With the summer travel season waning and a busy fourth quarter on the horizon for hoteliers, owners and operators continue to focus on maximizing revenue and profitability while confronting a host of critical operating challenges – from inflation to rising operating costs to an acute labor shortage.
A highlight of the summer was Converge, IDeaS Hospitality Revenue Summit, drawing a large number of hoteliers and revenue managers to the Lotte New York Palace, July 18-19.
The following Q&A is adapted from remarks at the event from Neal Patel, the recently appointed Chairman of AAHOA (Asian American Hotel Owners Association), and Dr. Ravi Mehrotra, president and chief scientist of IDeaS. Both industry leaders discussed the evolution of hotel technology and how AAHOA’s franchisees and brands are adapting in 2023.
Question: Hoteliers are not technologists and vice versa. Why is it essential for hotel leaders to take the stage at technology events and become part of the conversation?
Neal Patel: Some owners are still setting nightly rates at $60 and leaving it. Others are excited about the prospect of selling out all their rooms two weeks in advance. These operators don’t realize the money they are leaving on the table; in fact, when they operate this way, they are creating new expenses, not inventing demand. This is something that new technology can assist with.
Question: Depending on the segment, how can owners start to change their mindset regarding hotel technology?
Ravi Mehrotra: Growing up in India, I remember watching spy movies and marveling at the technology they used. James Bond had a wireless phone in his suitcase, and it was very large – it was the suitcase! Imagine if, during that period, someone told Mr. Bond that someday he would hold in his hand a device that, after pressing a few buttons, would call a driverless car – wherever you are – and it would take you anywhere. Today this is perfectly conceivable; in some places, it’s already being done. Imagination and technology combine to make science fiction a reality. I tell this story because if you only focus on the present and don’t imagine the uses in the future, especially in how you view technology in your work life, you will be left behind. If we insist on only using processes or technology we feel comfortable with, we won’t ever realize the innovations of tomorrow and all the future technology that will make our lives simpler and more productive.
Patel: In some ways, hoteliers’ mindsets must change. For example, too many owners today focus on growing RevPAR (revenue per available room) and not ADR (average daily rates). This mindset has to be corrected and using an RMS (revenue management system) easily demonstrates how a positive change to ADR flows directly to the hotel’s bottom line and has ten times the impact of identical RevPAR gains. It’s our job to educate owners on these facts; something AAHOA is taking very seriously this year. However, in other ways, technology providers have to meet hoteliers halfway. Today’s systems must be simple to be successful, especially for limited service and independent hotels. They cannot be complex, or hoteliers won’t get the most benefit out of them.
Question: What is the best technology that has been adopted by AAHOA’s hoteliers?
Patel: The latest technology we implemented was check-in kiosks to address labor challenges. These allow guests to pay using cash or card, scan their ID, and print their room keys. This technology doesn’t exist to eliminate the front desk. Throughout 2020 those jobs weren’t available and after that, COVID drove hotels to shut down their night audit processes. This technology is not perfect, but it helped hotels solve a problem that was sorely needed and, in turn, helped us manage our bottom line.
Question: What do you see as one of the most significant technology challenges facing hospitality today?
Patel: In 2019, a survey of AAHOA membership found that 91 percent of all hotels had a job opening. COVID did not help this situation; now, that number is 100 percent. Hotels are in need of differentiators right now. One that has existed for years is the branded central reservation system or PMS (property management system), but today we need a workforce that can prosper regardless of the chosen brand. In five to ten years, we will need to see the emergence of a uniform system to alleviate the time and money it takes to train team members today. I want to train tomorrow’s workers about what sets my hotel apart, not spend one week or month explaining the PMS.
Mehrotra: Every cloud has a silver lining. The silver lining, I see in COVID is that people are now realizing they must achieve a lot more with a lot less. The only way to do that is to focus on your strengths and allow technology to fill in the gaps along the way.
Question: What is one thing hoteliers should remember as they prepare to confront the future and stay ahead of new technology and other innovations?
Mehrotra: This question reminds me of a story about three fishes in a pond, a story everyone at IDeaS has heard and is familiar with. The fishes were named Wait and See, Plan Ahead, and Think Fast. One day, the three fishes heard some nearby fishermen discussing laying out some nets to see what they could catch. Plan Ahead said, “I won’t be caught here,” and swam to other waters. Wait and See thought to himself, “What’s the hurry? Let’s take some time, and when I get the best answer, I will make a decision.” Lastly, Think Fast said, “Well, I’ll think of something in the moment, should the fishermen come.”
Sure enough, the fishermen laid their nets the next day. Plan Ahead was nowhere to be found, but Wait and See and Think Fast were both caught up in the confusion. Think Fast quickly decided to play dead, and the fishermen threw him back in the river. Unfortunately, Wait and See ended up on a dinner table somewhere.
In essence, while it may seem like planning ahead is the best possible decision to make today, sometimes it is not always possible. In the future, planning ahead is not going to be able to solve all of your problems; hoteliers are going to have to think fast. Technology will allow you to achieve a new dimension of problem-solving.
Prepare, Adapt and Execute
These remarks include some of the insights shared throughout the conference and reflect an ongoing evolution taking place in hotel operations and technology. The daily demands of the last two years have shown the industry that no matter how much one prepares, an adaptable strategy and fast execution are just as important for overcoming future challenges. Hoteliers with an eye on tomorrow and investments in new technology will be better positioned to flourish in the next phase of hospitality.