Why Hospitality Should Join the Agile Movement

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Why Hospitality Should Join the Agile Movement

By Josh Galun, Hospitality Industry Lead, Excella - 01/22/2019

The Agile methodology for software development is almost two decades old. Despite being adopted by nearly every other industry, hospitality has mostly ignored it. Why have hoteliers failed to take advantage of this powerful approach to technology?

The Manifesto for Agile Software Development is deceptively simple, expressing only a preference for:

Individuals and interactions over processes and tools

Working software over comprehensive documentation

Customer collaboration over contract negotiation

Responding to change over following a plan

This radical simplicity turned out to be incredibly powerful. Today’s leading technology organizations all apply Agile principles to build higher-quality products, deliver faster, maximize value, and reduce risk. In fact, Agile has been so effective in technology departments that some firms are applying it across the entire enterprise, to adapt faster to their changing markets. Seventeen years ago, Agile was a manifesto – an audacious rebellion against traditional software projects. Now, it’s on the cover of Harvard Business Review.

But Agile bypassed the hospitality industry. Most hotel companies are still delivering technology in the old-fashioned way – known as “waterfall” for its set of cascading stages – and experiencing all the old problems as a result. There are three primary reasons for this.

Management Grounded in Capital Projects and Operations

Hotel executives typically come up through asset management or hotel operations.

The predictable approach of “waterfall” management works well for capital projects like building a property, upgrading the physical plant, or remodeling. These efforts can successfully follow a detailed plan because the steps are well-understood, and changes are infrequent. Vendors are held to precise contracts because the results are clearly defined up-front.

Meanwhile, hotel operations are all about repeatable processes. Market conditions change daily, but the levers remain the same: setting rates, marketing to customers, adjusting staffing levels, etc. Management focuses on executing established tasks effectively.

Above it all is ownership. In a low-margin business, owners want to know exactly how much projects will cost, when costs will incur, and what return they will achieve. The priority is cost control, not flexibility.

When hospitality executives run technology initiatives, they naturally gravitate to the management approaches they have been using for their entire careers. Most don’t have the technical experience to know why these approaches are not a good fit for technology or how to apply Agile to achieve better results.

Numerous Organizational Boundaries

Cross-functional teams are the foundation of Agile. These teams enable regular interactions across organizational lines, so that people are talking, learning, and adjusting together rather than passing written documentation back and forth. This allows for much more rapid exchange of new information and faster progress in dynamic environments.

Unfortunately, many hospitality companies are highly siloed. For example, it’s a common complaint that revenue management and sales and marketing aren’t collaborating, even though these teams should be working hand-in-hand to achieve occupancy, RevPAR, and profit optimization goals. If related teams aren’t even working together, it’s no surprise that IT usually runs technology efforts in isolation.

On top of that, staff are spread across multiple locations. There are gaps between headquarters and properties, and many organizations also have employees who are based remotely in the geographic region they focus on.

Finally, there are inter-organizational barriers to surmount. Franchisees implement brand technology, while independents acquire technology from third-party vendors. In either case, the hotelier needs to work with staff from another organization, who are based in a different location, and who are probably supporting multiple clients at once. This is a challenging, even for firms experienced in Agile practices.

Impediments to Customer Collaboration

Agile emphasizes customer collaboration because it enables frequent feedback. The customers themselves validate that the work is on track, delivering the right product, and providing real value.

The customer for hotel technology is often the property staff. It is critical for technology managers to get their feedback because headquarters and properties are different worlds. It’s easy for headquarters to guess wrong about what will work on property.

But it is difficult to engage property staff. There is geographic separation between headquarters and properties. Property staff are extremely busy with operations and may not be able to make time to participate in technology implementation. High staff turnover means that even if you can engage them, they may leave your company before the initiative is complete.

The other customers for hotel technology are the guests themselves. Again, it’s critical for headquarters to get their feedback to ensure that the technology is delighting the customers. But, of course, it is difficult to convince periodic guests to trial your technology and provide regular feedback.

Getting Over the Hump

These three challenges are real. But technology will increasingly be the difference between good reviews and bad reviews, between loyal guests and one-time guests, and between efficient operations and high labor costs. Hotel companies must become more innovative, more nimble, and more customer-centric, which means that they must get better at managing technology initiatives.

The good news is that Agile is a proven method with proven benefits. It helps firms streamline the development process, adapt to changes, and create products that truly meet the customers’ needs. Industries as diverse as government, finance, and manufacturing have been able to use Agile despite similar obstacles. It is time for hospitality to adopt Agile, to improve the trajectory of technology initiatives and increase the return on technology investments.

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