Author: Mintel Group Ltd.
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Hotel Technology - International - June 2010
Introduction
 
Managing information technology is seen as an extremely troublesome issue for most hotel managers. Making choices among the array of options available is seen as risky and confusing; staying up to date with new developments is certainly difficult; and implementing new systems using yet-to-be-finalised technologies is often challenging. Coupled with the sector’s ingrained resistance to change, this has severely limited the diffusion of information technology-based systems within the hotel industry.

Although most hotel properties now use systems of various kinds to help manage their operations, as will be discussed, these for the most part remain relatively basic in functionality compared to what is used in other sectors. In particular many hotels continue to use legacy systems – single-purpose operational-level systems never designed for the flexibility and connectivity required of today’s business environment. Such applications are often written in cumbersome programming languages and, in contrast to systems in other sectors where more open architectures abound, tend to be proprietary, making passing data from one application to another, particularly one supplied by a different vendor, problematic. As will be discussed, this challenge is amplified by the absence of commonly agreed technology standards for interfacing systems. 

Similarly, justifying the cost of technology investments seems to be a permanent challenge in the hotel sector, despite the fact that the capital required is perceived as negligible in comparison to the benefits accrued. The rapid pace of change means that technology investments must be made on an ongoing basis. However, the majority of the benefits from implementation of such systems tend to be difficult to quantify. The problem is exasperated by the ownership/management/branding split that typifies hotels. While technology investments are specified or in some cases mandated by management companies or franchisers wishing to implement standardised solutions across all the properties within their chain, investments are typically funded by owners or franchisees with many conflicting calls on their capital. Given the aforementioned difficulty in assessing such investments using conventional investment appraisal techniques, getting the latter to approve such capital spending can be a daunting task. 

This report examines the hotel technology sector, highlighting current developments and future trends. An overview of the main technology-based systems used in the hotel sector is first of all presented. Distribution systems, hotel-facing systems and guest-facing technologies are then discussed in detail to demonstrate the relatively basic nature of the technologies being used. Key challenges in managing hotel technology are then discussed, followed by a presentation of the industry’s short- and medium-term priorities.

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