It was at the start of my journey along the IT road when I attended a seminar from Compaq (yes that old) where they unveiled their concept of utility computing. Essentially paying for what you used, just like gas and electricity consumption.
That was the glorious year of 1998, where the fuse was lit of the dot com boom, when Compaq, Oracle and Sun suddenly shifted to “let’s sell boxes and software and make some hay while the sun shines!" There were a lot of casualties as companies, jobs and private equity cash piled into dreams of delivering everything online.
This era saw the rise and adoption of more and more subscription-based services, minimal monthly fee, nice fixed-term contract, client gets the latest and greatest whatever it is they have signed up for, everyone is a winner….or are they?
Things suddenly changed; both on a macro and micro economic level. Global liquidity meltdown, global pandemic, losing monthly income….suddenly the equilibrium shifts and someone isn’t happy with the new normal! And that’s the beauty of a consumption-based economy. If you don’t use it you don’t pay for it. This is where the message got lost along the way. If it is a utility how can it be based upon subscription? Technology is great because it’s a modern day invention that can easily be programmed/investigated to see what someone’s consumption is. The beauty of subscription models is that there is a predictable income stream for a period of time. Manufacturers like subscription models - it’s like the modern day credit card for their goods, thinly veiled as a service/subscription.
You may be asking where I am going with this and what the relevance is to the hospitality sector, in particular hotel ownership. Quite simply it because the investors are the ones that have to foot the bill no matter the market condition.
It is fair to say that the investor is the ultimate recipient of the biggest reward in the event of a successful exit from their investment, but they are the ones who have to make the big investments to make those returns, in this case the technology.
I am a strong advocate of investing in technology to bolster a return, I am also a strong advocate of getting the optimal commercial terms, a fair price for a good product or service. However, I just can’t get that day in 1998 of revelation out of my head. Imagine paying for what you use as and when you use it. Imagine software and hardware and “as a service” service providers genuinely being invested in the successful operation of a hotel and only charge when you actually use it.
Is there a need for the sector to shift (I think the new normal expression is pivot!) to charging based upon occupancy, in other words “sure Mrs very large hotel brand I would be delighted to use the very latest technology that is going to reap so many rewards therefore just charge me for the monthly occupancy that you achieve for my hotel. As you point out it is going to make us more efficient, gain us more direct revenue, so we are going to make more money, you earn more, the technology company that believes in their software will benefit as they can charge slightly more while the sun is shining for us all and in the event of a global pandemic, we all share the difficult times”.
Now there are a couple of people slowly moving in this direction, such as XN Protel. I tip my hat, but it has to go beyond. There needs to be seismic change of attitudes, within technology providers, owners and most importantly operators. Nobody saw this coming however maybe this is the opportunity to be proactive to increase our ability to be reactive….or we can sit and wait around for another few years for a hospitality disruptor to come and change the game on a much bigger level.