By Aaron Shepherd
“A tipping point is a point at which small changes become significant enough to cause a larger, more critical change that can be abrupt, irreversible, and lead to cascading effects.”
Over the last month, headlines have been awash with news of a reckoning spreading across Silicon Valley’s big tech darlings; lay-offs are happening at an admittedly blistering pace as companies like Microsoft, Google, and Amazon brace for an economic downturn. The numbers, if you’ve seen them, are rather staggering. Meta, Alphabet, Amazon, and Microsoft have collectively cut 50,000 jobs, while Elon Musk is said to have fired half of Twitter’s employees soon after he took his seat at the company’s helm. While the justifications for these lay-offs vary, a common theme has emerged: companies are scrambling to centralize their operations and reduce costs to safeguard their business during an increasingly volatile economic landscape.
There is a lesson to be learned here – especially when we turn our gaze to the world of hospitality. Looking throughout history, we observe periods of economic downturn that, understandably, led businesses to tighten their budgets, reduce costs and, where necessary, let go of staff. This may be the natural way, but the hospitality industry is notorious for its misguided obstinance toward platform and process evolution. Within our industry, legacy systems run amuck – until an inevitable breakdown costs a hotel enough to inspire them to seek out the update that was due years prior. Unlike other industries, hospitality is decidedly a people-first business – even with the introduction of self-service tech, hotel staff still primarily championed the guest experience. As such, when hotels look to safeguard their business against a shifting landscape, much like the aforementioned big tech companies, they do not have the option of furloughing most of their staff. Quite the opposite, hotels frequently struggle to attract and retain key talent – a problem that has grown exponentially in the wake of the pandemic.
With the economic uncertainty, hotels are forced to look at their operations through an aptly critical lens. Is an adherence to legacy technology costing them, and if so, how much? Could they centralize their operations and reduce costs by updating their core technology? Right now, it may be time for big tech to streamline processes with leaner teams, but in the world of hospitality, it’s time to streamline operations with better technology.
Traversing the Hospitality Tech Gap
Consider this: around 62 billion data and analytic work hours are lost annually worldwide due to analytic inefficiencies, according to the ‘Data and Analytics in a Digital-First World’ report. Despite 70 percent of organizations citing that they want to be more data-driven now, 95 percent still struggle with operational challenges around data and analytics, and 88 percent continue to be hindered by legacy technologies.
Within hospitality, there is a growing gap between hotel companies using legacy systems, compared with those embracing emerging technologies in lockstep with guest demands and other industries. Hotels that stick with legacy systems may find their margins squeezed, growth slowed, and a heightened turnover of staff frustrated with the negative impact outdated tech has on their work. Even still, some hotels may continue investing in their legacy systems rather than adopting new technology. However, they will likely pay the price in lost revenue, market share, market preservation, expansion, and profits.
After all, how many integrations and patch fixes until you are dealing with what amounts to an overpriced and underperforming bunch of tech spaghetti? How many horror stories do we need to witness (Southwest Airlines, as a recent example) before we finally abandon the “we’ve always done it this way” mindset once and for all? As the Wall Street Journal articulated in a 2017 article, “glitches that can ground hundreds of flights are becoming routine as U.S. airlines battle the vast, aging information technology that keeps them aloft.” Why should hotels and travel brands be content working harder rather than smarter?
Turning the Page
Despite the economic hardship across key sectors, the hospitality industry finds itself in a uniquely advantaged position. Even while consumers cut down ancillary spending, there appears to be a renewed and unrelenting appetite for travel as individuals and families look to make up for trips lost over the pandemic. This is promising; however, if the pandemic taught hospitality brands anything, it should be to always air on the side of caution. During times of uncertainty, a hotel’s best defense is a streamlined operational model that empowers staff to do more with less while helping properties to reduce costs and maximize/diversity revenue opportunities. With this in mind, many hotel brands are waking up to the potential of new-age technology while finally acknowledging the limitations of their age-old crutch: legacy tech.
Of course, every time a new generation of software is introduced, hotels must carefully weigh the benefits and costs of shifting to the new paradigm against the disadvantages of continuing to operate an increasingly obsolescent system.
Hotels invest in tech primarily for these reasons:
- Market desires
- Client/customers desire
- Looking for bright shiny objects
- To put out fires like cyber-threats
- They have not put money into the reliability and scalability of systems architecture, so systems need to be updated.
When considering a platform overhaul, hoteliers should consider the following questions:
- Will this platform better position our property to align with guest expectations and market trends?
- Is the platform cloud-based?
- Does the platform offer a variety of applications/services, or is it a singular offering?
- Does the vendor offer platform flexibility and customization?
- Does the platform utilize open APIs and/or microservices architecture?
- Does the platform offer unlimited scalability for future growth and property needs?
- Will the platform enhance the staff experience to maximize productivity and improve staff bandwidth for guest service and connection?
- Is the platform ‘plug-and-play,’ or does it require extensive training and installation efforts?
The hospitality and travel industry has finally reached a technological tipping point. Without investing in the latest modern technology, hotel and travel brands won’t be able to do what their competitors are doing or deliver the services their customers want because their legacy systems can’t cost-effectively deliver them, or at all.
Legacy systems have served us well for decades, but all good things must come to an end. Fortunately, many good paths lie ahead. Using microservices that work with legacy tech is one great approach. Platform inefficiencies should no longer be glorified or excused, and when we consider the costs associated with outdated platforms, the associated cost of new tech adoption is revealed as minimal. Better yet, new platforms quickly pay for themselves while bringing our industry up to speed on the possibilities and operational advantages of agile, limitless technology. Whichever approach you take, it’s essential to take it now. Hoteliers that do will be positioned to delight guests, safeguard revenue streams, and move into profitable futures.