Exploit Your Systems for Full ROI
Without a doubt, every hospitality operator has made substantial investments in information technology systems, from advanced reservation and distribution systems to top-notch websites, to market analysis and revenue management applications. These key areas — what we’ll identify as demand generation, digital distribution, and profit optimization — are in constant flux as IT systems gain new functionality. In the midst of this is a key question: How completely are these IT functions integrated? Or, put another way, are hoteliers getting the full value possible from those systems?
Cornell Center for Hospitality Research recently conducted a study to identify the behaviors that indicate a hotel company is using (or to use the term from the research, “exploiting”) its systems to their fullest extent. In the report, IT integration levels are measured in terms of Network Exploitation Capacity, or NEC, for 150 hospitality organizations. The report includes a self-test that allows hoteliers to assess their companies’ NEC maturity and compare it with the averages of the pilot group.
The researchers see NEC maturity as a continuum in the integration of IT applications. As silos around demand generation, digital distribution, and profit optimization are broken down, an organization becomes increasingly strategic in its use of IT. The researchers identified 48 specific behaviors related to the use of IT, and asked hoteliers to indicate how regularly and rigorously the company engages in those behaviors.
Ironically, the industry panel who reviewed the potential NEC model behaviors could not agree on specific behaviors for the model’s top achievement level (named “Optimizing” in the study), which involves continuous improvement and learning. They were, however, able to identify specific actions for the fourth level (Analytical), in which a firm systematically engages in data gathering and analysis.
The industry leaders agreed on the following eleven “analytical” behaviors (followed by the percentage of firms that do these regularly):
1. Analyzing changes in guests’ distribution channel preferences over time (59%)
2. Performing tests or experiments to optimize display position on distribution channel screens (57%)
3. Analyzing interactions across the main distribution and marketing channels (55%)
4. Analyzing competitors’ demand generation efforts (54%)
5. Evaluating the effect of emerging distribution channels (53%)
6. Performing price tests designed to understand guests’ rate sensitivity (53%)
7. Computing abandonment and conversion rate for each of the major distribution channels (52%)
8.Experimenting to understand customer response to marketing initiatives (49%)
9. Measuring customer value and margin contribution by channel and segment (45%)
10. Performing tests to optimize the conversion of digital distribution channels (45%)
11. Developing analytical models to understand the effectiveness of integrated selling initiatives (42%).
Looking at these examples (or the entire list of 48 actions), you might say, well, “we do that from time to time,” or you may even do some of them regularly. If so, that’s a good start. The researchers do not judge how frequently any particular action should be taken. The key is that there is a set plan for doing each one regularly, and then adding more of these actions until the IT strategy includes all 48 behaviors.
Regardless of the level of a hotel’s IT sophistication, the simple point made by the report’s authors is that it’s imperative to consider how to integrate the IT elements involved in those three activities of demand generation, digital distribution, and revenue optimization. Hotels have made the investment (with more to come), and now it’s time to get the most possible from those systems. The NEC maturity model is a comprehensive framework for making that happen.
The Cornell Center for Hospitality Research titled “Network Exploitation Capability: Model Validation” was authored by Gabriele Piccoli, William J. Carroll, and Paolo Torchio. Piccoli is a professor at the University of Pavia, Carroll is a senior lecturer at the Cornell School of Hotel Administration, and Torchio is a vice president for SABRE Hospitality Solutions. The study is available at no charge from the Cornell Center for Hospitality Research.
Glenn Withiam, Director of Publications,
Cornell Center for Hospitality Research
What was your first job?
Picking green beans at the Cornell Agricultural Experiment Station
Who inspires you?
Anyone who has persevered in the face of adversity
What are your hobbies?
Bicycle riding and running
What technology excites you?
We live in an age of miracles that we can electronically communicate, look up information, and so forth in a heartbeat. Medical advances are also quite impressive of late.
Words of Wisdom:
Whether you’re speaking of publishing or hospitality the answer is the same, don’t let technology get in the way of being a mensch.
What is one other field that you would like to try?
Professional chef
Who would you invite to lunch?
Mark Twain & Theodore Roosevelt
Top movie/book:
Some Like It Hot
Favorite vacation spot:
New York Adirondacks, but I love the Grand Canyon, Crater lake, Acadia, and the Oregon Coast.
