Hotel technology investments to increase in 2015 to match guest expectations
Hotels are matching heightened guest expectations with an increase in hotel technology budgets, investing an average of 4.9% of revenue in IT. The biggest spenders by this metric are the mid-scale chains, which will spend 6.6% when compared to the 3.5% at the economy and luxury ends of the market.
These figures come from the latest Hotel Lodging Technology survey from Hospitality Technology magazine (available here), and show how mission-critical technology has become for all aspects of the guest experience. Technology has moved from only being a boost to behind-the-scenes activities to a guest-facing tool that positively affects the overall hotel experience.
Top tech priorities
Indeed, consumer-facing technologies were the highest priority for the surveyed cohort of IT professionals. The other important areas of tech upgrades are adding bandwidth to on-property systems (especially as the industry trends towards personal content consumption), and preparing for the upcoming shift in North America to the chip-and-pin technology.
The rise of mobile payments also poses a technology quandary to hotels, as there are currently competing standards without a clear winner. The reality of multi-brand mobile payments is also that there will likely be several winners, and guests might wish to pay via a variety of mobile-first payment systems in the near future.
Migrating to the cloud continues to be a priority for many respondents. Services across the boar are being transitioned from on-property to the cloud, including PMS (15% moving to cloud), sales and catering (14%), POS(14%) and CRM (12%).
The security of this data is obviously also a concern, with many hotel technologists seeing securing data as a clear priority.
As the shift to cloud-based services continues, hotels must spend more money on security to prevent breaches or other embarrassing lapses. Mid-tier brands are the most likely this year to see an increased focus on security, investing 10.39% of budgets in security and PCI compliance. That’s compared with only 6.87% last year.
Security technologies currently being deployed, as identified by respondents, are: third-party security-as-a-service (43%), total end-to-end encryption (41%) tokenization at swipe (40%), and breach protection (27%).
Mobile is also a priority when it comes to employees. Given the near-ubiquity of smartphones, hotels can now also consider mobile solutions that address particular employee considerations on this mobile channel.
Top challenges facing hotel tech
The report also identified the top challenges for the IT respondents.
- 29% said that guests expect technological progress faster than hotels can reasonably keep up with.
- 21% find it difficult to properly manage the ROI on new technologies.
- 16% feel IT is under-budgeted.
- 15% are challenged by a resistant company culture as far as technology.
- 11% doesn’t have the appropriate talent to deliver the best IT.
The complexity of these ongoing IT investments are one of the biggest hurdles to both adoption and successful deployment by teams with limited experience at such levels of complexity.
Despite all of these investments, IT is still struggling to be accepted into the fold as far as influence and reach — only 40% of respondents agreed that the CIO has influence on par with other C-suite execs.
This result demonstrates an actionable opportunity for C-suite management to double-down on IT and ensure that technologists have an equal place at the executive roundtable, especially given the outsize influence technology has on all aspects of the guest experience.
Download the full report (signup required) here, which includes a detailed breakdown of what specific tech investments are being made by hotels.
NB: Investment image courtesy Shutterstock.
Nick Vivion is a writer and strategist. He was a Tnooz reporter and global events lead between August 2012 and July 2015. He was the launch co-founder of Booty's, a global street food restaurant in New Orleans and was recently AVP Operations, North America, at Zomato.