In Focus

Costs linked to ‘occupancy, not property’

Owners and asset managers should challenged brands to over the cost of IT, relating it to occupancy, not property Kevin Edwards, managing director, PnK People, told this week's In Focus.

Edwards raised concerns that hotels would panic-buy IT which was not needed, hindering future investment.

He said: “There’s a real danger that you’ll see a lot of hotels making a lot of impulsive purchasing decisions based on what they think the new normal is. One, they’re going to be substantial and possibly not required in the medium term.  We’re going to see a lot of panic purchasing of things like in-room ordering systems which people hope will drive revenue and there will be suckers who spend money on it.

My concern is that the sector was starting to embrace change at the property management level but this means that they now won’t invest in technology and they will suffer.  You’re going to see the brands that invest in technology come out well from this.

“Owners and asset managers should be pushing back and saying to their brands ‘we’re running a hotel at 50% occupancy but IT costs are 100%’, they should be challenged and they should be looking at aligning costs to occupancy, not to the property.

“IT is still a black box, and when an asset manager tries to challenge a brand they are given really complex answers to try and rebuff them. I feel that there needs to be some external assistance to help that process, the expertise in the asset management process needs to develop, There should be more explanation from the brands about technology.

“From a brand’s point of view they are very strict, particularly with PMS, owners should be more vocal, it may be hampering the ability to innovate in the sector. You look at hotel brands which are coming up rapidly, they are more agile. These companies understand more about how to target their customers, but they get swallowed up by the big brands and then they have to use their proprietary systems and they lose that competitive edge.

“It’s got to be something where hotels develop further. Technology in so many sector has evolved so well, the premise of hotels doesn’t quite lend itself to that, but these should be the moment where they see hotels fit in their business rather than just be add on.”

Looking at hotels should approach IT in pandemic times, Edwards said: “In terms of automation, there is so much which can be done. Now is the time to streamline and take the cost out of the business. There aren’t an abundance of guests, but there are core areas; identifying how to make the operation as efficient as it can be, to make sure the processes are streamlined. In the past hotels have gone and tried to provide the guests with the technology they need, but now guests just need an enabler - to view their own content, for example. It should be commonplace, but, frankly, it isn’t.”

At the heart of hotels’ issues with IT remains a lack of knowledge. Edwards said: “Technology is part of the business, but the business needs to understand technology. It’s a challenge which we’ve overcome in many sectors but hospitality still rattles on without ever really making sure that IT is represented.

“The reality is that because of the size of most hospitality businesses, you’re never going to hire the breadth of knowledge you need, because of salary or interest. You have to look externally and many people in senior management believe that hiring an IT manager will be the panacea they need - but you can’t solve the issues of a hotel with one person.”

 

Insight: He’s right you know and it seems that, sadly, IT will be the place where hotels fall behind as they look to cut costs in the face of zero revenue. It’s not a real thing after all. Those hotels and brands which focus their efforts on being competent will run rings around those which are struggling, but those who fail are more likely to blame the virus than what they could have done to update their systems.

For too many hotels, IT is seen as on a par with the luggage storage robot at the Yotel in New York: gimmicky and often broken down. For this and general lack-of-understanding issues, many hotels which are considering reopening have furloughed their IT people, much as they have furloughed their revenue managers - at exactly the wrong time.

With nature abhorring a vacuum, the gaps in knowledge find themselves filled by the brands and, increasingly, the OTAs, who don’t want you worrying your pretty little head about that. Don’t be the 1950s blonde confused at the side of the road waiting for the repair man. Learn how to change your own tyre.