Trends 2001

In this article…

The Major Trends

Information Everywhere

The (Blue)Tooth Fairy

Data convergence, Information accessibility

(i) Get it together

(ii) Analyze it

ASPs go mainstream

Functionality improvements

Vendor consolidation

Focus on Service / Support

The Frustrating Bit



Handhelds at Carlson

Fast Feedback Helps Concord

Wyndham Commits to the Future

We’re on the threshold of a real breakthrough in efficiency as systems become more integrated, with more universal access and more sophisticated ways of analysing their data. But will we get there?As the Chinese might say, we live in “interesting” times. Irrational exuberance and dramatic downturns both stir the pot equally strongly; the former encourages major new developments and risk-taking, while the latter’s Darwinism forces an urgent exploration of which combinations of factors make the most practical sense and will survive. The disruptions may be painful, but the creativity surrounding the new possibilities is both exciting and liberating – and that’s what we’re seeing in the hospitality technology industry right now.

The old structure of well defined, individual systems (PMS, CRS, S&C, POS, etc.) and established vendors each focusing on a specific application area had become too inflexible to cater to modern demands for more complete, meaningful information and more flexible access to it. As a result, both systems and vendors are developing new ways of interacting with each other and with the outside world, for the seamless integration of data and a much fuller understanding of its implications and value.

Some approaches will work, some will be discarded as better alternatives are developed, but when the right combinations gel, we’ll cross the threshold into a much more effective way of doing business. And we’re really close.

The Major Trends
In the hospitality industry as much as any other, the over-arching trend is towards the growing availability of access to the right information, at any time, from anywhere, all of which allows a quantum leap in operational efficiency. Four major, linked components are bringing this about:

  • much improved integration between systems to compile truly meaningful information;
  • more intuitive, hospitality-focused tools to analyze it;
  • the growing use of PDAs to access it; and
  • the rapid adoption of wireless networking and communications

Beneath this overall picture, some other trends becoming apparent include:

  • the emergence of viable ASP-oriented PMSs;
  • some improvements in system functionality, though most change is in the way systems interact and are accessed rather than in what they do;
  • some vendor consolidations where mergers or acquisitions make sense, and where product functionalities are complementary, and
  • an increased emphasis on service and support

Let’s look at these in more detail.

Information Everywhere
Wireless communications are quite clearly on a massive growth spurt. When a major part of the population is used to being able to reach anyone by cell phone, where Internet-enabled phones and PDAs (Palm Pilots, Pocket PCs and their ilk) can pull data out of the air from everywhere and where hard-wiring older office buildings and homes is seen as too expensive, too disruptive or both, the rapid implementation of plug-and-play wireless data networks is inevitable. Users in general have come to expect that they can get access to any information they need, when they need it.

Various techniques and protocols have been explored to bring this about, but the recent emergence of a common communications standard (802.11b) that is both fast and has been rapidly adopted by vendors is the key to opening up the possibilities. Yes, there are security issues still to be addressed, but overall the huge improvements in convenience will force the pace.

A major factor in this is the phenomenal growth in the use of PDAs. Huge numbers of people are now accustomed to instant access to information that’s highly relevant and personal to them, in a convenient and portable form – no carrying around a bulky laptop and waiting for it to boot up. Even for access to on-line, rapidly-changing information (e-mail, stock prices, hotel operating statistics, etc.) the Palm VII demonstrated that you don’t even have to be frustrated by the wait to sign on to a network, either; just lift the antenna and you’re there.

Put these two together and you have the growing spread of very effective mobile tools that can liberate your staff. Three examples of their usefulness are:

– mobile check-in/check-out. Already in at least pilot-test usage with Wyndham, Starwood and the Venetian in Las Vegas (from vendors such as MICROS-Fidelio, IAD and others), the use of these units can only spread rapidly, as they have done in the car rental business. A little larger than a regular PDA and with wireless links to a PMS (see Figure 1), they incorporate magnetic stripe units that can both read a credit card (and, via the PMS, dial-out for credit authorization) and record an access code on to a guestroom keycard.

Figure 1 [click to enlarge}
Courtesy of Wyndham International, Inc..

A lightweight printer on the user’s belt lets them generate a registration card, folio or payment receipt. This combination allows for the completely mobile performance of check-in and check-out functions from anywhere within communications range of the property – a separate group registration area, a shuttle bus or even just anywhere in a large lobby.

– housekeeping. The housekeeping staff clearly doesn’t need the mag stripe units or printers, but up-to-the-minute knowledge of the house status, and the ability to receive notification of urgent cleaning requests and to report room readiness (and maintenance faults needing attention), make their tasks significantly more efficient. If it’s impractical to provide basement-to-roof wireless network coverage, synchronization cradles in the attendants rooms on each floor can also be cost-effective.

