Hotel technology

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HOTEL TECHNOLOGY IN 2014:Funding a Hyper-ConnectionTech spending increases as hotels scramble to meet guest expectations

A S U P P L E M E N T T O H O S P I T A L I T Y T E C H N O L O G Y

Hotels reveal detailed IT budgets &spending allocations

New analysis compares projectimportance and performance

Guestroom tech upgrades focus on

connectivity, WiFi and HD content PLUS:New data on IT leadership and inuence


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TABLE OF CONTENTS

TECHNOLOGY GROUP

www.edgellcommunications.com

PUBLISHER

Lenore OMeara

[email protected]

EDITORIAL

EDITOR-IN-CHIEFAbigail A. [email protected] EDITORDorothy [email protected]

STUDY AUTHOR

Mehmet Erdem, PhD. CHTPPresident, iHITADirector of Hospitality Technology& Innovation / Associate ProfessorUNLVs College of Hotel Administration

SALES

ACCOUNT EXECUTIVELeah [email protected] EXECUTIVEHope [email protected] TO PUBLISHERJen Johnson

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[INTRODUCTION]

4 | Annual Study Measures Objectives and Outcomes for Hotel Technology

Study authors outline the updates to this years report, and offer key ndings from the research.

Results indicate that IT investments are on the rise as hotels seek to boost connectivity for esca-

lating guest expectations.

[CHAPTER 1: BUDGETS & INVESTMENT PRIORITIES]

6 | Tracking Hotel Technology Investment Areas

This section provides a breakdown of IT spend by sub-segment, and as an industry-wide per -

centage of revenue. Overall, technology allocations in 2014 will focus on property management,

guestroom technology and connectivity.

[CHAPTER 2: IT STRATEGY & PERFORMANCE]

8 | Guest Expectations Bring Increased Pressure

Hotel IT executives reveal their technology goals and top challenges in 2014. This years research

includes new queries into the perception and inuence of technology teams at their respective

organizations. In addition, an importance-performance analysis shows valuable insights into areas

where technology is and isnt satisfying hoteliers needs.

[CHAPTER 3: IN-ROOM TECHNOLOGY]

12 |Hotels Reveal In-Room Technology Priorities

Guestroom investments focus on bandwidth, WiFi and HD television content. Tablet rollouts in-

side the guestroom are stagnant. Meanwhile, HSIA pricing edges towards a tiered-access model.

[CHAPTER 4: ENTERPRISE SYSTEMS]

15 | Enterprise Upgrades Focus on Property Management

Hotels rank their upgrade plans across 16 enterprise and above-property technology areas. PMS

systems and business intelligence will be priorities in the coming months. Hotels also evaluate op-

tions in cloud, big data and payment.

[CONCLUSION & METHODOLGY]

18 |Evolution for Technology Leaders

Guest expectations are rising rapidly and IT budgets are on the increase, creating opportunity for CIOs

to embrace leadership roles.

Copyright 2013 Hospitality Technology. All rights reser ved. No part of this pub

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send address changes to HOSPITALITY TECHNOLOGY, P.O. BOX 261, LOWELL, MA

01853. PRINTED IN THE U.S.A.

WWW.HTMAGAZINE.COM LODGING TECHNOLOGY STUDY 2014 HOSPITALITY TECHNOLOGY 3


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HT LODGING TECH STUDY 2014

4 HOSPITALITY TECHNOLOGY LODGING TECHNOLOGY STUDY 2014 WWW.HTMAGAZINE.COM

The state of the lodging industry since the recession is looking

brighter, with near record-high prots reported in 2012. Despite

the good news on prots, revenue growth has been moderate

(Host Almanac 2013 by STR Analytics). Moreover, some leading

experts in the industry point to ongoing uncertainty across lodg-

ing segments (Hotel Year Book 2014). The 2014 outlook for the

global lodging industry reects a competitive environment with

strategic opportunities and threats for all entities involved.

The authors of the 2014 Lodging Technology Study strongly

believe that one of the key purposes of technology is to de-

crease uncertainty. Technology has evolved rapidly in recent

years, creating both an opportunity for improving operations

and guest services, and presenting challenges for executives

who are tasked with implementing these projects. In order to

assist hotel executives in their decision-making process, Hospi-

tality Technology (HT) magazine produces this annual Lodging

Technology Study.

This years study offers an overview of technology trends and

issues facing hotel executives in 2014, and compares this to

historical data going back to 2011. This report includes bench-

marking data on budgets and investment objectives, IT strategy

and decision making, and patterns in both guest-facing technol-

ogy and enterprise systems.

This years research points to an increase in technology bud -

gets, particularly as hotels race to meet escalating guest expec -

tations and provide robust connectivity. This 2014 report also

contains several new lines of investigation, including a section

on IT leadership that evaluates the perceived importance of tech-

nology by the business, and in so doing has identied areas for

improvement (Chapter 2, Fig 6). The report also includes, for the

rst time, an importance-performance mapping grid that expos -

es technology areas that are underperforming (Chapter 2, Fig 7).

Findings overall show that the industry continues to invest heav -

ily in property management technology, is exploring cloud-based

systems, and is largely motivated to add bandwidth in 2014.

