2020 Industry Outlook: Imagination to Iteration
Hospitality is at a fascinating intersection. It is one of hyper-personalization and privacy; automation and high-touch interactions; sustainability and indefatigable demand. Organizations across industries struggle to keep pace with the rapidity of technological advances and hotels and restaurants must do so while also grappling with complex inventory, a shaky workforce and notoriously slim IT budgets, among other challenges.
“As we live in a more connected world, the IT leader has had to adapt technology and resources to meet that demand,” Nelson Garrido, SVP, Thayer Lodging, Brookfield Properties, says. “This has put a demand on skills like innovation, people management, and cyber security to be important for leaders to have in the IT space moving forward. As guests want more experiences, the challenge will be how to provide these in an integrated seamless environment.”
Hospitality Technology’s annual Industry Outlook calls on Advisory Board members to share strategic goals for their respective companies’ IT investments as well as insights into what is shaping broader industry challenges and trends.
HT: WHAT ARE YOUR IT PRIORITIES FOR 2020?
MIKE DICKERSBACH: Since we manage more branded than independent hotels, this year’s focus is primarily staff duress systems. Now that most brands have made this system mandatory, we are looking to get the bids together and get them deployed across the board. The challenge with these systems is the costs swing in many directions and there is no clear-cut way to budget. Since the brand requirements are not equal in terms of how the system needs to operate, it can be a challenge describing the nuances to ownership when they receive a bid from one vendor at half the cost of another.
JOHN EDWARDS: Moving into 2020 RLHC is working on continued automation surrounding the solutions that we have recently launched. One solution we will be focusing on is our owner’s portal and Intranet. Finding new ways to communicate directly with our hotel community as well as enhancing the information and solutions we provide to our hotels through this tool will be a primary focus in 2020. Another ongoing project is data automation and reporting. As we continue to collect more information, we will be working to deliver new solutions that allow our corporate and hotel teams easier access to data.
SIMON ENG: It seems to be a perennial gripe, but we are focusing on basic technology infrastructure within hotels as we build new and purchase existing. Ensuring that all end-user (associate or guest) technology that is implemented is done so on a solid base of: a properly designed and secure wired and wireless network; servers and storage that are appropriately sized for both performance and capacity, and reliable, resilient and high performance external connectivity. Insufficient investment in these core areas is done so to the detriment of the downstream systems and users.
NELSON GARRIDO: Brookfield Properties are implementing a multi-discipline Microsoft Teams site globally, which will become the hub of internal communications, collaboration and storage. We are also rolling out a casting solution to all hotels that we are renovating globally to provide content that guests want when they want it.
MICHAEL HASSEL: Momofuko is focusing on standardizing systems in 2020. Over the years, we have accumulated a few systems to help the individual units manage their business on a local level. Now that we are in a period with aggressive growth projections, we need to streamline the process of aggregating data.
COREY KLINE: We are continuing, but increasing, our focus on several digital and data initiatives to support efforts in personalization to delight guests. As capabilities evolve, we are seeing the importance of evaluating functionality that guests consider a value versus what they consider an intrusion and developing intelligence to make those distinctions. We also have an increased focus on digital and operational efforts to support convenience. We are already seeing intersection points of these personalization and convenience efforts — the true value is in the combination.
ROCKY LUCIA: We are in the process of implementing EMV technology to all our locations and changing credit card processors to remove the chargeback liability shift. We are also opening our first, of hopefully many, QSR concepts. We will be using self-serve kiosks, line-buster handhelds, KDS and other state of the art technology to speed service, save labor and increase efficiency. We are also finishing up Windows 10 upgrades across the company in order to be completely safe and compliant. We are working with Ordermark to integrate all the third-party takeout and delivery services so we can get rid of all the tablets and have all orders integrate directly to the POS.
BRIAN PEARSON: Our focus is on engagement and leveraging data to manage guest experience, while integrating solutions that identify lapses in visit and encourage return. Marketing analytics, third-party integration, and a fully integrated package that works with the guest from search to return. Google- and Yelp-powered reservations, table management, guest Wi-Fi, and integrating it all with check detail are critical components of our strategy.
ZERRICK PEARSON: At Five Guys, we are working on delivery integrations and reporting, as well as making POS upgrades and investing in customer experience and food safety.
R.P. RAMA: As energy costs continue to increase, green initiatives will be low-hanging fruit in 2020 as we seek to reduce our carbon footprint. With that in mind, we plan to explore opportunities to work with companies that would assist in implementing sustainable initiatives to recover CapEx invested through savings on costs related to that specific area after implementing the technology.