– management information. Carlson has approached the use of PDAs from the opposite direction by issuing standard Compaq iPAQs to management staff. These are used not only for every day appointment/contact/to-do list tracking, but also to receive key operational data from both the corporate data warehouse and from the hotel systems, customized to each manager’s personal needs and focus (see sidebar). Mobile access to the house count, to guest lists, to housekeeping and reservations pace data and to alerts that a VIP has just checked in or that a major group just cancelled – all of these and more contribute greatly to management flexibility and effectiveness (see Figure 2).

Figure 2 [click to enlarge]
Courtesy of Carlson Hospitality Worldwide, Inc..

For travelers, although more and more carry Internet-enabled PDAs or phones there are still limitations to the usefulness of the current generation of these devices, despite considerable growth in the types of data they can access and in the number of locations where you can get good enough reception.

The attractions of being able to check hotel and restaurant availability instantly within a given distance of your current location (and then to get directions), to check e-mail, and to see whether your flight has been delayed are clear. But the small size of a convenient handheld unit requires an intense focus from the vendors and developers on just how to present the right data in the right way and in the fewest number of steps to make the process intuitive. We also really need another step forward in the coverage and speed of wireless data services to make them ubiquitous.

Except for the pioneer early adopters, it’ll take another step or two towards the effective marriage of the PDA and the cell-phone before most of us can get past the significant restrictions of current screen sizes and sluggish download speeds.

The (Blue)Tooth Fairy
Given the huge amount of media-fueled interest in this short-range wireless communications protocol (probably triggered as much as anything by its colorful name), you might wonder if it really exists. You gotta believe… Actually, it is real, but it’s certainly had a remarkably long development period, and its usefulness in the real world has yet to be proven.

The attraction of having your phone, PDA, laptop and desktop recognize each other and automatically synchronize their data all the time they’re close to each other is clear enough. So is the potential for short-range communication between PCs and printers that avoid the line-of-sight restrictions of the perennially unreliable infra-red links.

But the hype has considerably outstripped the reality for now. Considerable work needs to be done on just how these interfaces will work and how they can be made really usable. We also don’t know how robust they’ll be in a real-world environment packed with an ever-growing cacophony of wireless transmissions and ever-growing demands on communications links.

In any event, Bluetooth-equipped hardware is still a long way off. US-spec phones won’t be here until year-end at the earliest, and the cost of the Bluetooth chips is still too high for them to be built-in to all appropriate hardware. It seems to have a good potential as a low-level, short-range technology, but it’ll be a while before we see how useful it is beyond that.

Data convergence and Executive Information accessibility
(i) Get it together
There’s real growth in awareness of the value of complete information, coupled with major improvements in our ability to get it. It’s not enough to know that a guest has a room reservation, and stayed in a particular room last time she visited that property. We also want to know what other rooms she’s stayed in at other properties, how often, with what total and average revenue, what activities she typically books during a stay and what she’s reserved this time. We don’t want just a daily flash report for a single property; we want to see how its results compare to other properties we manage, in the same region and in different regions, compared to last year, to budget and to its peer group, and so on.

On the operations side, this is one attraction of an ASP-based CRS/PMS; all the information’s in one place, for all properties, without needing interfaces. And there’s a growing trend towards more multi-functional property-based PMSs (such as Springer-Miller, Visual One, Northwind, MSI, etc.), with modules covering some or all of point of sale, sales and catering, tee-time reservations, spa bookings and other activity tracking functions, all on a single property database. This gives a much more complete picture both of the guests’ history and of the property operations, though there’s still a way to go before all relevant areas are covered.

More individual property databases can now be consolidated into a single multi-property warehouse, allowing a common guest profile to be shared across all properties owned or managed by one company. While interface standards help this process along, there are also more third-party tools available to extract the data from individual systems, clean it up and consolidate it into a meaningful, analyzable database.

One thing that resort-type operations really need but which hasn’t made a significant appearance yet is a Web-based activity booking system. This would not only let hotel reservations staff book any available activity for a guest, but would also let the outside providers of those services, such as spa therapists, access the system remotely to check their booking commitments and adjust their schedules and availability. There have been a few first attempts at this, but it seems like a natural growth direction for the Web-based restaurant reservations systems.