We value the contribution of those executives who partici -

pated in our 2014 report. It is their commitment to peer-to-peer

sharing that helps make this research possible.

Annual Study Measures Objectives and Outcomes

for Hotel Technology

I N T R O D U C T I O N

2014 IT investments on the rise as hotels seek to boost connectivity forescalating guest expectations

STUDY HIGHLIGHTS

Technology budgets are on the rise, and the average an -

nual IT spend-per-location is $290,000. The estimated an-

nual IT budget as a percentage of total revenue is 2.81%.

Once again, high guest expectations have outpaced budget lim-

itations as the number one challenge facing IT departments.

Property management systems account for the single larg-

est portion of technology investments, at nearly 20% of the

total budget.

There is a surprising drop in budget allocation for certain guest-

centric IT projects (such guestroom technologies and CRM),

while investments in bandwidth and connectivity are on the rise.

Connectivity is the key driving force shaping IT projects in 2014,

with 66% of hotels in this study planning to add bandwidth in 2014.

Hoteliers should plan their HSIA pricing models to accommodate the

realities of tomorrow. Tiered-access pricing models are on the rise.

The realization for a well-trained and equipped workforce to

manage IT initiatives is evident throughout the report. How -

ever, the general feeling is that IT staff is not always given the

tools and opportunities needed for professional growth.

There is evidence of a disconnect between the importance

of technology in helping hotels meet their general business

innovation goals.

Abigail A. Lorden

Editor-in-Chief

Hospitality Technology

Mehmet Erdem, PhD., CHTP

President, iHITA

Director of Hospitality Technology

& Innovation / Associate Professor

UNLVs College of Hotel Administration


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BUDGETS & INVESTMENT PRIORITIESC H A P T E R O N E

gets that are 1% or less of total revenue;

budgets that are at 2, 3 or 4 percent of

revenue; or budgets that are at 5% of

revenue or greater. Approximately one

quarter of the respondents invest 5% or

more of their total revenue in IT. Another

25% of respondents invest 1% of reve-

nue or less in IT. The bulk of respondents

(50% of hoteliers in our study) fall in 2, 3,

or 4% investment levels.

It should be noted that the reported

averages vary from year to year based on

the prole of organizations represented

in this study; and these averages can

be inuenced by outliers, for example

in cases where respondents may be in-

volved in new builds.

Where the Budget is Going

One way to measure IT investment priori-

ties is to follow the money. We traced IT

spend across nine key operational areas

(guest rooms, networking, property man-

agement, etc.). Respondents were asked

to estimate the percentage of their 2014

IT budget that has been or will be spent

across these areas. This list was previ-

ously established by industry experts and

has been used in prior studies. Figure 3

shows the distribution of funds across

these areas and also offers a comparison

between 2012 and 2014 to identify any

changes in patterns.

Results show a drop in IT dollars spent

on guest room technologies and on cus-

tomer relationship management (CRM)

when 2014 allocations are compared to

2012. Just last year, in fact, these two

guest-centric technologies collectively

represented about 30% of IT spend. In

2014, these two categories account for

23%. Indeed, industry experts have re-

ported a growing sentiment amongst

hoteliers that the ROI on CRM and guest

room technologies is difcult, if not im-

When strategically and properly utilized, in-

formation technology can provide lodging

rms with a sustained competitive advan-

tage. One way of assessing the use of IT is

through a review of budgets. There is grow-

ing evidence that hotels have increased

their technology budgets over the past sev-

eral years. Participants in this study were

asked to report or estimate their organiza-

tions 2014 IT budget per single location,

along with their corporate IT budget (if ap-

plicable). Results are shown in Figure 1.

The 2014 industry-wide average for

IT spend-per-location was calculated at

$290K. This is a marked increase over

the 2013 average of $142K. Looking at

market sub-segments, we see similar

growth in all categories.

In the luxury segment, the per-location

IT budget averages at close to $600K,

compared to $280K last year. IT invest-

ment levels in the luxury segment range

from $110K to $2 million. With no outli-

ers observed during the analysis, it can

be assumed that there will be signicant

IT investment across the luxury segment

in 2014.

The single-location IT budget for up-

scale properties averages at $286K,

compared to $174K last year. Midscale

properties averaged $148K per location

($61K in 2013), and economy proper-

ties average $135K per location ($51K

in 2013). There was a wide range report-

ed in minimum and maximum budgets

across these segments, and this is consis-

tent with previous years studies. Overall,

there is clear evidence that hotels plan to

increase IT spending in 2014. For further

analysis, respondents were also asked for

information on corporate IT budgets.

At the corporate level, the budget dif-

ferences between segments were even

more pronounced. The reported average

corporate IT budgets are as follows: $22

million for luxury, $1.5 million for up-

scale, $450K for midscale, and $250K

for the economy segment.

