Hotel Online Special Report

10 Trends Affecting 
Hospitality IT in 2005
This article is from the upcoming Spring 2005 issue of Hospitality Upgrade magazine.To view more articles covering technology for the hospitality industry please visit the Hospitality Upgrade Web site or to request a free publication please call (678) 802-5307 or e-mail.
by Bradford S. Iverson, March 2005

The hospitality industry has gone through tremendous change over the last decade.  Some changes have been dictated by technological advances, such as the shift from mainframe access via dumb terminals and green screens, to the current emphasis on above-property applications leveraging data from a single source.  Other changes, such as the increased use of the Internet spawned a plethora of new opportunities along with new intermediaries.  And, of course, the economy and geopolitical events have impacted our industry.

Through it all technology and improved business processes have had an enormous impact in transforming this industry—real-time access to inventory, transparency across multiple channels, campaigns targeted with laser precision at niche segments, seamless exchange of operational information and key performance data – all have had a profound impact on the industry. 

Indeed, change has been the one constant, as it will be in the future.  With this frame of reference, this article examines the 10 trends expected to impact the hospitality industry in 2005 and the coming years.

Saying ‘No’ to Commoditization:  Watching their neighbors in the airline space, hoteliers will do everything in their power to avoid commoditization.  Embracing and expanding upon the natural variances between hotel properties and services will be critical.  Seeking to emulate such successes as the Westin Heavenly Bed® there will be increased focus on new product/service development and differentiation.  While such activities will go beyond IT, technology holds the ability to both drive and enable substantial product differentiation.

2 Increasing Spending:  With RevPAR up hoteliers are once again able to make investments in their future.  According to IBM’s 2004 Global CEO Study, 83 percent of CEO’s surveyed will be focusing on revenue growth over the next three years.1  An increased appreciation for the ability new technology and business processes can drive business value will lead to meaningful increases in IT spending.  The focus on investments will enable revenue growth, including new products, new services and customer intimacy enhancements. 

3 Understanding the Customer:  Traditionally, CRM in the hospitality industry was largely the loyalty program, with value based on room nights and customers grouped into loyalty program tiers.  Today there are opportunities to do much more with CRM eventually perhaps "marketing to one" and the industry will soon be embracing such capabilities.  Indeed CRM can enhance revenue and differentiate service.  As such we see the full scope of CRM capabilities being applied, leveraging these tools at a more micro level of detail, where campaigns, package creation, and service, are delivered on a one-to-one level, where customer value goes beyond room nights to focus on lifetime value.

4 Delivering Personalized Experiences:  While the notion of personalized service has been discussed for some time, and successfully implemented in limited cases (e.g., Wyndham ByRequest®), today the capability to expand and deliver personalized service at a reasonable cost is reality.  Armed with the next generation of CRM information and handheld devices, today it is possible to arm restaurant servers with the name of the guest’s favorite wine and fondness for chocolate desserts.  Such capabilities can dramatically drive revenue, enhance guest value and contribute to brand affinity.

5 Going Direct:  While online intermediaries have in the past outmanoeuvred online direct sales, this trend continues to reverse itself.  Indeed, with a well designed site, robust functionality and appropriate marketing, those hospitality companies with a large portfolio and strong brand equity should aspire to reach online direct adoption rates that exceed online leaders such as Southwest Airlines (for first nine months of 2004, passenger revenue generated by equalled 59 percent2).  JD Power supports such a notion, reporting that "guests who book directly on a hotel chain’s Web site report significantly higher satisfaction with their stay than those who make their reservations through an independent travel site."3

6 Expanding Online Distribution:  Online direct distribution has traditionally focused on the transient and unmanaged business segments.  Attention is moving to other forms of online distribution.  In addition, more large corporations are interested in online direct bookings, when appropriate reporting and support of negotiated rates is supported, as well as an increased focus on providing online group capabilities.  There is merit in using the online channel to secure advance bookings for ancillary hotel services including restaurant reservations, spa treatments and the like.

