Outsourcing Hospitality Technology – What Will the Brands Do Next?
By Tom Klein
Monday, 15th April 2013
Outsourcing technology is an important option hotel brands are weighing and those in the hospitality industry will tell you that property operations and distribution strategies are going through a rapid evolution. 

Competitive pressures, marketing goals, new revenue opportunities, evolving guest expectations, emerging markets and new distribution channels all play a role in driving hospitality technology needs.  The pace of change in operations and distribution strategies requires hoteliers to use systems that can grow with them to remain competitive.

Maintaining an in-house technology platform that can change with their business needs is costly.  As a result, many hoteliers and brands are re-evaluating the cost of keeping up with their evolving requirements.

Brands are reconsidering the level of investment required to adapt to changing market conditions and are now willing to entrust their intellectual property to an external party. The realization that building and maintaining software products is not their core competency is driving a key decision point in their strategy for a future-state technology platform.

Is a completely custom solution required, or are there community model platforms with the potential to meet their needs?  Also, in a world where even the most switched on CIO can barely keep up with technologies as varied as mobility for consumers to the explosion of new data center technologies does any single brand really have the ability to keep up?

Historically, a custom solution was the only option to serve the idiosyncrasies of a particular brand.  This has clearly come at a cost – technical, human and financial. With a custom solution, the brand needs to determine their hosting approach.  Most custom solutions are developed in a professional services model, and the brand takes delivery of the software and must bear the cost of hosting and enhancing the product either in-house or through an outsourced support agreement.

Software as a Service (SaaS) platforms have evolved to meet the needs of a myriad of hospitality customer segments, and support key distribution and operational needs.  Moreover, SaaS solutions have successfully expanded through community input, and while this has resulted in feature-rich systems and innovation, there is a notable trade-off in business processes unique to a single brand.  

Finally, hoteliers are starting to examine their real source of advantage—their brand and service strategy and their ability to enable their services by being a great user of technology as opposed to being responsible for their end to end technology.

There is, however, a middle ground between custom and community model solutions: a SaaS platform that has the core functionality needed to support common industry requirements yet is extensible enough to support the brand's unique business processes. 

As brands look to free themselves from their legacy platforms, their needs will be unbounded by their current technical limitations. 

A platform that supports their core business and can grow with their evolving needs will be critical. This hybrid model will require very tight collaboration between hoteliers and their technology providers—in a sector that has arguably been under-served, the players who get it right will be big winners.

Sabre President Tom Klein spoke this week at the World Travel & Tourism Council (WTTC) Global Summit in Abu Dhabi- tackling the subject of "What's Next for the World's Hotel Brands?"
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