These days hospitality managers are virtually bombarded by trade press ads, online marketing, and tech company pitches that offer advanced-technology products and services designed to revolutionize the entire industry.
These tools and services typically boast that they are vitally important and can offer radical competitive advantages. Of course, these products and services are not free, so deciding which ones to actually purchase and adopt can be challenging.
So how can hospitality managers choose those tools and services that will be truly valuable to them?
Guide for adopting a new tool
To determine if you should adopt a new technology-based tool, we recommend three steps. Step1: look beyond the glitz and glam of a new offering. Remember that good marketing is designed to get your attention, but it might not be right for your business. Step 2: know what your business needs truly are. Step 3: compare your needs to the tool’s benefits to determine if there is a good match.
Remember that industry improvements are not inherently good for everyone. You must determine if a specific technology upgrade is cost-effective given the current state of your business. Consider the impact on existing systems as well as the time required for changes, implementation, training, and or other needed modifications.
- Only adopt a technology when it directly addresses a current need.
You should never adopt a technology just because it is new and flashy. You should adopt a new technology only when that technology will offer concrete benefits to your business. This is often easier said than done because new tools often promise exciting change to the industry or may have their benefits over-hyped by good marketing.
So how can you cut through the hype and marketing to assess if tools match your business needs?
Understanding complex tools: Focus on what they deliver
- Luckily, it doesn’t require a deep understanding of topics like “neural networks” and “on-demand scalable cloud computing” to assess a tool – just identify what value the tool delivers to its users.
One good way for hospitality managers to quickly assess the potential value of a new technology tool is to first recognize the tool’s intended purpose. In hotels, restaurants, and other segments of the hospitality industry, new technology can be viewed as being of three distinct types:
- Technology that automates
- Technology that innovates
- Technology that analyzes
Each type of technology can be vitally important to managers, but in completely different ways. And with so many new technology tools coming to market each year, it is essential that managers understand what a particular type of technology is actually designed to do before they decide to purchase and implement it.
Type 1: Technology That Automates
Technology that automates addresses repetitive tasks to make them more efficient, faster, and/or more accurate. Many of the data-collection tasks completed in a hotel are repetitive. When they can be automated, real labor savings can be created.
To illustrate, revenue managers who worked in the hotel industry two decades ago no doubt recall the infamous “Call Around.” For those newer to the industry, the “Call Around” was a process in which a hotel’s night auditor would dutifully call competitive hotels each day and ask how many rooms they still had available to sell (estimated occupancy %), and what they were selling the rooms for (quoted ADRs).
This information was recorded by hand and then shared with the revenue manager the next morning. The revenue manager would then use that information to help set their room rates. Of course, this data was subject to inflation and inaccuracy by whoever answered the phone for the competing hotel. But it was better than nothing!
Today, hotels can buy any number of “Rate shopper” programs, an analysis tool used by hotels to automate their rate comparison process. The tool simply scans previously selected hotels’ websites, scrapes their posted rates, and produces a report summarizing those. Add to that the very familiar occupancy-related tools provided by Smith Travel Research (STR), and the “call around” (thankfully!) is no more.
If a technology tool claims an ability to automate a process, it should be a process that is already of importance to a hotel, and one in which savings in time or labor can be readily identified.
Type 2: Technology That Innovates
A second type of technology is the kind that offers a brand-new service or product that did not exist before. Because the hotel business is primarily based around the temporary exchange of a physical room, truly innovative technology is often less common in our industry than other industries.
But some advancements in technology do indeed innovate. For example, before the introduction of cloud-based technologies, even the most technologically advanced hotels stored their current room rate and rooms availability data on-site, and most often in a franchisor’s mandated Property Management System (PMS). Thus, a regional revenue manager responsible for multiple properties (and often from multiple franchisors) would need to contact each hotel on a regular basis to gather their desired data into a single document for review, and only then could the regional manager assess and use the compiled information.
With the introduction of cloud-based technologies, PMS data from individual hotel properties can now be viewed from one (or many!) universally accessible locations. Thus, our hypothetical regional revenue manager can now sit in a central office, home office, or airport and access each of their hotels’ rate and occupancy information in real time. In fact, multiple users from all around the globe could log in simultaneously to check that data, interpret market triggers, and price rooms accordingly.
Many new technology-based tools are marketed as being innovative, however, technology that significantly innovates is actually quite rare in the world of hospitality. As illustrated in the regional revenue manager example, technology that innovates should clearly demonstrate what it is that you can now do with the new technology product that you could not do before – and do it more quickly, accurately, and often, if desired.
Type 3: Technology That Analyzes
The third kind of technology is the type that analyzes. For many professionals, this is possibly the most important category of technology to understand. In this area, there are continual advancements, and many of these directly affect a hotel’s revenue generating efforts.
To illustrate technology that analyzes, it is important to recognize that proper data analysis has always been central to effective revenue management-related efforts. Because revenue managers are working with a hard supply constraint (the number of rooms available in a property is the same regardless of the demand for rooms), they must be incredibly thoughtful about forecasting room demand and optimizing their room rates.
In most cases revenue managers create demand forecasts utilizing data summarized by their PMS (for transient rooms) and recorded on their Pace or group rooms reports (for group rooms and contracts).
Today, technology tools are available to further refine a revenue manager’s demand forecasts. For example, an advanced-technology program may be designed to modify a revenue manager’s existing demand forecast by creating separate reports summarizing demand by:
- Distribution channel – A forecast outlining each major distribution channel’s contribution to room sales.
- Business type – A forecast which divides guests into types: business, leisure, groups, etc.
- Room type – A forecast looking at the demand for specific rooms: suites, kings, etc.
Additional demand reports such as these can give revenue managers a better understanding of exactly where their business is coming from, the business impact of each segment type, and therefore which types of business they need to target more.
Assessing a Technology Tool’s Value: Recap
Staying ahead of changes in technology in the hospitality business can be challenging. When reading advertisements for advanced technology tools, or walking a trade show floor, professional managers can make informed purchase decisions best by thinking clearly and identifying a match between their existing needs and a new offering’s tangible benefits.
It can seem daunting at first to have to constantly assess the changing landscape of technology tools. However, regardless of how complex the inner-workings of a tool, you should be able to categorize it as one of the three technology types. Once you know its type, you can ask vendors pointed questions to determine if it will deliver tangible benefits to your business:
Hospitality managers must know the right questions to ask about a new technology tool being offered for sale. If they approach each new offer from the right mindset, then they are in a better position to cut through the hype and adopt only those technology tools that have a direct and identifiable benefit to them and to their properties.
- About this Article: This article is based on information in the newly released second edition of Revenue Management for the Hospitality Industry by David K. Hayes, Joshua D. Hayes, and Peggy A. Hayes. © 2022 John Wiley & Sons, Inc. All rights reserved. To purchase this book, visit www.wiley.com or www.amazon.com.
- About the Authors: Dr. Joshua D. Hayes is a Silicon Valley Data Scientist, Dr. David K. Hayes is a hospitality industry author and educator, and Peggy A. Hayes is a publications specialist. Together they operate Panda Professionals Hospitality Management and Training where they create and deliver innovative and practical educational materials exclusively for those in the hospitality industry.