IT Budget as a Percentage

of RevenueIn order to get a better sense of IT bud-

get allocations, we asked each respon-

dent to share their annual IT budget as a

percentage of their total revenue (Figure

2). Overall, this gure was reported to

be 2.81%. We further averaged invest-

ments levels across ve buckets: IT bud-

Tracking Hotel Technology Investment AreasResults show an overall increase in IT budgets, and a focus onconnectivity upgrades


INDUSTRYSEGMENT MEAN MEDIAN MINIMUM MAXIMUM

CORPORATE-

LEVEL MEAN

CORPORATE-

LEVELMEDIAN

LUXURY $592,000 $300,000 $110,000 $2M $22M $7.5M

UPSCALE $286,000 $250,000 $20,000 $700,000 $1.5M $325,000

MIDSCALE $148,000 $18,000 $1,000 $900,000 $450,000 $30,000

ECONOMY $135,000 $135,000 $20,000 $250,000 $250,000 $250,000

INDUSTRY-WIDE

$290,000 $175,000 $38,000 $962,500 $7.9M $2M

FIGURE 1: TECHNOLOGY BUDGETS IN THE LODGING INDUSTRY


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of hotels invest

1% or less

of hotels

invest 2% of

revenue on IT

of hotelsinvest 3%

of hotels

invest 4%

of hotels invest5%of revenue or

more on IT

25%

25%

25%

15%

10%

possible, to document. With guests bring-

ing their own devices into the hotel, the fo-cus has largely shifted away from in-room

technology and onto the infrastructure

needed to support those devices. In fact,

one leading hotel CIO was quoted saying

that guestroom technology is dead on

arrival at the 2013 Hotel Technology Fo-

rum. The ndings of this years survey ap-

pear to support such sentiments.

Overall, many areas are receiving a

reduced percent of the IT budget in com-

parison to the previous years. Despite

the lessened emphasis on guest-centric

technologies, the third highest spending

in 2014 and highest growth area when

compared to 2012 investments will be

focused on Networking, Bandwidth and

Connectivity. This is a conrmation that

hotel executives are well aware of the im-

portance that guests place on being con-

nected, and that these areas are in need

of improvement and updates.

Property Management Systems ac-

count for the single biggest investment

area, at 19%. When combined with guest

room technologies (17%) and band-

width/connectivity/networking (17%),

these three areas account for more than

half of all technology spending. Further

insight into the types of investments

across PMS, guestroom, and connectiv-

ity is explored later in this study.

This years results show a noticeable

increase in the Other category. This

item includes IT support/stafng and sal-

aries, and implies that there is an effort

to invest in the human capital needed to

manage IT initiatives. Overall, IT budget

allocation for the top three items has not

changed in the last two years. However,

the uctuations in allocations could be

an indicator of changing priorities.

We further asked respondents to indi-

cate approximately what percentage of

their IT budget goes to Capital Expendi-

tures (investing in innovation) versus Op-

erational Expenditures (maintaining sys-

tems and license fees). Despite the drum

beat for innovation and repeated news

articles on the importance of investing

in technology infrastructure, operational

expenditures represent almost 60% of

the IT budget, while capital expenditures

remain at around 40%. These numbers

are similar to last years reported num-

bers, and consistent with gures report-

ed by both the foodservice industry (HTs

Restaurant Technology Study) and the

greater retail industry (RIS News).

Customer RelationshipManagement

Revenue Management

Workforce Management

Payment Security/PCI Compliance

Point of Sale System

Other (staff and misc.)

Networking/Bandwidth/

Connectivity

Guestroom Technology

Property ManagementSystem

2014

2012

11%

FIGURE 3: TECHNOLOGY BUDGET ALLOCATION

FIGURE 2: HOTELIT BUDGETS AS A PERCENTAGE OF REVENUE


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IT STRATEGY & PERFORMANCE


natives entering the workforce, leveraging

mobile solutions for employees may see a

priority increase in the coming years. That

said, our research further indicates that em-

ployee-facing mobile solutions are an area

of marked dissatisfaction among hoteliers

(which will be outlined in Figure 7).

Tech Department Challenges

Respondents were asked about the biggest

obstacles currently facing their respective IT

departments (Figure 5). In the past, insuf-

cient budgets consistently plagued IT inno-

vation efforts and were rated as the top IT

challenge in our research. Consistent with

last years ndings, however, high guest

expectations have outpaced budget limita-

tions as the number one challenge.

Nearly one third (31%) of the respon-

dents chose guests expect greater technol-

ogy advancements than we can reasonably

keep pace with as their top challenge; this

measurement has increased by 3 percent-

age points since 2012, and 7 points since

2011. Meanwhile, Insufcient technol-

ogy budgets came in second in our rank-

ing at 27%, dropping steadily from 33% in

2012, and 39% in 2011. This trend further

supports the overall increase in IT spend

reported in Chapter 1. A growing number

of respondents (at 20% in 2014) admitted

their organizations are primarily challenged

by a lack of internal IT talent, and indeed

this issue has been slowly on the rise (re-

ported at 17% in 2012, and 15% in 2011).

In addition to identifying current challeng-

es, the authors of this years study added

a new objective: to determine the role and

perceived inuence of technology leader-

ship across the overall organization. Thus,

respondents were asked to review a num-

ber of statements related to the organiza-

tional structure and perception of technol-

ogy within their organizations, and indicate

Information Technology is an important

asset for all lodging companies and an in-

tegral part of the strategic management

process. Large-scale information technol-

ogy projects are considered a major capital

investment for any hotel operation. To suc-

cessfully implement technology, companies

must have clear-cut goals, an empowered

team, and an ongoing process for evaluat-

ing the success of IT rollouts. In this section,

we measure these areas. Results show a

clear priority on meeting the expectations of

tech-savvy guests, and indicate that many

IT priorities are on track. Results also reveal

that theres marked room for improvement

in the overall role of technology leadership

in the strategic decision-making process.