7 Strengthening Brand Value:  Rising occupancy and ADR traditionally encouraged hoteliers to go independent.  However, in 2005 and beyond strong branding will be more important than ever.  Not only are brands increasingly blanketing the globe (both within and outside of the hospitality industry), but a strong brand is necessary to drive online direct bookings, to differentiate and avoid commoditization, and to provide leverage against online intermediaries.  To further enhance the bond and brand value significant investments will be made in brand/franchisee portals, portals that will enhance and streamline both processes and information delivery.

8 Building Self-Service:  Self-service is now an accepted way-of-life in the airline industry, and travellers will increasingly embrace this form of interaction if not prefer it for their hotel stays.  Indeed, while we have seen self-service infiltrate the large, full-service hotels this trend will expand into mid-scale properties.  In addition, there will be a need for a consistent, multi-channel approach to self-service that includes Web, kiosks and wireless devices.

Moving beyond such we believe that that CUSS (Common Use Self-Service) will revolutionize the entire travel experience.  Already players like Hilton Hotels are pursuing strategies.  Northwest Airlines' passengers will soon be able to print their boarding passes when they check out of a Hilton as they head to the airport.4  Clearly, those who implement CUSS will provide a great customer convenience that will contribute to their service differentiation.

9 Growing the Revenue Picture:  Hoteliers will increasingly demand access to the full revenue picture that is required to manage their business.  As previously mentioned we see a future in which customer information is leveraged to deliver personalized campaigns and packages.  A future in which online direct sales go beyond room nights to include restaurant reservations and spa reservations – in short a future in which the brand delivers value through more than room nights alone.  Accordingly, we see a need for both the brand and property to have access to better real-time revenue and profitability information – dashboard information that goes well beyond room nights and ADR.

10Planning for the Future:  Hotel revenue is up which enables these organizations to finally look to deferred investments in their infrastructure and plan ahead.  Such investments must be made carefully, ensuring appropriateness and providing the flexibility, scalability and adaptability necessary to meet future needs and innovations.

Focus will be key as investments in non-core, non-differentiating functions are not generally the best use of limited capital.  As such, hospitality companies will increasingly focus their capital investments in truly differentiating functions, while turning to outsourcing and its many benefits for that which is non-core.  This will not only improve the organization’s focus, but will deliver world-class capabilities, capital outlay reductions, flexibility, scalability and more.

1 Global CEO Study 2004. IBM Business Consulting Services. Somers, NY
4 NWA Fliers Can Soon Check-In at Hiltons – Hotel Kiosks Latest Idea in Self-Service Travel, Martin J. Moylan, St. Paul Pioneer Press, p. C1, December 14 2004

Bradford S. Iverson is responsible for IBM’s strategy and offerings across the hospitality and travel related services industries.  In this role he keeps abreast of industry trends, identifying customer pain points and needs.  He is always interested in hearing from those in the industry and may be reached at
©Hospitality Upgrade, 2005. No reproduction or transmission without written permission.