ERIC ROSENZWEIG: EMV and back-of-house are focus areas for Qdoba. We need to get EMV to enhance our security posture of credit card data, reduce chargeback costs and reduce scope of PCI. We are running an antiquated back-of-house solution that makes it very difficult for above-restaurant visibility. We’ll be doing an RFP this year to find a solution that is cloud-based and works well for us.
JOE TENCZAR: Sonny’s BBQ will be spending a lot of time on a more robust CRM. Gathering more information and then segmenting our guests will allow us to create more personalized experiences for them. It will also help us make sure we are communicating with them in a way that resonates.
MARCUS WASDIN: We completed a $200 million arena renovation last year to harden our cyber security posture. We spent about $25 million on technology replacing all network and major technology, so our tech stack is current. We are now focused on the continued policies, procedures and technology to keep the environment safe for our employees and our fans. We are working our way through the alphabet soup of privacy regulations (GDPR, CCPA, etc), working with a partner to build a framework that will allow us to plug in the applicable rules around collection, permission, storage and use of privacy information. We have a number of IoT tests going right now, looking for further expansion. Most are operational in nature and impact the guest experience indirectly. For example, we have sensors in our paper towel holders and soap dispensers in the arena. Operations staff is alerted when these items are low and can make sure we never run out. We rolled out a new mobile app platform last year and moving into this year, we are working to expand those capabilities to allow our guests to better tailor their experience.
HT: What is the greatest disruptive force on your business?
ENG: One disruption that will make us shift soon is cord-cutting, both with regard to providing casting/streaming of guest-owned or subscribed content as well as reevaluating the need to provide linear content. Two years ago, the ability to stream or cast in a guestroom was a nice to have, but it is quickly becoming an absolute necessity. With regard to linear content I think it will be dropped, certainly within the next 10 years but likely much sooner, and replaced with either just a screen and a casting/streaming function, or; an amalgam of guest subscription streaming/casting along with on-demand subscriptions made available through the hotel. That second option has some guest service and revenue opportunities that come with allowing a guest to access content to which they do not currently subscribe. I suspect that the tech cost would vastly outstrip the complexities of licensing.
KLINE: Guest interest in delivery and the relationships that brands have with delivery service providers is critical disruption, but the competitor mindset has prevented both from realizing the full potential. Delivery providers and restaurants need to work together in order to achieve results that benefit both restaurant and delivery providers. If either party is in a losing situation, the guest is not delighted and both will eventually lose. Both businesses in a delivery transaction need to understand one another’s business and get creative on mutually beneficial terms, processes and systems.
DAVID STARMER: The biggest disruption for our industry is really the changing expectations of the consumer and our ability to acknowledge that and respond appropriately. This is not an evolutionary change to which we will have time to evaluate and respond. The changes in expectations from our customers are immediate and ongoing. To pivot appropriately requires a level of agility from organizations and technologists, which may be difficult to achieve if those groups are using legacy delivery methodologies. It is more incumbent now that we listen to guests and associates with the intent to understand the shifting landscape so that we may ensure that the tools and experiences we are providing align with what they reasonably expect.
TENCZAR: In my view, the biggest disruptor will be the scarcity of resources in the future. It will not matter if third-party delivery is eating into our dine-in traffic if there is less food to serve. We intrinsically know that if we do not change the way we farm, transport and waste food (and water) we will eventually outgrow our planet. This year’s CES showcased innovation to help these areas: smarter logistics, alternative food sources, water creation, and in-house farming.
HT: What is a top challenge facing your segment of the hospitality industry?
EDWARDS: At RLHC, we have brands that fit within multiple segments in the industry. Throughout all of these different types of hotels, the top technology challenge is finding the right technology solutions to install within the hotel. Whether that is Wi-Fi solutions, guest service solutions, or others, the conversation is always very similar. For most of our hotels, the cost for these solutions is a significant investment and they want to know they will deliver a return. We continue to work with hotels to understand the difference between consumer grade equipment and commercial grade equipment. Knowing that a television or network equipment from a commercial provider has a longer warranty or better customer experience will justify any increase in cost or delivery lead times to the hotel.
ENG: In the luxury and ultra-luxury segments, the top challenge is still making the technologies that guests interact with seamless, invisible and 100% reliable. Many times we try to take common devices, gadgets, technologies, etc. that work relatively well in a residential setting and try to provide them to guests. For example, home automation with integrated lighting, shading and environmental controls (which in hotel IT parlance would fall under “guestroom automation”). In a home, these systems work relatively well and the users are very familiar with the way to interact with them in order to reach a desired outcome. We have deployed many of these types of systems, I have stayed at many of my competitors that were similarly equipped, and I have yet to see one that approaches 100% in terms of usability, reliability or satisfaction.
