Once companies work through that legacy tech debt, they have to prioritize what comes next, he said.
Another issue is the rapid obsolescence in technology, said Pat Pacious, president and CEO of Choice Hotels International. Companies can invest tens of millions of dollars only to find that three years later the vendor is no longer supporting that technology, so the company needs to move to the next version.
“If you want to see inflation, go look at technology,” he said.
The higher cost of technology is further exacerbated by the labor shortage in IT, where having talented people who can help deploy the new tech is critical, he said.
Tech Perspectives
All technology relates to data, BWH Hotel Group President and CEO Larry Cuculic said. He asked the audience why the owner of an advanced technology company would want to buy Twitter.
“It’s not about the technology,” he said. “It’s about the data, and that’s what all of us focus on and what all of you should focus on, is the use of technology related to data.”
Technology increases efficiencies and makes hoteliers effective, but only when they use data efficiently, Cuculic said.
At last year’s Consumer Electronics Show, Marriott International launched its new Marriott Design Lab, a 10,000-square-foot, state-of-the-art lab and research and development space, President Stephanie Linnartz said. It’s where Marriott can work with its different partners on the physical hotel of the future and the tech innovations that could be used in them.
“We’ll come up with new technologies and new offerings that won’t just be for our company but that we can share with the industry to make our industry stronger,” she said.
During the pandemic, usage of Marriott's mobile app increased by 40%, Linnartz said. There was a 600-basis-point increase in the percentage of room nights coming through direct bookings.
“It's about data and analytics, and not just for the sake of data and analytics, but to personalize and customize the guest experience and to really stand out,” she said.
The word "phygital" means the combination of physical and digital services, Jacobs said. Hoteliers are in the business of people serving people, not the business of robots and computers serving people.
Technology is going to enable better service, and the last leg of the stool is the property management system getting modern technology, allowing staff at the hotel to spend less time heads down working with tech and more time with their heads up providing anticipatory service to guests, he said.
“We think that’s where the magic happens,” Jacobs said.
Hilton uses the term phygital to remind everyone that the physical side matters, too, he said.
Over the past 10 years, the three biggest trends in tech have been cloud computing, big data and mobile, Pacious said. The mobile capability in hospitality has allowed hoteliers to connect with guests in a much closer way than before.
“It’s not just before the journey and after the journey, but it’s actually now on-property as well,” he said. “We’re staying connected to that consumer.”
For franchisees, a mobile app allows for revenue management, he said. That means it could be 10 p.m. and the franchisee is at home, but rates are going up in the market and they’re aware of it. That’s an important new capability for a small business owner who might also be handling changing out linens or other responsibilities at any given time.
“The mobile capability, I think of all those three trends, is really the one that's been the biggest game changer, both for our franchisees and for consumers,” he said.
Investment in technology comes down to strategic discussions and allocation of capital, Maalouf said. There’s so much a company can invest in, but the key is differentiating between fads and long-term trends.
“We’re not Amazon or Google,” he said. “None of us around this table can afford all of the hundreds of billions of dollars and, ‘Oh, this didn’t work out, that’s a billion write-off, move on to the next one.’ We’ve got to make really great strategic bets.”
Maalouf said executives also need to think about work that new technology can create for employees, even as it increases efficiency and productivity.
“Technology gives you ways to work more parts of your day, more days of the week, all the time,” he said. “So, we have to also think about that. Enabling workplace technology — make sure that our people get the break from working all the time that the tools allow them to do.”