Geneva Rinehart 
Managing Editor 
Hospitality Upgrade magazine 
and the Hospitality website
Also See: Searching for Bookings? Optimize / Dr. Matthew Dunn / August 2004
Instant Messaging: Age Is Everything - Expectations of Immediacy, Productivy and the Rise of IM / Elizabeth L. Ivey / August 2004
Baby It's Cold Outside the Firewall / Michael Schubach / April 2004
High Wired: The Hotel Room of the Future / Kelly Stanford / April 2004
We're Not In Kansas Anymore; Differentiating your hotel through technology / Mark Haley / January 2004
Understanding the Power of Customer Relationship Management / Neil Holm / Hospitality Upgrade Magazine / November 2003
The Case for Self Service in Hospitality / Marvin Erdly and Amitava Chatterjee / Hospitality Upgrade
Magazine / October 2003
Five Questions to Ask Online Distributors / Michelle Peluso / Hospitality Upgrade Magazine / October 2003
Surf's Up - Internet Marketing for Destination Properties / Marvin Erdly and Amitava Chatterjee / Debra Kristopson / Hospitality Upgrade Magazine / October 2003
Wireless Changes Everything; So, do ya want a latte with that or what? / Jocelyn Valley / Hospitality Upgrade Magazine / June 2003
Customer Awareness or Customer Beware? Data Security in a CRM-Obsessed Industry / Elizabeth Ivey / Hospitality Upgrade Magazine / June 2003
Your Magnificent Selling Machine Would you Prefer Your Hotel to Get: the Web Hit or the Phone Call? / Robert Camastro / Hospitality Upgrade Magazine / June 2003
Tradeshows & Economic Soldiers / Dan Phillips / Hospitality Upgrade Magazine / April 2003
Hotel Telecommunications in the 21st Century / Geoff Griswold / Hospitality Upgrade Magazine / March 2003
The ABCs of CRM  / Mark Haley & Bill Watson / Hospitality Upgrade Magazine / March 2003
Getting the Most out of Your IT Investment / By: Clay B. Dickinson / Hospitality Upgrade Magazine / Fall 2002
The Role of Paper in a Digital World / By: Bill Fitzpatrick / Hospitality Upgrade Magazine / Fall 2002
The Rotten Pineapple (international symbol of hospitality) / By: Steve D'Erasmo / Hospitality Upgrade Magazine / Fall  2002
Focusing on Labor Can Improve More Than Just Cost / Hospitality Upgrade Magazine / Summer 2002
Attention Hotels - An Ounce of Prevention is Worth a Pound of Cure / Elizabeth Lauer Ivey / Hospitality Upgrade Magazine / May 2002 
HOSTEC - EURHOTEC 2002 - Room for Improvement / Christel Dietzsch / Hospitality Upgrade Magazine / Feb 2002 
Technology and the Human Touch / Dan Phillips / Hospitality Upgrade Magazine / Spring 2002
Wireless Technology:  Where We Have Been, Where Are we Going? / Geneva Rinehart / Hospitality Upgrade Magazine / Spring 2002
Effective Customer Relationship Management (CRM) Implementations / John Schweisberger and Amitava Chatterjee, CHTP / Hospitality Upgrade Magazine / Fall 2001 
What's Up With Call Accounting Systems (CAS) / Dan Phillips / Hospitality Upgrade Magazine / Fall 2001
Technology Dilemmas: What have IT investments done for you lately? / Elizabeth Lauer / Hospitality Upgrade Magazine / Summer 2001
Full Circle from Centralized to ASP - The Resurrection of Old Themes and a Payment Solution / Gary Eng / Hospitality Upgrade Magazine / Summer 2001 
A High Roller in the Game of System Integration / Elizabeth Lauer / Hospitality Upgrade Magazine / Spring 2001 
CAVEAT EMPTOR! Simple Steps to Selecting an E-procurement Solution / Mark Haley / Hospitality Upgrade Magazine / Spring 2001 
Your Bartender is Jessie James and He Needs to Pay for College / Beverly McCay / Hospitality Upgrade Magazine / Fall 2000 
Choosing a Reservation Representation Company / John Burns / Hospitality Upgrade Magazine / Spring 2001 
Understanding and Maximizing a Hotel’s Electronic Distribution Options / by John Burns / Hospitality Upgrade Magazine / Fall 2000 
The Future of Electronic Payments - From Paper to Plastic and Beyond / J. David Oder /  Hospitality Upgrade Magazine / Summer 2000
Timeshare Technology Steps Up / by Elizabeth Lauer / Hospitality Upgrade Magazine / July 2000 
Biometric Payment: The New Age of Currency / by Geneva Rinehart / Hospitality Upgrade Magazine / Mar 2000 

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