(ii) Analyze it
Once you’ve got it, what does it all mean? There’s a wealth of information contained in these normalized, consolidated databases, but without clear, intuitive tools to analyze it, it may as well not exist. Fortunately, the tools have become much easier to use, and have fuelled a really productive focus on comparative numbers, especially among properties in the same management group. It’s amazing what a little peer pressure can do when everyone can see each other’s results… (see sidebar on Concord Hospitality)

Current analysis tools come with a built-in library of standard hospitality performance measures, and an intuitive approach to ad hoc analysis. Slicing and dicing the data comparisons between properties, regions, financial periods and anything else you can think of is very straightforward, and drill-down to the most detailed levels really helps get a handle on exception data. ASP PMSs have a built-in advantage; since all their data for all properties is already in one database, providing a customized management overview is a snap (see Figure 3)

Figure 3 [click to enlarge} Courtesy of HotelTools, Inc..

Add in the ability for individuals to identify the key parameters they’re most interested in and have them sent wirelessly to a PDA, and once again we have a great example of mobile access to the right data for each user, wherever they are and whenever they want it.

As ever, though, there’ll always be a need for good judgment and discipline to ensure that the data captured in these executive databases is reliable. Financial data must be audited and reconciled before being used in databases open to strategists and analyzers, although daily operations staff can work with the raw data to identify and handle exceptions quickly.

Guest data cleansing will always remain a tedious, painstaking but essential function. As people become more used to companies tracking their activities, they’ll have the not unreasonable belief that the data kept on them should be complete and accurate. This means that, even if all users are working with the same software, hotel databases must continue to combine multiple records created inadvertently for the same guest, to track changes of guests’ names (through marriage, divorce, etc.) and addresses, and so on.

ASPs enter the mainstream
In a rocky economy, outsourcing gains a lot of added attraction, and interest continues to grow in renting software and systems support from an ASP. Within a chain, centralizing system operations offers the potential of lowering costs and increasing efficiency at the same time, by minimizing the properties’ support tasks and maximizing data gathering effectiveness and consistency.

This remote-computing model has been proven effective for some time for systems which don’t require face-to-face guest interactions. Central reservations, centralized accounting and payroll systems, even e-mail are all examples of remote-server applications that have been in successful use for years. If you lose your connection to the service for a few hours it may be highly frustrating, but it’s seldom mission-critical.

But unless ALL property systems, including PMS and POS, are outsourced the benefits of an ASP model are considerably reduced. After all, if you still have even one server on site, you still need a support staff. Although the concerns holding hoteliers back to date have been real enough, we’re now seeing more confidence that they can be overcome and that ASPs can be a viable solution.

For instance, traditional worries have been:

  • loss of the connection when guests are at the front desk to check in
  • concern over the security of the data held at a remote site
  • lack of functionality in the products being offered
  • lack of clarity about the pricing models.

The first is still the hardest to overcome, but only real-world experience will tell how much of a handicap it really is. After all, rumor has it that even on-site systems have been known to crash from time to time… And although the cheap but sometimes unreliable Internet is often touted as the ideal ASP communications link, a private network is a lot more reliable. Many chains have extensive experience with their own Intranets, satellite links and other wide-area networks, and have real-world reliability data that will help them decide whether to trust PMS/POS operations to these connections.

An alternative offered by some ASPs is a small on site server to cache and provide access to the most critical data in the event of communications loss. However, this really needs to be a bullet-proof unit requiring no maintenance to avoid compromising the “no on-site service” ASP mantra.

Data security is a lesser issue; after all, an ASP or Corporate office can afford a highly-professional staff to look after the servers and back up the data very regularly, which is more than a great many hotels are staffed to do. But what if the vendor fails and leaves you without access to the data they’ve carefully backed up for you?

There’s been understandable caution in the general business world about the viability of ASP companies, especially after a few highly-visible failures of start-ups have left clients without access to their data. With most ASPs in the hospitality industry being offered by well-known names, though, that’s a lower concern here.

Given that properties will continue to change brands, however, it’s more important than ever for the franchise or management contract to spell out clearly the rights of all parties to the guest and operational data generated by each property, regardless of where the data is actually stored.

As for functionality, many of the new PMSs developed for the ASP model originally had a very limited feature set. Further, there has been little real-world experience with thin-client versions of the several “standard” PMSs being offered on a remote-server basis. However, by HITEC we should be seeing several ASP PMS products with a much more widely-applicable set of functions, from old-established vendors such as Pegasus as well as new ones like HotelTools and Ramesys. And the early adopters of remote-access versions of more traditional systems are already building up experience on their functionality and reliability.

Of course, none of this matters if the pricing doesn’t work. Various models have been suggested, from monthly rentals and leases to per-transaction charges. Each property will have to work out whether the numbers make sense, and must ensure it has considered all the fees involved, and has put an appropriate value on the reduction in its support responsibilities. In addition to the software fee itself, there may also be a set-up fee, support/admin charges and, of course, the cost of the communications line. The whole scenario has to make sense.