IT Goals in 2014

When asked about their companies tech-

nology goals in 2014 (Figure 4), band-

width topped the list: more than two thirds

(66.7%) plan to add bandwidth to address

guest expectations. This supports the nd-

ings highlighted earlier (Budget Allocation,

Figure 3) that investments in networking

amount to 17.35% of the total IT budget,

up from 11.92% in 2012; it also conrms

that offering connectivity to guests is indeed

a top priority. Tied for second place, half of

the respondents (49.1%) will focus on pre-

paring for changes in payment technology

as well as leveraging mobile solutions for

customer-facing applications. Some 42%

of respondents will focus on securing guest

data and nearly the same amount (40.4%)

will be migrating solutions to the cloud.

Responding to trends in distribution

channels (including mobile booking and

the impact of social media), 35% reported

that their companies are developing out

their digital strategy to address changes

in e-commerce. Despite the popularity of

enabling connectivity for guests, only one

out of three respondents (33%) reported

a focus on leveraging mobile solutions for

employee-facing applications. Consider-

ing the ever increasing number of digital

Guest Expectations Bring Increased Pressure

C H A P T E R T W O

Bandwidth, payment and mobile top list of goals, but results show room forimprovement in empowering IT teams and low satisfaction with guestroom tech

Leveraging mobile solutions foremployee-facing applications

Developing a digital strategy to addresschanges in e-commerce

Migrating solutions to the cloud

Creating a secure frameworkfor all guest data

Leveraging mobile solutions forcustomer-facing applications

Preparing for changes inpayment technology

Adding bandwidth to addressguest expectations

FIGURE 4: TECHNOLOGY GOALS FOR 2014


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IT STRATEGY & PERFORMANCEC H A P T E R T W O

if these statements are true for their respec-

tive organizations. Figure 6, Technology

Strategy & Leadership, shows the results

of this query.

Our rst objective was to evaluate overall

perceptions around innovation, asking re-

spondents if their companies seek to be in-

novators in both business, and in the use of

technology. More than half of respondents

(58%) said their companies seek to be in-

novators in business practices. A desire to

be innovative often leads to heightened

priority for leveraging technology. Yet, only

42% of respondents felt that their respec-

tive organizations were seeking to be an in-

novator in the application of technology. The

16-point gap reveals a potential perceptual

disconnect in corporate strategy between

the application of technology and its role in

overall business innovation. Further, when

asked to evaluate the perception of execu-

tive inuence at their workplace, only half ofthe respondents believe that the impact of

senior IT leadership (i.e. CIO, VP technology

roles) is equivalent to the impact of senior

leaders who are not in IT roles (i.e. those

in operations, marketing, or other areas).

This could potentially indicate issues with

organizational culture, particularly if IT is

perceived mainly as a support-center rather

than a compass for identifying trends and

business priorities.

Less than half of the respondents (42%)

report that IT staff members are given for-

mal opportunities for continuing educa-

tion. A disappointing 18% of respondents

reported that their organizations mission

statement includes a reference to technol-

ogy. The ndings listed in Figure 6 point to

some underlying issues in terms of the per-

ceived strategic role and importance of the

IT department within lodging organizations.

Measuring Importance vs.

Satisfaction for IT projects

In order to formulate an effective IT strategy,

it is imperative for hotel companies to evalu-

ate the performance of key IT projects and

prioritize their IT investments. A pragmatic

way of achieving this is through importance-

performance analysis. Respondents were

provided a list of 18 technology projects and

asked to rate the perceived importance and

satisfaction of each using a 5-point Likert

scale, with 1 being the extremely unimport-

ant/dissatised and 5 being the extremely

important/satised. The objective of this

analysis is to help organizations set pri-

orities for change when considering IT proj-

ects. The results are presented in Figure 7.

By calculating the mid-points, or averag-

es, of responses given, we are able to plot

each project on a four-quadrant graph. The

four quadrants in Figure 7 can be interpret-

ed as follows: Quadrant 1 represents High

Performance, but Low Importance (Pos-

sible Overkill); Quadrant 2 represents High

Performance and High Importance (Keep

up the Good Work); Quadrant 3 represents

Low Performance and Low Importance

Our organization's mission statement

includes a reference to technology

Our organization has dedicated IT staff that operatein and report primarily to a non IT department

head (e.g. marketing, operations, etc.)

Our organization seeks to be an innovatorin the application of technology

IT staff members are leveraged for projectmanagement tasks outside

of traditional IT scope

IT staff is given opportunities for continuingeducation via a formal program

The perceived impact of senior IT leadership isequivalent to the perceived impact of non-IT

leadership in my workplace

My organization seeks to be aninnovator in business practices

FIGURE 6: TECHNOLOGY STRATEGY & LEADERSHIP

2014

2012

Technology is insufficientto meet our needs

Our company is slow/resistantto upgrade technology

Lack of internal talent necessary tomake improvements

Insufficient technology budgets

Guests expect greater technologyadvancement than we canreasonably keep pace with

FIGURE 5: TECHNOLOGY CHALLENGES IN 2014


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(Low Priorities); Quadrant 4 represents

Low Performance, but High Importance(Concentrate Here).

