A Look Back at the Digitalization of Hotel Management
In 2021, Charlestowne Hotels will be celebrating 40 years of hotel management. The brand, which began as a small management company working with independent hotels concentrated in the Charleston area now represents more than 50 properties in diverse markets across the U.S. During the last 40 years, Charlestowne has seen technology revolutionize the way hotels are run. Here, HT goes down memory lane with Johnathan Capps, vice president of revenue, and Max Spangler, corporate technology & systems manager, to better understand where hotel management technology started, how it has progressed and where it may be headed.
What kind of technology was available for hotel management companies 40 years ago?
When Charlestowne Hotels was established 40 years ago, our founder and CEO Everett Smith purchased a small inn located in Charleston, SC. At that time, human labor was the core technology used – physically moving and manipulating data through the various components that made up the property’s technology. Systems were large, expensive, closed and located on-site only. Software was tightly coupled to hardware and Minicomputer-based systems at the time cost between $80,000 and $100,000. As hotel technology followed the broader trends in computing, costs began to come down and innovation was on the rise. Still, by the mid 1980’s, a PC-based 5-workstation system sold for around $10,000, including hardware and software.
The design and implementation of hotel management strategy was all conducted on-premise, as well. Communication, strategy and analysis were constrained by time, visibility and geography. Reservations were made on the phone or in person – the internet as we know it didn’t have a formalized system until 1983. Hoteliers utilized physical tape boards to see what was available and would quote customers from printed rate schedules. Revenue management was far from today’s real-time, analytical discipline. Ultimately, hotels were siloed businesses whose strategy was largely reactionary to external consumer sentiment and broader market conditions.
Fast forward 20 years and how had technology changed?
Between 1982 and 2002, hotel technology started to become more mature and consolidated. Some of the technology standards that emerged from the 80s and 90s, such as magstripe-based access control, evolved as RFID access control became more commonplace. The internet began to transition to something resembling its current form during this time. The world began to shrink with the increased connectivity and some management companies quickly understood the potential. At Charlestowne, we recognized early on that the industry was rapidly shifting and sought out technology partners who aligned with our mission to facilitate our vision. We developed an organizational structure and supporting technical systems – starting with our robust operations team – to manage multiple hotels and teams across a larger geographic territory. During this time, technology began to fully support our focus on discipline-based revenue and marketing, and our specialty in emerging industry technology and resources was born. From that point, the name ‘Charlestowne Hotels’ represented our origins and became known for quickly expanding into new markets across the country, versus our previous drive-market reach. Our leaders – the key team still with the company to this day – had adopted the technology, found the right partners, and created an organizational structure to capitalize on the boutique hotel explosion right around the corner.
How is technology different now compared to 20 years ago?
Things are moving at a much faster pace than ever before. The democratization of modern software development, OSS, inexpensive hardware and modern API protocols have completely reshaped the ability for small teams to build a variety of hospitality technology platforms efficiently and at scale. Software is no longer coupled to hardware or location in the same ways as before, allowing for greater connectivity around the world. Smartphones have revolutionized the way we interact with technology and are the primary gateway to the internet now.
The pandemic accelerated the deployment of many technologies that had been under development for some time. We recognized the potential of kiosk, contactless and mobile key technologies and because future proofing and system flexibility had always been a cornerstone of our philosophy, we were able to pivot and deploy solutions quickly.
Further, we’ve built the infrastructure to seamlessly communicate with geographically distant teams across all disciplines, from operations to accounting, marketing and revenue. Our teams are constantly feeding, tagging and updating data into our central repository in real-time. We’ve implemented IP safe-guards with contextual awareness monitoring and surgical access control to ensure that the “secret-sauce” stays secret. Internally, we’ve built automated data acquisition via orchestrated API calls and have developed our own ETL analysis layers that also update in real-time. We broadcast reports to our corporate and property teams with conditional logic and enhancement UI elements for quick variance analysis. Our operations teams are in the field, monitoring asset and operational performance. This data is then stored, analyzed and aggregated across our diverse portfolio of more than 50 properties.
What was the biggest advancement in technology to revolutionize hotel management?
The internet, or more broadly, connectivity, is the single biggest advancement to revolutionize the way hotel management is conducted. Pairing the advanced connectivity with smartphones created a paradigm shift in the way business is conducted. As the world became smaller, competition became more intense. Profit margins have become more constrained as commissions have steadily taken a larger percentage of revenue. Twenty to 30 years ago, the only travelers that really understood the differences in the brands were corporate entities. Now, with the availability of online ratings and a smaller world footprint, the consumer has the ability to research and make a more informed decision. This technology also supported a dramatic increase in operational efficiency, where communication to and from guests through PMS, CRM and CRS integrations form a new, digital customer journey for hoteliers.
What’s one area where technology is still lagging in hotel management?
Technical aptitude is one area still delayed in hotel management. The pace at which technology has evolved and continues to iterate has caused major disruption in the hospitality industry. Unfortunately, the decision makers are generally not technologically fluent enough to understand real from fake or realistic to hyperbole data and situations industrywide.
This issue can be seen across the board and framed through the lens of large brands, boutique properties, or small mom and pop inns. Each faces its own challenges – technology is not a hammer to be applied to every nail, nor is it one size fits all. The truth is, any hotelier needs to be armed with the technical knowledge to make an informed decision on implementing any piece of technology – this is a problem third-party management companies can solve. At Charlestowne, we understand that hospitality is and will always be a business for people, and technology is a tool that amplifies our ability to deliver great service, anticipate needs and maximize profitability. When we look to hire key positions at any property, technical aptitude, or an interest to learn and willingness to be curious is a key hiring trait.
Any additional insights?
Hoteliers and management companies need to be aware of the AI hype-machine; an area of technology where AI- or Machine Learning-based widgets can revolutionize a hotel. Questions that need to be asked include: Why was ML necessary over a rules-based system? Where did test data come from and is it anything like real-life data? How do they evaluate its performance? Why didn’t they take a simpler approach?
API documentation for hotel-centric systems is another area to place focus. Documentation is often sparse, outdated, and ambiguous with inconsistent examples – if any. Good documentation helps developers work efficiently and ultimately will promote the API and corresponding product. Conversely, if the documentation is poor, it will inevitably lead to developer frustration and abandonment of the project. Although crafting and maintaining clean, concise documentation is costly, the alternative is constant friction for those who wish to innovate and push the hospitality technology industry forward.