The ASP rubber is hitting the road right now. A solid bet on the future of centralized computing is being placed by Wyndham (see sidebar), which is on target to start running its properties remotely this year from centralized versions of MICROS-Fidelio’s very full-featured Opera flagship. Live experience from these systems will guide many other properties and chains thinking of trying the model, and I predict that many will go ahead with them.

Some improvements in functionality
A few other areas that should see significant growth in the next year include:

  • an increase in corporate travel policy enforcement and the use of e-folios for automated expense collection and reimbursement
  • more business meetings being booked on-line, mostly for smaller, simpler meetings at short notice. Sabre DirectMeetings is a good start; there’ll be more.
  • the first practical applications of revenue management systems interfaced to group booking systems, at both the individual and corporate levels.
  • closer integration of Sales & Catering systems with Convention & Visitors’ Bureau (CVB) systems such as Passkey, Wyntrac etc., passing control of the rooms block to the user.
  • improved PMS direct-booking capabilities from the Internet, handling input from any number of Websites with different levels of inventory offered to different types of site/guest. There’ll also be more coordination with Web-based reservations/ distribution services such as SynXis, as properties enticed by the potential of Internet booking discover that effective channel management can take up a lot of their time.
  • web-based training should pick up significantly, and is clearly an essential component of a chain-wide ASP implementation or upgrade. If the material is kept up to date by the vendor (a big “if”) the users will always have access to the right course for the software version they’re running, at times that suit their schedule on their work PCs, from a hotel PC in a training room, or from their home systems. It still requires active management, of course, to make sure that the users are given the time to take the courses and are compensated appropriately if they take them at home. But Web-based training makes it much easier for managers to check on each staff member’s individual progress, and to track when they use the system.

Vendor consolidation
There’ll be a few more vendor consolidations and mergers as some business plans are seen to be unsupportable, and as the natural convergence of complementary application functions becomes apparent. Clearly there must be a significant shake-out in the over-populated high-speed Internet access market. This service really is just a utility, and it really makes more sense for it to be offered as part of a regular PBX or pay-per-view video package, not as a separate product line.

Other mergers/acquisitions will continue to take place where the companies’ product functionalities are complementary, as typified by OpenTable’s recent takeover of ProHost, and AremisSoft’s acquisition of Rio.

But the mid-tier PMS vendors should continue to thrive as they always have. They’ve survived for many years through a careful focus on and prioritization of their particular market segment’s priorities, and this caution and experience should stand them in good stead for the future.

Increased Focus on Service and Support
We live in an increasingly demanding world. As these new technologies allow us pay ever more careful attention to our guests’ needs, they learn to expect more. When everyone is pressed for time and wants to make the most of every minute at our properties, they become less tolerant of shortfalls in service. So while all these new tools do let us increase our efficiency in providing for our guests, they also raise the consequences of failure.

That need for absolute consistency and reliability in guest service means that we must be able to rely on the systems just as completely. Vendors who can provide reliable, accurate systems and outstanding, prompt and flexible support will thrive. Those that don’t correct known inaccuracies, or which don’t handle trouble calls immediately and professionally, will lose market share.

Hotels don’t have the time or patience to re-train every new support clerk on the same problem – or even to continue dealing with the same problem. Even if your system has the best feature set and functionality on the market, hotels will become increasingly reluctant to look at it if they hear from their peers that the support is well below par.

The Frustrating Bit
Many new initiatives technically are reaching a point where their benefits are tantalizingly close, but, in a wonderfully frustrating piece of timing, the recent slowdown in the economy has tightened the availability of finances. Making that last push to a practical, usable and profitable product could be a real challenge.

Hotel business is down, and so there’s an even greater reluctance than usual to spend money on new systems technology. It would be a real shame if a short-term focus on cost control prevented the completion and roll-out of the very tools that would have a major effect on profitability. When considering the cost of a new initiative, it’s more important than ever to take the wider view. Make sure you’ve actually invested enough, and are linking enough of the right areas to make them into a consistent, cohesive and effective whole instead of a collection of isolated improvements. These days, it’s all about connectivity.

We’re on the brink of a much more effective, inter-linked and mobile way of doing business, one that will be more powerful, more flexible and more efficient both for hoteliers and for their guests.

A good start has been made in many areas, as various trial runs and experiments settle into a workable product set. As more users experience the benefits of these new approaches, their rapid and widespread adoption seems inevitable. It’s going to be a fascinating year.


© Jon Inge
First published Summer 2001, Hospitality Upgrade magazine

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