Of the 18 projects measured, eight

fall into an acceptable range of high im-

portance and satisfaction (Keep up the

Good Work). Five projects, however, leave

marked room for improvement (falling into

the Concentrate Here quadrant), and

one in particular guestroom technology

takes up a large portion of IT budgets.

Guestroom Technology projects top the im-

portance list (rated with a 4.3 out of 5 pos-

sible points), followed by Website Enhance-

ment (4.09) and Network Infrastructure

(4.04). Last year, PCI, PMS, and Guestroom

Technologies were the top three important

initiatives, and PCI topped the list in terms

of performance satisfaction. This year, PCI

is in fourth place for importance. Perhapsthis is an indication of a declined sense of

urgency about PCI or the result of several

years of successful efforts to improve se-

curity. Social Media (3.87) and CRM (3.8)

were ranked somewhat important for

2014. Augmented Reality Apps came in at

the bottom of the list, perceived as being

unimportant. This could be attributed to the

industrys perception that Augmented Real-

ity Apps are still in a research and develop-

ment stage.

When asked about their level of satisfac-

tion with the current performance of items

on the list, POS, PMS, and PCI received the

highest averages (all hovering at or near 3.4

on a ve-point scale). However, its important

to note that none of the 18 items evaluated

averaged a high performance satisfactionscore (that is 4 or higher) and could be best

described as not evoking satisfaction or dis-

satisfaction. The only item which registered a

level of performance dissatisfaction was Em-

ployee-Facing Mobile Solutions (2.89); also

rated second-to-last in terms of importance.

In summary, tech-savvy guests have

new expectations of their hotel experi-

ences, placing IT teams under pressure

to deliver connectivity, and to deliver

mobile tools for engagement. To meet

these objectives, hotel organizations

should evaluate the overall empower-

ment they afford to their IT leaders, and

ensure that resources are focused in

the appropriate areas.

2.0 2.5 3.0 3.5 4.0 .5 5.0

2.0

2.5

3.0

3.5

4.0

4.5

5.0

IMPORTANCEPERFORMANCE

MID

POINT

3.20Guestroom Technology

Property Management Systems

Point of Sale

Website Enhancements

Distribution Systems

Network Infrastructure

BusinessIntelligence

Customer Relationship Management

Payment, Security & PCI

Social Media

Cloud-Based Technology

CellularInfrastructure Meeting Room Technology

Digital Signage

Energy ManagementAugmentedReality Apps Employee-

Facing MobileSolutions Customer-Facing

Mobile Solutions

MID POINT

3.66

1 ) POSSIBLE OVERKILL

3) LOW PRIORITIES

2) KEEP UP THE GOOD WORK

4) CONCENTRATE HERE

FIGURE 7: IT PROJECT SATISFACTION


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IN-ROOM TECHNOLOGY


mands and are rethinking their pricing

strategies for HSIA. As consumers be-

come increasingly digitally connected,

hoteliers will have no choice but to keep

up with the moving bar of what is the

norm for their guests.

In-Room Upgrade Plans

When it comes to near-term in-room

technology upgrades (those within 18

months), increasing bandwidth took the

lead amongst all ten technologies listed.

Sixty three (63%) percent of the respon-

dents report plans to upgrade bandwidth.

This is a considerable increase from

2013, when 51% of respondents report-

ed the same. Not surprisingly, the second

highest priority is wireless Internet ac-

cess (with 47% planning an upgrade in

the coming 18 months); this a clear ac-

knowledgement of guests expectations

to remain connected at all times during

their stay.

In terms of TV-related technologies, the

ability to offer HD content (37%) is spear-

heading near-term upgrade plans, and

at-screen TVs are a priority upgrade for

22.2% of respondents. A quick review of

this years results and previous studies

conrms that 3D TV has not caught on

as an in-room technology priority for hote-

liers. A full 94.4% of the respondents do

not use and report no plans to add 3D TV

in the near future. Unexpectedly, 20.4% of

those surveyed do not use or plan to use

energy management technologies in the

guestroom. Perhaps some hoteliers still

do not see the ROI and savings energy

management technologies offer. Con-

versely, 42.6% have already rolled out en-

ergy management technologies, and 37%

report plans to upgrade within 18 months

or beyond.

In our 2013 report, hotel executives indi-

cated that the largest portion of their IT

budgets were designated for guestroom

technologies. This years study shows

that this category of technologies is to

receive the second largest portion of the

IT budget for 2014; still a substantial in-

vestment at 17%. To determine the plans

for specic in-room technologies, respon-

dents were asked to review a list of ten

items identied by industry experts and

included in previous years studies and

indicate any near term upgrade plans

(that is, within the next 18 months) and

any upgrade plans with a longer time hori-

zon (18 months or longer).

