Thu 6 Mar 2014
Remember, I am a hotel guy, not a blogger. I am not putting in cute pics just to break up the blog and do the best practice stuff. This wall of text is about helping you. It’s your text to ingest or ignore.
I was asked a question in a cold call email, by a smart hotel tech start up guy (MobileSuites). It was personable, deferential, intelligent, and *not* copy-paste stuff. I rarely answer cold call emails from any vendor, and if I do, good on you (If you are copying and pasting, guess what, that’s boilerplate spam. Stop). So this hospitality tech guy seemed quite bright, with a bit of humility in trying to understand hospitality, namely the pricing differences and vast range of Property Management Systems. I love that.
So few tech startups realize their problem: They think they know everything and are a technology company, while not knowing much, not knowing they are a hospitality company. I think more hospitality technology startup firms need to start realizing they are *using* tech *in* hospitality.
First - can you pick my brain, and buy me a cup of coffee? No. Don’t be insulting. Intellectual property is of profound importance in our profession, and we didn’t grind it out for 100 hours 6 or 7 days a week just to help others learn our business at no cost. If you need professional consultants, you pay them. You wouldn’t “pick the brain” of someone writing code, you wouldn’t “bend the ear” of a mechanic. This is a professional relationship. Just because you wear jeans doesn’t mean we’re not in suits. Act like a professional, and realize your time might not be the most valuable in the world.
Second- as I mentioned, have some humility. I know hotels are not tech people…. but just because we don’t understand how amazing or revolutionary your app is does *not* make us stupid. Hubris is a dangerous avenue to stumble down when you are looking for success. Tech spends VC money like it’s VC money. Hotels spend their owner’s money as if it was their own. It’s a huge difference in how we look at business and money. Realize that…. anecdotes & marketing vibes will not sell your product. ROI and solid references will. Demonstrate that simply and you will have us.
I deleted my comments about PMS’, but for those interested, I pasted them at the end….
A joke in our industry is that “Hotels are not pioneers because pioneers were shot in the back with arrows“. We don’t have the money to waste on fancy new tech or systems. We let hospitals or dorms pioneer new tech, and adopt it 10 years later when it’s settled, working, and reliable. A lot of times, a GM you are selling your idea to will simply say “Give me the name of 5 GM’s using it, and I will get back to you”…. it’s an outmoded and very dangerous mentality though, and we are evolving. We lost phone revenue due to changing times, and just finished losing movie revenue because Lodgenet didn’t innovate to match the new era. We got destroyed by the early web boom, losing our inventory and rates to OTA’s and distribution middlemen. Then we got burned on SEO optimization… (hotelier – remember when you were pulling your hair out because no one could find your hotel?). We did a bit better on social, but we’ve learned a lot of lessons in becoming archaic and irrelevant. Now, we know being on top of tech is vital for us to survive, but we are wary. We need to be able to trust the tech to ask questions we don’t know to ask. Much of tech knows this, and takes advantage, accordingly.
We’ve looked at so many apps and ideas throughout the years. Runtriz Hotel Evolution, for example, and other concierge style apps, which are cool. I LOVE DATA EXHAUST. I just love it, and that provides you a lot of valuable info. But, most of the important and vital hospitality tech is internal to management, and has zero to do with the guests. It’s *obvious* the tech groups that don’t get hospitality – thinking we need more bells and whistles to market in-house to a guest. We need solid tech that makes our hotel successful. That’s usually analytic tools. But no matter the program, solution, tech, app, efficiency, program, etc… here’s why you are reading this. You want to know how to get the app into the front door of the hotel. Your challenges, which I am sure you know, are as follows:
1) A generalization, but somewhat accurate: Almost all hotels are the same. From some luxury down to normal biz box hotels – same threadcount on sheets, same ihome clock radio, same amenity concept (local, artisan, etc), same “hip” concepts and angles for marketing. It’s amazing, but it’s unbelievably similar across the board. So, what is the one thing we can do to stand out against our competitive set? Service. Even Mr. Kong from Best Western thinks so. That’s interesting. I am not saying Best Western is a luxury brand. But I *am* suggesting that if *their* CEO thinks that service is paramount to the notion of hospitality, luxury hotels are not going to engineer situations that limit our exposure to the guest…. If we don’t take every opportunity to impress upon the guest our brand and experience, then we have lost. Tech doesn’t get this, because tech wants you to crane your neck down to use a smartphone, going everywhere else in the universe than where you currently are. Hotels want you to be where you are, and have that experience flow through you. Tech can be tools to facilitate a guest’s need, but it shouldn’t be something that engineers complexity.