Glenn Withiam is the director of publications for the Cornell Center for Hospitality Research. To download complimentary copies of any of the research reports from the Center for Hospitality Research, visit www.hotelschool.cornell.edu/research/chr.
Cornell Center for Hospitality Research recently conducted a study to identify the behaviors that indicate a hotel company is using (or to use the term from the research, “exploiting”) its systems to their fullest extent. In the report, IT integration levels are measured in terms of Network Exploitation Capacity, or NEC, for 150 hospitality organizations. The report includes a self-test that allows hoteliers to assess their companies’ NEC maturity and compare it with the averages of the pilot group.
The researchers see NEC maturity as a continuum in the integration of IT applications. As silos around demand generation, digital distribution, and profit optimization are broken down, an organization becomes increasingly strategic in its use of IT. The researchers identified 48 specific behaviors related to the use of IT, and asked hoteliers to indicate how regularly and rigorously the company engages in those behaviors.
Ironically, the industry panel who reviewed the potential NEC model behaviors could not agree on specific behaviors for the model’s top achievement level (named “Optimizing” in the study), which involves continuous improvement and learning. They were, however, able to identify specific actions for the fourth level (Analytical), in which a firm systematically engages in data gathering and analysis.
The industry leaders agreed on the following eleven “analytical” behaviors (followed by the percentage of firms that do these regularly):
1. Analyzing changes in guests’ distribution channel preferences over time (59%)
2. Performing tests or experiments to optimize display position on distribution channel screens (57%)
3. Analyzing interactions across the main distribution and marketing channels (55%)
4. Analyzing competitors’ demand generation efforts (54%)
5. Evaluating the effect of emerging distribution channels (53%)
6. Performing price tests designed to understand guests’ rate sensitivity (53%)
7. Computing abandonment and conversion rate for each of the major distribution channels (52%)
8.Experimenting to understand customer response to marketing initiatives (49%)
9. Measuring customer value and margin contribution by channel and segment (45%)
10. Performing tests to optimize the conversion of digital distribution channels (45%)
11. Developing analytical models to understand the effectiveness of integrated selling initiatives (42%).
Looking at these examples (or the entire list of 48 actions), you might say, well, “we do that from time to time,” or you may even do some of them regularly. If so, that’s a good start. The researchers do not judge how frequently any particular action should be taken. The key is that there is a set plan for doing each one regularly, and then adding more of these actions until the IT strategy includes all 48 behaviors.
Regardless of the level of a hotel’s IT sophistication, the simple point made by the report’s authors is that it’s imperative to consider how to integrate the IT elements involved in those three activities of demand generation, digital distribution, and revenue optimization. Hotels have made the investment (with more to come), and now it’s time to get the most possible from those systems. The NEC maturity model is a comprehensive framework for making that happen.
The Cornell Center for Hospitality Research titled “Network Exploitation Capability: Model Validation” was authored by Gabriele Piccoli, William J. Carroll, and Paolo Torchio. Piccoli is a professor at the University of Pavia, Carroll is a senior lecturer at the Cornell School of Hotel Administration, and Torchio is a vice president for SABRE Hospitality Solutions. The study is available at no charge from the Cornell Center for Hospitality Research.
Glenn Withiam, Director of Publications,
Cornell Center for Hospitality Research
What was your first job?
Picking green beans at the Cornell Agricultural Experiment Station
Who inspires you?
Anyone who has persevered in the face of adversity
What are your hobbies?
Bicycle riding and running
What technology excites you?
We live in an age of miracles that we can electronically communicate, look up information, and so forth in a heartbeat. Medical advances are also quite impressive of late.
Words of Wisdom:
Whether you’re speaking of publishing or hospitality the answer is the same, don’t let technology get in the way of being a mensch.
What is one other field that you would like to try?
Professional chef
Who would you invite to lunch?
Mark Twain & Theodore Roosevelt
Top movie/book:
Some Like It Hot
Favorite vacation spot:
New York Adirondacks, but I love the Grand Canyon, Crater lake, Acadia, and the Oregon Coast.
Glenn Withiam is the director of publications for the Cornell Center for Hospitality Research. To download complimentary copies of any of the research reports from the Center for Hospitality Research, visit www.hotelschool.cornell.edu/research/chr.