Additionally, in continuation with pre-

vious years Lodging Technology Studies

and in response to industry-wide pres-

sure to provide connectivity to guests,

respondents were asked about in-room

high-speed Internet access (HSIA) pric-

ing structures employed by their respec-

tive organizations. Overall, there is clear

evidence that hoteliers are recognizing

the increase in guests bandwidth de-

Hotels Reveal In-Room Technology Priorities

C H A P T E R T H R E E

Guestroom investments focus on bandwidth, WiFi access and HD content;HSIA pricing edges towards tiered access

FIGURE 8: IN-ROOM UPGRADE PLANS

iPad/tablet in guestroom

VoIP phone system

Room control devices

Energy management

Next generation electroniclocking system

Wireless Internet access

Increasing bandwidth

3D television

HD television content

Flat-screen television

0 20 40 60 80 100


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One interesting area of investiga -

tion is the deployment of iPads/tab-

lets inside the guestroom. Boutique

and high-end hotels have deployed

these devices as an in-room amenity,

offering everything from room-control

functionality to personalized concierge

services. In our 2012 study, adoption

was low (at 5%), but an additional

23% reported plans to add tablets as

an in-room amenity. Despite the roll-

out plans reported two years prior, in

2014 weve seen little change in these

gures: 5.6% have already deployed

them and 24% plan to do so, leaving

the same 70% in wait-and-see mode.

Perhaps, this is recognition by some

hoteliers that guests are more likely

to bring their own devices with them.

Nevertheless, guests are expecting

to be connected through HSIA with

increased levels of bandwidth and

there is every indication that hote -

liers acknowledge this need and are

planning for upgrades to meet these

expectations.

FIGURE 9: HSIA PRICING MODELS

IN-ROOM TECHNOLOGYC H A P T E R T H R E E

HSIA Pricing Models

The debate on having HSIA for free or a

fee still ensues. It appears that momen-

tum is shifting towards offering guests

an option to increase bandwidth. In

2013, almost 55% of hotel executives

in our study offered free HSIA to guests.

For 2014, this gure has increased to

59%, indicating that pressure from

guests for free access is being heard.

It should also be noted that the model

of having tiered prices with a free level

of HSIA access has also increased from

14.3% in 2013 to 21% in 2014. The at

fee model (11%) seems to be less popu-

lar than last year (19.8%).

Having a variety of pricing models

for HSIA is expected, given the differ-

ences across markets and service levels

amongst hotels. However, as guests be-

come more dependent on the Internet

for their daily lives and routines, hote-

liers should expect to see an increase in

demands for high-bandwidth and plan

their HSIA pricing models to accommo-

date the realities of tomorrow.

1 DRIVING MORE REVENUE

2 ENHANCING GUEST SERVICES

3 IMPROVING OPERATIONALEFFICIENCY

4 COST SAVING

5 GAINING COMPETITIVEADVANTAGE

n continuing tradition with the

previous three Lodging Technol-

ogy Studies, respondents were

asked to rank the top ve busi-ness goals for investing in technol-

ogy. They were instructed to com-

pare ve business goals for lodging

technology initiatives, and then

rank them all in terms of impor-

tance, with 1 indicating the most

important, and 5 indicating the

least important.

Theres been very little uctua-

tion in the rank order of these ve

goals since 2011. The top two

goals have remained the same:

driving revenue and enhancing

guest service. Cost saving came

in fourth place for the last three

years. These priorities are very

telling in terms of the motivations

pushing technology initiatives in

the lodging space. We recommend

vendors take note of these unyield-

ing business goals when designing

and marketing their products.

TOP 5 MOST

IMPORTANTBUSINESS GOALS


11/15

CHAPTER FOUR

of enhancements to their operational sys-

tems. In this section, we report on planned

investments across a list of 16 technology

areas, looking at both near-term upgrades

(within 18 months) and longer term up-

grades (18 months or more). We also

dive deeper into several specic upgrade

areas: big data, cloud computing, property

management systems, and payment.

Figure 10 shows current use rates

and planned upgrades across 16 tech-

nologies. As reported earlier in this study,

property management systems (PMS) ac-

count for the largest portion of technology

spending. Likewise, PMS led the list of

planned above-property upgrades: over-

all, 41% of hotels in our study plan to up-

grade their PMS (35% within 18 months,

and 6% in 18 months or more). Competi-

tion and technology vendors should take

notice of this movement. (Note that the

specic functionality they seek is outlined

later in Figure 13). Business Intelligence

systems are another likely area of invest-

ment, with 37% of the respondents plan-

ning an upgrade here (33% in the short

term, and 4% in a longer time frame).

Pressure to optimize revenue and offer

customized marketing has inuenced

some organizations with 29% of respon-

dents planning to upgrade their revenue

management systems and CRM tools

within the next 18 months.

