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September 16, 2016

Greater investment in IT will bring hospitality real estate up to date with other sectors, according to Avenue9.

Checking into a flight today is a seamless, digital experience. In retail, technology has revolutionised everything from the supply chain to point of sale. Behind the scenes, these industries have invested heavily in sophisticated digital infrastructure and are reaping the rewards.

Meanwhile, the hospitality industry has lagged behind.

“There’s a ‘if it’s not broke, don’t fix it’ mentality in hospitality but we have to challenge that,” says Philippa Witheat, sales and marketing director of Avenue9, a specialist hospitality IT consultancy, part of JLL. “Many hotels are living in the past and some of this is based on lack of investment.”

Hotel guests regularly have to fill in paper forms at the front desk and, when a system fails, manual workarounds are commonplace; staff at some of the world’s biggest hotel chains have resorted to makeshift excel spreadsheets for day-to day tasks such as taking payment or logging complaints. This is proving costly, with Avenue9 estimating that some properties risk losing as much as 10 percent of their operating costs as a result of manual workarounds, not to mention missing subsequent revenue opportunities.

The chronic underfunding in hospitality IT is, in part, a hangover from the Global Financial Crisis, which stalled the industry’s modernisation. Today, the sector is finally turning a corner thanks to renewed market confidence and pent up demand for technology investment.

Flexibility is the future for IT

From property management systems (PMS), to door locking software and even HR solutions, most of the systems responsible for making hotels run more efficiently are IT solutions. Yet onsite IT teams in hotels are often absorbed in routine tasks including password resets and fixing printers. IT strategy on a flexible basis is the future of hospitality technology, according to Avenue9.

“We’re seeing more forward-thinking hoteliers exploring the outsourced IT model,” says Witheat. “It allows the hotelier to rise above routine IT tasks to focus on strategy.”

Outsourced IT is nothing new, says Dale Nix, IT Director, Avenue9. It’s the execution that differs.

“It’s a model we will likely see adopted more and more as hotels see the value of investing in an outsourced model, rather than a single hire IT Director.”

Nix adds: “Hotels often do not have the necessary funds to invest in all of the diverse skills needed on a full time basis. A flexible service brings multiple disciplines and varied skills.

Until now, overhauling a hotel’s IT systems has happened on a ‘needs-must’ basis, says Nix, who recently advised a well-known UK-based hotel on a new PMS. “Their existing system was 12 years old,” he said. “It was no longer fit for purpose.”

Like many hotels, this issue came to light through a change of ownership. As the sector sees more M&A activity, technology is being forced to the top of the agenda.

Large hotel chains may find that legacy IT systems make change tricky without group-wide consensus. But smaller chains and independent hotels are an obvious fit for flexible IT.

Nix explains: “If you’re Hyatt or Starwood you have a lot of resource to deploy for ad-hoc projects. While we can always provide tremendous value for the large hotel chains, its smaller groups and independent hotels who can really benefit.

A case in point: Galgorm Resort & Spa

It was a period of expansion that encouraged management at the Galgorm Resort & Spa in Northern Ireland to raise the IT bar.

The five-star 163-acre property, in Ballymena, County Antrim, will be joined by a newly-built development in Belfast once completed in early 2017.

After an initial audit, which examined every hotel system, Avenue9 set about finding solutions to make the business more efficient. The Galgorm project is now contracted for three years to see the business through its initial expansion.

IT outsourcing may be an interim fix for some hotels but Nix warns that technology investments should be viewed as long term. “Many mainstream systems are expected to last 3-5 years, however, we are seeing more applications, such as PMS and PBX, being sweated for 8-10 years, despite technology advancements that would make deploying a new application much more efficient and cost-effective.”

IT outsourcing is, in theory, easy to defend as a capital expenditure charge because of the tangible benefits, says Nix. But, he adds: “A lot of it is down to mentality of decision makers, it’s purely down to their willingness to put right what they have and see the real benefit of investing in IT.”

Philippa Whiteat
Sales and marketing director, Avenue9

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