GARRIDO: Regulation, labor and alternate lodging operators are the top three challenges. Legislation being put into place make competing in the hospitality space more expensive. Hotels are finding it harder and harder to find employees in all areas. Finally, alternate lodging operators compete for the customer, but don’t necessarily follow the same rules.
HASSEL: Keeping up with regulations. As soon as we feel like we have a handle on PCI, here comes GDPR. Just as we feel like we have identified the areas we need to focus on for GDPR, up pops ADA website compliance and right behind follows the need for Braille Gift Cards.
KLINE: Providing convenience with total consistency is our top challenge, especially in the fast casual space. Convenience isn’t the same to every guest nor is it the same in every concept. Identifying the superset of methods that equal convenience for a specific brand and then layering the personalization capabilities to the right guests is key.
LUCIA: There is a constant “battle for bandwidth” as the guest needs to be connected at all times and if they are not connected or they feel the connection is insufficient, they will be upset. Being able to deliver an experience that is tailored directly to guests or improve their visit and make it more efficient via the use of technology is a constant challenge.
BRIAN PEARSON: The competitive landscape is ever-shifting, and there are way too many restaurants in America for it to be a healthy market. There appears to be a significant shift away from the “chain.” Customers want innovation, craft and a unique service experience. They want to feel like the atmosphere caters to their aspirational needs. Chains need to rethink the way brands are positioned, allow for a local flavor wherever possible, and capitalize on brand image wherever it is not.
ROSENZWEIG: With additional ordering vehicles, i.e. third parties, we need to ensure that throughput in our restaurants is maximized while not negatively affecting the in-restaurant guest experience. Labor challenges persist in hospitality, with unemployment at record lows and a competitive market.
HT: How can technology be leveraged to empower staff and help with retention and satisfaction?
BROOKS: Mobile devices have assisted staff and guests in customizing orders, education and in giving feedback. Less than 25% of restaurants use company-owned mobile devices, but the ones that do, empower staff and assist with employee retention and satisfaction. Costs on mobile devices continue to drop and the applications continue to grow. For restaurants that do not invest, they can develop applications the guest can use on their phone or mobile device. From online ordering to recipes, nutrition, education, virtual tours and behind-the-scenes tours, I see tremendous growth in this area and in the future. I predict that the majority of restaurants will expand the use of apps that educate staff and assist guests.
DICKERSBACH: We are a diverse industry. Having our team use technology between all disciplines is a challenge, but the bigger challenge is even offering it. The technology is there, but how it is implemented varies so wildly between companies I have not seen a single implementation that just embraces an app or portal that caters to all. We need to do better to provide a single point of entry for all things company-related. Not just payroll/HR but all company happenings and activities, and in employees’ preferred languages. We could be providing the same type of communications by using familiar technology to the team, such as instant messaging, AI bots, and voice. Companies that are able to provide an immersive experience will see usage when it is simple to use and understand.
ENG: Daily pay. There are some nuances that would have to be addressed such as tip payouts, overtime, union compliance, etc. but it could be done. The downside to ownership groups is the potential effect on cash flow, but even that might be mitigated somehow.
HASSEL: With minimum wage increases, we rely more heavily on our scheduling and forecasting tools to manage labor. The approaching overtime report is probably the most important tool we can provide our operators to help them manage P&Ls.
ZERRICK PEARSON: Things like instant pay (wages and tips) and other employee incentive programs will drive retention and engagement.
RAMA: Two-way communication technologies on service recovery guest and staff communication platforms will empower staff to be able to document issues and resolve them in a timely manner.
TENCZAR: Keep the store manager on the floor at all costs! The best-run restaurants are those that have visible and accessible management. The goal is to either greatly reduce the amount of work in the back-office or to allow that work to be done remotely. Ideally, reduce the work by presenting only actionable insights instead of reports and KPIs. This needs to be done with smarter back-office systems that take advantage of machine learning to avoid repetitive or frustrating actions.
WASDIN: The experience of your guest will never exceed the experience of your employee. If your employees have a bad experience, that usually rubs off on the guest in their interaction. We did a great job rolling out new technologies for employees (HRIS, time and attendance, workflow platforms, communication platforms, etc). However, we fell down on making that a cohesive and easy-to-use experience. We delivered a solution that forced employees to remember multiple sets of credentials and forced them to use different platforms for different things. We are rolling out an internal employee-facing app that allows them to go to one place for everything. The vision is to provide real-time guest information to the appropriate team members to allow them to personalize the experience.
HT: Where has technology been underserved?