Big Data & Cloud Computing

Technology is increasingly enabling hote-

liers to effectively document transactions

and track guest activity. The lodging in-

dustry is capable of capturing more data

about their guests than ever before. As

a result, traditional data processing ap-

plications are becoming less effective at

managing and analyzing this data. Orga-

nizations across varying industries are

Much attention is given to customer-facing

hotel technologies, but theres a substan-

tial period of innovation happening in

above-property, operations, and enterprise

technologies. From migration to the cloud,

to greater integration, to more sophisti-

cated business intelligence tools, hotel

technologists are evaluating a wide variety

Enterprise Upgrades Focus on Property ManagementPMS tops list of enterprise upgrades, and hotels consider options incloud, big data, payment and more


0 20 40 60 80 100

Big Data

Cloud-based Applications

Compliance Monitoring

Accounting and Financial Tools

Group Billing Technologies

Sales and Catering Technologies

Business Intelligence Solutions

Customer RelationshipManagement Tools

Call Center Technologies

Web-based Reporting

Mobile Back-office Capabilities

Revenue Management Systems

Recruiting or Retention Tools

Labor Management Systems

Central Reservation Systems


FIGURE 10: ABOVE PROPERTY TECHNOLOGY IMPLEMENTATION PLANS

ENTERPRISE SYSTEMS


12/15


evaluating the use of Big Data applica-

tions to cull and decipher these vast poolsof complex data. However, implementing

a tangible Big Data solution is also widely

seen as cost-prohibitive and complex. To

measure the hotel industrys use of Big

Data, respondents were asked to evalu-

ate the level of maturity their respective

organizations have around processing

and using Big Data to make decisions

(Figure 11a). For the purposes of this

study, Big data was dened for respon-

dents as: information assets that are high

in volume, velocity and variety that, when

captured, stored and analyzed through

advanced techniques, can provide en-

hanced insight and decision making.

The complexities and unknowns around

implementing Big Data are evident in the

responses provided: Almost half of those

surveyed report little to no maturity at their

companies when it comes to using Big

Data for making decisions. Not a single

respondent in our survey reported having

high maturity. Respondents were also

asked how they use Big Data (Figure 11b).

Given that this is not an established tech-

nology concept for many in the lodging in-

dustry, the responses were not surprising.

The largest portion at 44% selected, not

applicable/dont know, while 26% stated

that Big Data is used for identifying trends;

12% of respondents are using Big Data for

advanced reporting and 14% use it for pre-

dictive analysis. If Big Data is indeed the

next frontier for information innovation, the

lodging industry needs to keep up with this

inuential technology trend.

Another trend garnering much atten-

tion is the migration of enterprise tools

to a cloud-based platform. This years

research included a new set of questions

on cloud to determine the scope of its use

(Figure 12). The average implementation

rate across all nine systems shows that

the industry is in a period of transition:

approximately half of survey respondents

are currently not running any applications

on a cloud-based platform, nor do they

plan to. The other half has either already

High Maturity 0%

Do NotKnow

ModerateMaturity

Little toNo Maturity

Other: AdvancedReporting

Don't Know /Not Applicable

PredictiveAnalysis

IdentifyingTrends

11a.) What level of maturity does yourorganization have around usingBig Data?

11b.) How does your organizationuse Big Data, if at all?

FIGURE 11 BIG DATA IN LODGING

0 20 40 60 80 100

Event Management Applications

Concierge Services

Sales and Catering

Customer RelationshipManagement

Point of Sale

Central Reservations Systems

Email

Revenue Management Systems


Have plans to move to cloud in 18months or more

Have plans to move to cloudwithin 18 months

Currently running on cloud

Currently not cloud-based and no planto move to cloud in the near future

FIGURE 12 USE OF CLOUD-BASED APPS IN LODGING

ENTERPRISE SYSTEMSCHAPTER FOUR


13/15


migrated some system, or plans to do

so. Email was the low-hanging fruit forcloud migration, with 50% already run-

ning on cloud and an additional 15%

planning a migration. CRM is next in

line, with 41% having migrated and an

additional 12% planning to do so. Con-

cierge service and event management

applications seem to be the least likely

applications to be moved into the cloud.

It is safe to conclude that there is clear

interest in cloud applications but the

trend is still in early adoption.

In pursuit of identifying patterns, as

with previous studies, participants in

the 2014 study were asked to indicate

which PMS platform innovations were

most likely to be a part of their next up-

grade. Eight innovations were evaluated,

including the addition of two new ones,

and results were compared to 2012

data (Figure 13). Despite the lack of

enthusiasm for employee-facing mobile

solutions discovered during the impor-

tance-performance analysis portion of

this study, almost of half of respondents

selected mobile access for managers

and staff as the capability most-likely to

be included in their next PMS upgrade.

Integration to Social Media was a distant

second with only 28.1% of respondents

reporting that it was a likely upgrade.

All of the updates measured in 2014

are less likely to be included than they

were in 2012; this result is likely due to

the completion of upgrades that were

planned two years prior.

Trends in Payment and SecurityOne area worthy of detailed investigation

is payment and security. Respondents

were provided with a list of technologies

and asked to indicate which are used at

their organizations (Figure 14). Results

were compared with those obtained in

the 2013 study. Many established se-

curity best-practices (such as the use of

end-to-end encryption and regular test-

ing) are not being used by the majority

of those in our 2014 study. There are

2014

2012

Mobile access for managers/staff

Integration to Social Media

Guest-centric wizard to controlguest experiences

Reservations wizard tohandle bookings

Above-property hosting

Room management grid

Direct billing

Automatic data backup

FIGURE 13 LEADING PROPERTY MANAGEMENT PLATFORM INNOVATIONS

Uses non-traditional payment hardware(such as iPads or other mobile devices)

Offers an app for mobile devices thatallows bookings and receives payment

Uses tokenization at the card swipe

Uses a QSA for certifying PCI compliance

Uses end-to-end encryptionfor cardholder data

Self-certifies for PCI compliance

Regularly tests systems and processes

2014

2013

FIGURE 14 PAYMENT & SECURITY PRACTICES IN USE

several possible reasons for this drop.

