When I moderated a panel discussion devoted to the Lodging Technology Study at our Navigating Together at HT-NEXT conference, in December, my guests (Brian Kirkland of Choice Hotels, Jerri Traflet of Verizon, and Daniel Connolly of Drake University) helped me to clarify what our data can and should mean to hotel operators. Big picture, guests are demanding digital transactions — from brand discovery through booking, on-property experience, and payments — across channels.
Our panel noted that a significant lodging demographic (loosely defined as Millennials and GenZ, but also including a sizable portion of older hospitality customers as well) now prefer to interact digitally. We also noted that, as hotels responded to the challenges of the pandemic, they were able to accelerate their “digital evolution” in part because guests were already pulling brands in the digital direction. “Technology today allows you to identify yourself, check-in and access a mobile key without ever having to visit a front desk agent,” Connolly observed. “If I were to open a hotel today, I would not hire front desk agents. Instead, I would hire the most extroverted people I could find to chat with guests, guide them to on-property experiences such as the restaurant or spa, and provide more of a concierge type service that really improves the guest experience.
IT Budgets’ Impact on Overall Technology
In our annual lodging survey, we asked hotels to report the percentage of overall revenue devoted to IT budgets in 2021. We found that, broadly speaking, less than 3 percent of overall revenue went to IT budgets. We also asked hotels to rate their technology compared with competitors — always a useful indicator of technology maturity and hotelier confidence. The results, in general, follow a bell curve, with fewer hotels rating themselves as significantly lagging or ahead of their competitors, and a plurality (around 40 percent) identifying themselves as "on par" with competitors.
But here’s where it gets more interesting: My co-author, Mehmet Erdem, Ph.D., Associate Professor of Hotel Operations & TechnologyWilliam F. Harrah College of Hospitality, University of Nevada, Las Vegas, took a deep dive into the two data sets and noted a correlation between IT budgets and hotels’ rating of their overall technology.
Among hotels reporting IT budgets between 1 percent and 1.99 percent of revenue, 17 percent rated their overall technology as “significantly lagging” competitors, another 17 percent said they were “somewhat lagging,”and 33 percent said they were “on par” with competitors. The distribution of ratings among hotels who reported IT budgets between 2 percent and 2.99 percent was similar.
Significantly, those hotels who reported IT budgets between 3 percent and 3.99 percent were substantially more positive: None rated themselves as “lagging,” 40 percent rated themselves as “on par,” and 60 percent rated themselves as “somewhat better” than competitors.
Perhaps not surprisingly, hotels who reported IT budgets between 10 percent and 14.99 percent of revenue had the highest opinions of their overall technology: 33 percent rated themselves as “somewhat better” than competitors, and a whopping 67 percent rated themselves as “significantly better.”
IT Budgets’ Impact on Health & Safety, Guest-Facing Tech, and Analytics Maturity
The correlation between tight budgets and lower self-ratings was not reflected in hotels’ feelings about their COVID safety protocols. We can presume that (a) hotels have made significant investments in health and safety technology over the past two years and (b) hotels are reluctant to rate their COVID measures as anything less than “on par.”
But we did see the correlation between tight budgets and lower self-ratings in hotel operators’ feelings about their guest-facing technology and analytics maturity — this is a significant cause-and-effect pertaining to two of the hottest tech categories for hotels attempting to meet guest expectations for digital transactions and to leverage guest data for efficiency, loyalty, and ROI. We look forward to diving even deeper into those connections soon.
Talk to Us!
As always, I’d love to hear what you think. My digital door is always open, at [email protected].