DICKERSBACH: Why aren’t we fully taking payments at the table? As an industry, we are so far behind. I remember swiping my card, tableside, in Europe, about 20 years ago. Here we are in 2020 and are just starting to see this roll out. Now that many systems have finally caught up and we are seeing certifications on many new devices, I hope this finally comes to full fruition in the USA.
ENG: Everywhere? All kidding aside, hospitality budgets are notoriously tight and even though we now focus much more on technology in the budget cycle, the pie does not get larger. This means that technology is now a heftier competitor for budget dollars. Something is going to suffer; cyber-security or carpet and curtains, virtual servers or vacuums? The needed advancements in both technologies are not cost effective to develop for an industry that has much smaller revenue potential when compared to others. Advancements that are useful to hospitality will come where they usually do in the tech development cycle: at the end.
LUCIA: Hospitality technology has always seemed to lag behind other industries when it comes to innovation and investment. I think most places don’t spend enough money on technology due to the increased costs that the business incurs, not realizing that if you invest in these technologies, many will mitigate these increased costs solving the problems. One other way to look at it is that it can be argued that this industry is not behind but it’s the way we view technology and upper management or ownership not willing to invest properly in full circle solutions and accept the pitfalls and limitations of legacy systems.
STARMER: Closed systems, de facto standards or no standards at all continue to prove a challenge. While there are emerging players who are beginning to address this space in addition to internal solutions, this remains a real opportunity. To effectively leverage data and support the guest and employee experience now requires work from our teams that would ideally be made superfluous by more focus from the vendor community.
BRIAN PEARSON: A lack of consumer behavioral data mixed with other transactional data from across the organization is the biggest gap we have in casual dining. The industry has been running by intuition for too long, and now when we actually have the data, many don’t know how to leverage it to make business decisions ... To understand the intricacies of our business, how customers shift between concept, cuisine and service style, we need to learn what the new labor models and offerings must look like.
ZERRICK PEARSON: The continued trend to treat security and now compliance as afterthoughts will continue to hamper efforts to integrate and consolidate applications.
Tech at a Tipping Point
The Reality is: Augmented & Artificial
STEVE BROOKS: Virtual and Augmented Reality is not just for gamers anymore. It is starting to show up in retail and hospitality, with platforms that specialize in helping concepts build their virtual worlds. I expect to see more application in restaurants, with VR/AR used to explore food items, nutrition, recipes and creation. VR/AR could offer expanded uses for online ordering and delivery. This is already happening with companies showing the virtual process of where food is in the kitchen or where it is in the delivery process. It could also benefit bars with recipes, mixology and virtual tours of the how ingredients are made like bourbon, tequila and wine.
JOE TENCZAR: IoT, robotics, and voice controls get a lot of attention, but I think one of the most exciting technologies is augmented reality. Yes, it has been around for a while (my Google Glass is still nested nicely in its box in my closet), but it’s finally getting to a point where it can be helpful and unobtrusive. Imagine how much easier it will be to train a cook or how you can do inventory by just looking at the shelves in the cooler.
JOHN EDWARDS: We are beginning to leverage both AI and machine learning to automate aspects of our call center solution. The idea of enhanced customer service through computer interactions isn’t new, but the fact that the computer systems can begin to learn about our hotel’s service standards, service styles, and hotel features changes things. When we can rely on the solutions to lead guests to the correct information, we can begin to create more memorable experiences for guests. This could be faster answers for simple questions or more time for guest service agents to spend meeting guests’ needs on-property while the systems are providing service elsewhere.
SIMON ENG: AI in combination with Voice Assistant Technology shows a great deal of promise. I envision a room with which any guest can interact in their native language, where the room AI understands from context that the guest needs assistance, taking its cues, much as a human servant would, without the need of specific “summoning words” such as “Alexa.” The biggest barrier is the uncertainty of how to ensure privacy and to help guests understand that their privacy is protected. In addition to privacy concerns, ensuring that devices accurately interpret requests and are actually able to assist with them are the next concerns. I do hope that we are able to find a path forward during my lifetime without ending up either in the Matrix or livestock for the Robot Overlords in the Machine States of America.
NELSON GARRIDO: AI and robotics can help in automating the more mundane requests that are generated by guests during their stay and even on some pre-stay requests. It has the capability of creating operational efficiencies and better guest experiences.
ROCKY LUCIA: I think AI is starting to pick up traction in the hospitality sector as computers, machines or robots can complete tasks that are normally carried out by humans. As AI interacts with guests, it becomes more intelligent and “learns” how to deliver even better service.
TENCZAR: I also predict we will someday replace guest satisfaction surveys with video-based AI-powered tools that can gauge satisfaction as the guest walks out the door. They already have technology that can see facial expressions, but they now have the technology to discern stress levels by assessing micro expressions and video-based vital signs.