Risky Business


Is it better for a hotel to be on the bleeding edge of technology adoption or wait and see what works elsewhere first?

Hotels aren’t typically known as hotbeds of technological innovation. As a whole, the industry can be described as “technology hesitant,” according to John Burns, president of Hotel Technology Consulting. Not that there isn’t a culture of innovation in the industry, said Diane Estner, president of DANNI Enterprises, “but there’s also a culture around avoiding innovation.”

“The majority of our industry, nobody wants to be first,” Estner explained. “They want to know that it’s been tested and tried and proven before they actually sign up.”

Burns said that slowness to adopt technology stems from hospitality’s fundamental debate of high tech vs. high touch. Previously, a common belief was that embracing technology would jeopardize a hotel’s customer relationship. However, Burns said hotels increasingly see new tech tools as a way to gain a competitive advantage and differentiate themselves in their guest services.

Burns said the changing preferences of guests and the workforce make new technology a necessity for most hotels.

“Our guests live in a world where they expect recognition. They expect efficient, detailed digital dialogue. And they expect the contactless ability to do things without necessarily [working with]a person,” Burns said. “So, wherever we are on the technology adoption spectrum, our guests are telling us to get on board. Our workforce itself also is changing. We have a traditional challenge in the hotel business where we have high turnover, especially among line staff. And the new line staff, the 20somethings who are working our front desk, are digital nomads. They’re certainly digitally proficient, and they’re looking to us as employers to have systems that are in line with what they have in their hands, which are remarkable devices. So, we’re being forced to be more technologically literate, technologically adept, and equipped. Whether we like it or not, we’re being pulled into the 21st century.”

The question becomes how ambitious a hotel should be in adopting technology, weighing the benefits, costs, and risks associated with one of two approaches: pursuing the newest, bleeding-edge tools or taking a more deliberate approach.

pursuing the bleedingPursuing the bleeding edge

For some companies, innovation is essential to the corporate culture, said Mark Haley, managing partner of Prism Hospitality Consulting, “not just in technology, but in architecture, business models, [food and beverage], and other aspects of the art.” For those companies, a tech-rich experience is essential to their brand, and that means being aggressive about integrating the newest technology in the marketplace.

“This posture of across-the board innovation can be a powerful attraction for guests and also for employees,” Haley said. “And we all know what a challenge attracting desirable employees to the hotel industry is right now.”

Haley said the drawbacks to being ambitious with new technology are obvious to anyone who has had an IT project “blow up in their face.” Risks to the flow of revenue or the guest experience can cause particularly powerful problems, Haley elaborated.

“Adopting a new technology is risky,” Haley said. “Embracing an unproven vendor partner can be risky. The risks and consequences of a failure impact your colleagues, your guests, your [profit and loss], and your boss. Not to mention your career.”

The primary danger of a hotel being an early adopter of technology is that “all the bugs won’t be ironed out,” Burns said, creating operational problems during an adjustment period and affecting the guest experience. “I’ve had experiences as a guest where the technology isn’t consistent,” Estner said. “It’s really frustrating when it doesn’t work.”

For hotels looking to generate revenue outside of room bookings, such as through dining or spa services, Burns said there is clear value in using sophisticated technology to promote those services to guests and make it simple for them to make reservations and use those services.

“It’s an ongoing program of assessment,” Burns said. “It’s asking, ‘What could I be doing? What more are my competitors doing? What do I need to do?’”

the wait and see ap proachThe wait-and-see approach

For a more conservative company, a technology-heavy strategy might focus on operational excellence rather than innovation, Haley said.

“Instead of jumping on 5G services, [internet of things], and beacons, they zero in on offering the greatest possible Wi-Fi experience with mature technologies,” Haley said. “Maybe instead of buying the newest system out there because it’s new, the strategy might be to train your people as highly skilled users of the systems you have now.”

Organizations that favor a more deliberate approach to adopting technology avoid getting caught up in trends that may not have staying power and could prove costly for those who jump onboard early.”

When evaluating new tech, it has to really fundamentally address core initiatives and values and the goals they want to achieve,” Estner said. “Because, otherwise, it’s just a waste of time and money. You can’t do new tech just for new tech’s sake. It must be built around elevating the guest experience, reducing costs, streamlining things, and having more insight.”

Those particularly slow to adopt technology risk failing to meet their guests’ expectations and turning off their staff. For those who attempt to take a wait-and-see approach, Burns warns against complacency.”

You can’t say, ‘I’m going to be in the middle. I’m just going to stand here and watch it happen,’ because you’ll be moving backwards,” Burns said. “You need to have a constant plan for evolution. You can evolve slowly or quickly, but you must evolve.”

For companies considering new technology, whether it’s leading edge or something safer, J2 Hospitality Solutions President Jennifer Jones said hotels need to weigh whether they have enough resources to support the new tools, particularly in the area of staffing. The question of timing also is crucial.

“Not only do we want the implementation to be invisible to our guests, we also have to consider how we make this as least disruptive as possible for our staff,” Jones said. “Depending on what kind of technology project you are implementing, stakeholders may want to implement when occupancies are low in the hotel, or it may be better to implement when your booking period is lower. Therefore, it’s important to gather information from all of your operational team members to understand critical dates that are happening in each one.”

Strategies to reduce project risk include testing for performance and data integrity in a lab environment, structuring a pilot implementation that allows the user to learn how the technology will behave at scale, and potentially running the old system in parallel with the new system for an adjustment period, Haley said.

“When being the ‘beta’ for a new technology project with a vendor, I always recommend that we spend a little more money setting up a lab environment and schedule extra implementation time for testing of integrations, if applicable, as well as user acceptance testing. This helps give the lead users comfort before we roll out the project to the immediate user base,” Jones said.

Estner said all stakeholders involved need to be invested in the adoption, and Jones said hotels should set goals and metrics before implementing any new technology, making the purpose of the project clear.

“Stakeholders want to understand their return on investment, so any team implementing a project should be in alignment with what stakeholders are expecting from the outcome of the implementation,” Jones said. “If you are embarking on a technology project without acknowledging your goals, then people’s time and money will be wasted.”


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