ITB 2024 Special Reporting
Unique value drivers determine hotels' technology choices
Deloitte & Touche / HotelBenchMark Survey
Friday, 18th July 2003
Technology has liberated the industry from time-consuming paperwork and repetitive manual tasks – especially in the critical area of property management systems.

25 years ago, many hotels used the Whitney Board system, with a rack full of colour coded slips of paper to show whether a room was occupied, in need of cleaning or ready to sell. Simple reservation systems were maintained manually except those coming through a central reservation system and telexed overnight. It took hours to complete the night audit, and any guest wanting to check out before it was completed would have been met with a curt response.

Today's hotel executives work in a completely different environment. Relative simplicity for both guest and hotelier has been replaced by either complete anarchy or total choice depending on where you are in the value chain.

Here, we suggest that hoteliers need first to find the value drivers for their unique business, and then bring together the most suitable elements to create the ideal property management solution for their organisation.

Channels and systems

There are four key technology elements that enable executives to assemble a solution that is flexible, yet meets the appropriate needs of their unique customer proposition.

First, the ubiquity of the Internet as a communication channel both between the hotel itself and all members of the extended enterprise (corporate sales, central reservations, headquarters) as well as between the hotel itself and all of its direct (business and leisure) and indirect (travel agents, tour operators, conference and convention planners, consolidators) customers.

Second, the emergence of open systems (ones that adopt the Open Travel Alliance standards and/or adopt Microsoft standards) allowing CIOs to bundle the best applications to meet each business's needs rather than acceptance of a pre-bundled series of proprietary applications.

Third, the rise of the networked enterprise. This enables chains of hotels to reach the goal of a single image inventory, and allows even the independent unbranded hotel to determine the distribution channels for its room inventory in the future.

Seamless GDS distribution through Wizcom and Pegasus is now a utility on offer to all hotel operators. Owners and brand operators can decide to bundle all rooms in a city and/or in a segment and treat them as if they are one single inventory – or can continue to ask unit management to drive inventory and pricing decisions.

And fourth, the adoption of ‘thin client' web browsing technology that allows the application to be held on the organisations intranet server, or to be provided by an application server provider. This means that the business is no longer organised around the technology tools – with the tools becoming the servant rather than the master.

Setting the pace for change

Having highlighted these four liberating elements, it's worth looking at how some organisations have harnessed the technology to meet their particular needs.

At last year's HITEC, Brenda Burke, Director of Hotel Technology at Hilton Hotels Corporation sought to expand upon CIO Tim Harvey's commitment to "develop highly integrated, common systems, that are consistently and rigorously deployed on a shared and unified information platform."

Hilton's System 21® is currently used by more than 1,900 hotels. Hilton believes that the ‘one system' approach enabling seamless data flow, consistent customer information, control of room and rate availability and control of technology destiny is best for its hotels.

With third party applications such as call accounting, PBX, movies, POS and minibars, Hilton conducts certification testing to determine co-existence capabilities and demands interface vendors support all brands.

On average, Hilton releases four updates to System 21® each year, and hotels download these from the website. With a committee determining enhancements, this process means the company can set the pace for enhancing efficiency and effectiveness across the hotel network.

This approach can be compared to the one adopted by the UK's Travelodge chain, which is now owned by Permira. Late last year, the company signed a seven-year technology services agreement with Pegasus Solutions (a Dallas based technology provider) under which the latter provides a total enterprise solution including central reservations systems (CRS), property management systems (PMS) application and data hosting, global distribution systems (GDS) and Internet hotel connectivity.
This marks the first time Pegasus's web-based PMS will be provided internationally on a pure application server provider basis.

A technically similar approach is that hosted from Hamburg Germany by Micros Fidelio in providing their Opera Enterprise Solution (PMS, Sales and Catering, Central Reservations, Quality Management, Sales force Automation and seamless GDS connectivity) to Boscolo Hotels, a chain of 16 hotels in Italy, France, Czech Republic and Hungary.

These three examples demonstrate one approach to systems design and delivery – a single suite of applications addressing a series of business issues hosted by a single concern.

Basically, they are centralised solutions leveraging from standardised platforms, operating systems, databases and user interfaces. They require similar levels of sophistication and development across the organisation.

This type of solution is best suited across linked businesses situations, such as the one brand approach,but it may be expensive to run because of the high costs of implementation and change. It may also hamper flexibility to adapt to business changes, due to acquisition for instance, or to new applications offered by technology providers. Perhaps most critically, a centralised approach may provide a sub-optimal fit to business processes because of the bundling of some excellent – and some average – applications brought together to meet diverse business needs.

The benchmark workhorse

Many other businesses are following the decentralised path and are still using a product that has been the benchmark workhorse for many years. Even now, Micros Fidelio has as many as 7,500 installations of its Suite 6, a character-based DOS application using Xbase as a database.

This product was developed when the hotel was the still the centre of all managerial decisions. Hotel companies, including Marriott International and Starwood built one or two-way interfaces from Suite 6 to their reservation systems, to their loyalty programmes management software, to third party yield management systems and point of sale systems.

Within the hotel, and between the hotel and its supply chain, there is a complex network of interfaces and connections linking the typical Suite 6 user to different (non-Micros Fidelio) systems. And under the Suite 6 architecture, licensees are hosting the application(s) on site.

The approach suited an industry in which many decisions were decentralised – where each function (finance, marketing, human resources) operated in something of a vacuum. It was an approach that was perhaps right when the brands were focused on providing a central reservation capability, and latterly the guest loyalty applications, as those provided most value to the business's partners.

The challenge with this, apart from the fact that the underlying technology is ageing, is that it is complex to integrate and there are myriad points at which data flows from one system to another. It's challenging to extend this approach to meet evolving business needs, and training and software upgrades can be expensive, lengthy tasks.

Driving best practice

Increasingly, organisations are moving away from both these models and are following the network solution path. This means that each of the key functional groups identify the best application for their purpose and define upfront what data needs to be shared with other functions.

The network is then developed with common data definitions and dictionaries, a single central integration tool and common open standard integration, regardless of source or target applications.

Key processes are linked together using the enterprise application integration tool and workflow methods. The approach enables both a presentation/executive dashboard level to be built into the architecture and a common content management system can be built in if needed.

The networked approach can be developed step by step from either a centralised or decentralised system, and provides a flexible architecture with market-leading applications serving differing communities.

It drives the adoption of best practice into the business, but requires the different parts of the organisation to be much less territorial. It also means the business must first define and lock onto the key value drivers for its unique target customers, and this can be a complex and difficult exercise.

The diagram above illustrates the various layers of technology. The goal for each organisation is to find the best applications in each layer and then bring them together into one network.

This way, the property management system's core transactional functionality is harnessed into a network with the functionality of other applications. This will benefit customers, brands and regions as well as the hotels themselves.

The next 25 years

It's clear there's no ‘one-solution-fits-all'. Different businesses have different needs and some groups consolidate functions, while others run them separately. And the ideal solution for any one company will change as the business itself develops and diversifies.

We consider the four liberating technologies – the Internet, open systems, networked enterprises and thin client – together with the executive demand for information, rather than data, and flexibility, will encourage most businesses to follow the networked route, at least as a short and medium term strategy.

But few things stand still in this business, and the hotel industry in 25 years' time is likely to look as different to today's as the one we looked back on at the start of this article.

Ian Graham
Thomas Maes
Chris Wray
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