February 24 2015

Hotel Technology Spending to Increase in 2015

According to a recent study from Hospitality Technology Magazine, hotel spending on technology will increase in 2015. Year over year, 2104 budgets nearly doubled from 2013 budgets:

  • Hotel’s average technology budget amounted to 2.6% of total revenues in 2013
  • Hotel’s average technology budget amounted to 4.9% of total revenues in 2014

According to AHLA, 4.9% of industry revenues amounts to nearly $8 Billion, or on average, $150K per property. So what are properties going to spend these dollars on? Respondents to the survey indicated technology spending in the hotel industry will shift toward security, the cloud, and adding bandwidth. Above all, the resounding answer to the survey was “Customer-facing mobile solutions,” from nearly 40% of respondents.

There’s one key word in that answer that I’d like to address: solutions. Not hotel mobile apps, not mobile hotel reservation software, but mobile solutions.

An app can be brochureware or a wrapped, HTML5 mobile booking engine. An app doesn’t actually have to do anything. A solution on the other hand, must solve something.

So what is it that guests need to solve via a mobile device? Everything outside the hotel stay is already accessible on the guest device. The guest can book her flight through the Kayak app, check herself in on the JetBlue App, catch an Uber, and upon arrival at the hotel, she must approach an agent at a desk.

Given the new trends in hotel technology, she could check herself into her hotel stay on an app, but in most situations, all that happens from there is that the app sends an email to a front desk agent who checks the guest into the PMS. That’s not optimal. Imagine if booking on Kayak did nothing more than send an email a travel agent who then manually creates a reservation? Or if a ride booked through the Uber app just sent a text message to a dispatcher to radio a taxi? That doesn’t seem to make sense. Uber wouldn’t have a valuation at a quarter of the entire hotel industry’s yearly revenue, that’s for sure.

A solution by it’s very definition must actually solve a problem. If a customer-facing app just replaces a website or merely acts as a forum to connect guests to staff, then a solution it is not. If a guest can’t interact with their stay through the app, then phone calls increase. If a guest can only book, that booking may still travel through legacy integration channels, still subject to those legacy fees and commissions. If the guest’s interaction with device simply tasks staff member, then staff is serving a phantom guest, rather than the one right in front of him.

As an industry, if we’re going to spend $8 Billion on technology in 2015, we must ensure that we solve problems, not create new ones.