The Future Of Hospitality Technology

The hospitality industry must overcome its general reluctance to invest in new ideas and technologies and look for applications that will drive the bottom line. This includes using distribution channels, agents and intermediaries to develop customer information sources, and using technology to bring customers what they want - in real time anywhere in the world.

These were the key messages from the fourth International Hotel & Restaurant Association (IH&RA) Think Tank on the Future of Hospitality Technology held in Lausanne, Switzerland, from 14-15 February.

The purpose of the two-day Think Tank, which brought together around 50 senior executives, technologists and academics from the hospitality and other industries, was to explore the long-term consequences of information technology on the hospitality business. The IH&RA plans to present the conclusions and recommendations of the Think Tank to its Hotel Leaders' Summit scheduled for November 2000, as well as to high-level meetings of national hotel associations and industry organisations.

Three major issues were discussed by Think Tank participants in Lausanne: investment in technology, e-commerce and commoditisation. All three had been identified in previous Think Tanks as issues having, or likely to have, significant impact on the future of the hospitality business.

Investment in technology

The number one issue facing CEOs, CIOs and investors is how to justify the required investment in technology, or assessing how technology affects return on investment and share prices. In addition to developing a cost-benefit analysis model, aimed at estimating cash flows and the life of each investment in the face of rapid change and the associated risks, the Think Tank participants recommended that hoteliers and suppliers should work more closely together to convince investors of the value added to be achieved.

Suppliers must nevertheless provide realistic figures for any investment - given the relatively short life span of many technology applications - helping hoteliers to ensure that a strategy is in place to allow for upgrading. The risk is expensive, but it can be managed and value is added by investing in competitive methods that will lead the industry in the competitive environment longer term.

E-commerce

E-commerce was explained by Think Tank participants as being the part of e-business that involves transactions of one kind or another, ie the revenue-generating share.

In order to generate increased revenues - while, at the same time, reducing costs - the Think Tank concluded that there were two key plans of action: attracting new business and ensuring incremental business from existing clients, ie increasing their lifetime value. In line with the second of these goals, there should be greater focus on customer relationship management and loyalty building.

At the same time, e-commerce also means business transacted with suppliers and, as an example, supply-chain economies of scale through bulk purchasing.

Commoditisation

The third, and perhaps most controversial, technology issue addressed by Think Tank participants was that of commoditisation. This has come about as a result of the increasing uniformity of the hotel product and the arrival of Priceline.com and similar intermediaries selling on price only.

Although not all Think Tank participants believe that commoditisation is a bad thing for the industry, they agreed that its potential negative impact has not been fully recognised, and that there has already been significant brand erosion as a result of the trend. In fact, they concluded, hotel brand erosion could further increase and Priceline.com and other intermediaries could take control of information on clients and, through their own data warehousing and mining, become the brands of the future themselves.

The fourth Think Tank on the Future of Hospitality Technology was co-sponsored by the Ecole Hôtelière de Lausanne and Leonardo, the worldwide media distribution and web promotion company. Additional information will be available on the IH&RA websites: www.eurhotec.com or www.ih-ra.com

Nancy Cockerell
+44 (171) 352 5796 or +44 (7887) 952 617
IH&RA