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 E-Business Proves to Be Essential to the Lodging Industry 
in Combating Industry Downturn Following 
September 11th Events
Washington, October 15, 2001 – Members of the E-Business Committee of The American Hotel & Lodging Association (AH&LA), during a regularly scheduled conference call last week, discussed the vital role of E Business in dealing with the sudden and unexpected business downturn that has impacted the Lodging Industry following the tragic events of September 11.   Committee members predicted that E-Business would become an even higher priority for most hotel industry executives in upcoming months as they work to stabilize revenues, reduce costs and try to cope with a very tough business environment.

According to Frank Nardozza, Managing Director at KPMG Consulting and Chairman of the E Business Committee,  “E Business has proven to be the savior for many hotel companies in the aftermath of the September 11 tragedy, by providing the most efficient and cost effective channel for getting critical information quickly in the hands of important customers and generating new business”. 

He added, “Now with major cuts announced in staffing at most hotel companies, executives are leaning even more heavily toward web enabled systems and technology as the means for handling current workloads with fewer staff, and the return on E Business investments will become much clearer now than it ever was before.”

Committee members explained that following the September 11 tragedy most major hotel companies used the Internet aggressively to stop the slide in business.  They quickly sent e-mails directly to frequent-stay program members offering a wide range of price breaks and travel incentives.  They offered numerous room rate discounts and travel incentives over the Internet and relied heavily on promotions through on-line travel intermediaries. 

Member Don Smith, V.P. at WorldRes.com pointed out, “In many cases on-line targeted marketing campaigns were designed and launched in a matter of days by hotel companies in an effort to attract potential guests within a reasonable driving distance from select hotels”.  “This was done”, he added, “to offset lost business from  “fly-in” clientele.”  Committee members estimated that rapid-fire E-Business initiatives generated multi-millions of dollars in incremental hotel revenues since the September 11 tragedy. 

Several committee members spoke of the potential future benefits that will accrue to owners and operators who have already made strategic investments in E-Business.  Jules Sieburgh, CIO of Host Marriott suggests,  “Now more than ever there will be a greater push on maximizing the on-line distribution channels which will go a long way in enticing more guests to travel and hopefully will have the effect of restoring consumer confidence in travel”. 

Clay Dickinson, Principal with IBM Global Services suggested, “There should be an even greater push now to leverage E-Business Investments, and every hotel company should be working hard to figure out how to use the Internet and technology to further squeeze out costs in this tough economy.”

The Committee identified the following priority areas of E Business opportunity and focus for the hotel and lodging industry during the months ahead.
 

Web Enabled Customer Relationship Management (“CRM”) – Web-enabled customer relationship management solutions were projected to gain further prominence as a means for better integrating on-line and offline customer channels, better managing and tracking important customers, and providing automation for the entire marketing and sales process.  CRM was thought to be even more important now in tough times to retain customers and generate incremental revenue.
On-Line Reservations Systems – More focus will be placed on moving away from traditional GDS bookings and towards direct on-line hotel bookings for substantial cost savings and customer convenience.
Web Based Self -Service Applications – Expansion is thought to be in store for increased deployment of Web based customer and employee self-service applications.  Some of the areas cited as examples include employee benefits administration, self- administration of frequent stay programs, employee time and expense reporting, and self access to corporate managerial and accounting reports.
Centrally Hosted Business Applications – It was predicted that there will be more interest in moving front and back office software applications out of the hotels and into  centrally hosted locations over the Internet, to eliminate the need for owners and operators to maintain costly hardware and software at all hotel locations.  There appears to be  an opportunity now for third party Application Service Providers (“Asp’s) to gain a foothold in the industry.  On-site users gain access to centrally hosted business applications such as PMS, Accounting, HR, and Sales and Catering over the Internet using a standard Web Browser.
E Procurement – E Procurement allows companies to purchase goods and services over the Internet eliminating much of the manual steps and paperwork. The Committee pointed out that up until now E Procurement has been slow to take hold in the hotel industry.  But it was thought that there would be new momentum behind E Procurement initiatives as hotel companies look for more ways to streamline operations and cut costs in the tough business environment we are presently in. 
Security -  Security was suggested to be the new frontier for E- Business in the hotel industry in the wake of the recent tragedies.  Lee Davis, Electronic Business Director at Unisys Corporation remarked, “The hotel industry will look to “state of the art” guest recognition and security technologies such as fingerprint identification and Iris scans to beef up guest security, and the Internet will provide a means to access central data repositories centrally stored by corporate and governmental entities”.

Nardozza concluded, “ E Business has recently proven its worth to the hotel industry and now will figure much more prominently in executive thinking about ways to cut costs and drive revenues during the tough months ahead”. 

The AH&LA E-Business Committee was organized to exchange information and ideas pertinent to e-business in the hospitality industry.  Defined as “the collective business strategies and business processes influenced or enabled by the Internet and electronic technologies,” e-business is becoming a vital tool that enables companies to conduct business online.

The committee’s primary goals include serving as an informed and objective resource for information and education on the topics of hospitality e-business; initiating better decision making on evolving issues relevant to e-business and enabling Internet and electronic technologies; disseminating information on e-business through all appropriate means such as publications, seminars, Web sites, speeches, articles, think-tanks sessions, and media interviews; serving as a venue for the exchange of information and ideas; and supporting AH&LA in legislative efforts applicable to e-business and e-commerce.

AH&LA, founded in 1910, is a federation of state lodging associations throughout the United States, with some 11,000 property members worldwide, representing more than 1.4 million rooms. 

   

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Contact:

AH&MA E-Business Committee
Rich Jackson
[email protected]

 
Also See Harnessing the Digital Revolution / KPMG / 2000 

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