Hotels have rolled out new payment ca-

pabilities, such as tablets at the front

desk and mobile apps with booking

and payment processing. The addition

of these tools brings increased security

complexities. In addition, the payment

industry is in a state of ux as U.S. mer-

chants wait for a migration to EMV/chip-

based payment. Half of the respondents

in this study, in fact, identied that prep-

ping for these changes will be a major

technology goal in 2014 (from Figure 4).

Its likely that the impending switch to

EMV has left some hotel organizations in

a holding pattern. We also know from our

importance-performance analysis that

payment security technologies received

mediocre performance scores. None-

theless, it is clear that payment security

continues to be an important area de-

serving focus in the lodging industry.


14/15

CONCLUSION & METHODOLOGY


2014 LODGING TECH STUDY

The qualifications of those who par-

ticipated in the study is evident in the

following: The respondents had more

than 1,000 years of combined pro-

fessional experience in the lodging

industry, with more than 70% having

attained a college degree or higher

level of education. Almost half of the

respondents were executives with

their primary responsibility being in-

formation technology. About a quar ter

of the respondents were CEOs, own-

ers, or general managers. The remain -

ing quarter included a mix of diverse

professionals in accounting, revenue

management, sales and marketing,

and operations such as F&B. One half

of the participants in the study reflect -

ed perspectives and decisions at the

corporate level, while the remaining

participants primary responsibility

was at the property or regional level.

Both full- and limited-service hotels

are represented in the study, with the

following break-down across the seg-

ments: 14% luxury, 35.1% upscale,

31.6% midscale, and the remain -

ing (19.3%) in economy or multiple

brands across segments. Ownership

and management models are repre-

sented as follows: multi-unit proper-

ties affiliated with different brands

(26.3%), multi-unit properties op-

erated by a management company

(24.6%), multi-unit properties affili-

ated with the same brand (7%), multi-

unit properties owned by the brand

(5.3%), single-unit property not affili-

ated with any brand (24.6%), single-

unit property affiliated with a brand

(8.8%), and others (3.5%).

Having tracked trends in hotel tech-

nology for the past four years, this

annual report is able to provide use-

ful historical analysis and serve as a

compass for future IT investments.

During that time, this research has

shown a measurable increase in tech-

nology budgets. This is good news for

hotel technologists who are faced with

costly bandwidth upgrades and loom-

ing changes in payment technology.

Connectivity, in fact, was a central

theme in this years research as more

than two-thirds of hotels race to pro -

vide guests with greater bandwidth.

Its clear that consumers are driving

the future of hotel technology. Indeed

this research has confirmed for the

second consecutive year that guest

expectations are evolving at a pace

that is difficult to meet, even with the

increase in financial resources.

Improving the guest-facing experi-

ence is just one critical goal of technol-

ogy, however. This repor t also reminds

us that the bulk of technology dollars

are still allocated to property manage -

ment systems. Hotels show increasing

interest in cloud-based capabilities for

these and other enterprise systems.

Once capital investments are made,

these cloud migrations should free up

funding for other projects.

Equally important to funding will

be well-planned upgrades that of-

fer long-term utility; and empowered

technology leaders that have the

right skills to evaluate guest trends,

orchestrate a cloud-based computing

environment, and proactively guide

their organizations.

Our research shows that IT teams

may well require greater support to

face future challenges, not necessar-

ily in easily-measured metrics such as

funding, but in subjective areas such

as training and executive influence. It

will be up to technology leaders them -

selves to motivate their organizations

and lead this transition. Indeed, as

technology evolves, so does the role

of the CIO. With this change comes

opportunity for those who harness

their potential for influence. Many of

the most important qualities of fu-

ture CIOs will require less technical

expertise and more business- and

communication-savvy: the ability to

bridge the gap between marketing

and IT; the vision to identify new ways

of conducting business; and the com-

mitment to lead.

Survey Sample &

Methodology

The 2014 Lodging Technology Study

was set up as an online question-

naire and distributed during fall 2013

to hotel executives in the readership

pool of HTmagazine via personalized

e-mails. Fifty seven completed sur-

veys were returned over a period of

seven weeks, representing a total of

25,879 hotel properties. The respon-

dents reported that their respective

organizations managed and/or owned

over 49,000 hotel properties. Accord-

ing to the 2012 Lodging Industry Pro-

file report by AH&LA, there were over

52,000 properties in the U.S. Thus,

the representation of properties in

this study is quite considerable.

Evolution for Technology Leaders:Business Savvy and Consumer-CentricGuest expectations are rising rapidly & IT budgets are on the rise, creatingopportunity for CIOs to embrace leadership roles


15/15

Hospitality Technology thanks the study sponsors and

academic partner of the 2014 Lodging Technology

Study. Their support helps to make this landmark

research possible.

ACADEMIC PARTNER

A S U P P L E M E N T T O H O S P I T A L I T Y T E C H N O L O G Y

STUDY SPONSORS

www.htmagazine.com

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