There is a *tremendous* disconnect and lack of understanding from the tech world: our business is hospitality. Technology is great, but not if it makes our guest inaccessible. If tech enhances the guest experience, that’s great. But if removes them from interaction, that’s a problem. A business man who doesn’t want that guest experience is probably not a luxury guest. You can say that a business person wants to use apps and tech and check-in without talking to a human, but that’s a entirely different hotel world than luxury. What’s more, we have noticed a total burn out with guests… they DO NOT want to download another app. They are usually at our hotels to get away from all that. After noticing high powered CEO’s using flip phones, I went back to one too. I am 37. There isn’t one “app” I need, and almost all of them are time wasters for people with time to waste. I receive calls, I answer questions, I make calls, I get stuff done. A smartphone is basically a diversion for people with too much time and too little drive. Apps just clutter my life. So… beyond not wanting to engineer distance between our guests, we enter problem #2, tech and app burnout:
2) We can *not* get guests to download apps. Not with tent cards (we hate those, anyway), not with staff training. Even Runtriz had admitted that the adoption rate on property averaged ** 10% ** of hotel guests *with* smartphones. That’s not 10% of all guests. That’s just the guests that the hotel knew had a smartphone. I still think this is probably a training issue, but it’s also that people are much more attuned to privacy, permissions, etc, than they were a year ago. People are just realizing how much of their personal info we’ve given away, via apps, social, or stuff like the Snowden NSA revelations. There’s a tremendous skepticism out there now, and the hallmark of hospitality is a profound respect for guest privacy. We are there to protect our guests. This is where marketing is losing their grip on reality – partnerships of sharing guest’s data with huge marketing data firms, etc. It’s a bad, bad move, in my opinion. Tech wants us to be “opt-out” because opt-in doesn’t work. Well, we’ve learned our “opt-out” lessons with huge court cases and major settlements, and now we understand, hospitality and marketing needs to be “opt-in”. Some don’t agree, but transparency is paramount to trust, and the whole “opt-out” concept is from a completely different era. It doesn’t work in building relationships or trust, and it will come back to bite you.
That being said, we’re not there to force an app on a guest, especially something 3rd party. I have had people plainly say they just feel all apps are insidious- almost trojan horses. You download it, forget it’s there, and you’ve given all of yourself and more to all these prying eyes, figuring out how to leverage you better as a consumer. Guests don’t want that, and as they become more skeptical of marketing and how the back end of these things work with their personal data, we need to lay off the over eager marketing that is alienating the guest from the experience they are meant to have at a luxury property. Data ethics is going to be huge for hospitality. Hotels value privacy for their guests, and in an era where privacy has disappeared, that becomes a very complex position for hotels to manage.
An app that decreases labor costs and offers efficiency or amenities to guests is a fantastic concept, but not if investing in it means no one will use it. We do not have the resources to invest much energy in something that doesn’t show obvious ROI. We are big proponents of the Pareto Principle- 80% of results come from 20% of actions, 20% comes from 80%. One of our most vital resources is time, and we can’t spend endless hours on endless apps that don’t produce, or that are used by a tiny minority. Getting the traction to get the public to use your app, knowing how difficult it is for hotels to reinforce it (for all these multiple reasons) seems nearly impossible. I *have* seen gamification and incentives, which can create loyalty to your app, work. But then a luxury hotel is giving away it’s branded experience to an app that isn’t loyal to the property or brand, but loyal to the app itself. It’s why expedia guests don’t work, it’s why groupon doesn’t work, for luxury (especially) – these people are loyal to the distribution channel. Not the hotel. They come and never come back.
The Target Store credit card data breach is one thing… but the first major hotel brand that has a guest data breach is going to be fundamentally disastrous for the trust that is the basis of our relationship with a guest. Asking them to download app after app for marketing purposes is a dangerous thing. They don’t want it. We don’t want to pressure them. It should be an organic, opt-in experience, and there isn’t one tech company that believes in themselves enough to be opt-in, because, surprise, that model doesn’t work. Hotels are opt-in… guests are already exhausted from their tech crazy world. Luxury is about reducing stress, enhancing calm, etc…. that is rarely what hospitality tech is about, or what’s it’s trying to do.
The joke “Silicon Valley is good at answering questions no one is asking,” comes to mind. Most of these apps add complexity. A small amount of people use it, so a small amount of people understand it, which means there isn’t rhythm. Most of these apps are lost in the day to day operations – unless everyone immediately uses it, always, then it falls into silent obscurity, and you get furrowed brows and confused looks at the front desk when someone asks about it. Instead of silly gimmicks and needless bells and whistles, think about something that might get traction and actually create efficiency, etc. Something like HotSOS as an app, or vital programs like Revinate or Market Metrix. Internal programs that aggregates guest data, etc, are far more valuable than a gimmicky app that doesn’t generate revenue. If your app does what hotel staff already do, what’s the point? We get reducing labor costs, but not at the expense of our guests. We hospitality people know you think technology is better than human interaction, which highlights our fundamental difference of world view.
Speaking of human interaction, this unfortunately poses the most prosaic and mundane of challenges for a hospitality tech startup: on property training.
3) Implementation and Training: You may have the best app in the world, and it all falls apart because of the accountability, ownership and training. A corporate hotel guy can totally dig your app and say “let’s roll this out”, but when it is pushed down to the property level, the GM doesn’t get it, it isn’t implemented, it falls through the cracks, etc. Every property is different, and finding the right person is difficult. It might be the DOS at one hotel, rooms at another, CMO, GM, etc at another. Your entry point into a hotel isn’t going to be the same position. But once you’re in, I bet you see it fall apart – either it goes stale and isn’t built, or at the front desk no one knows the app exists, etc? Training an employee who doesn’t earn that much is exceedingly difficult. I am not complaining, and that is on us. I know apps try to get into a luxury hotel because there’s equity in aligning yourself with a luxury brand – it’s good for your brand as you grow. Also, as for hospitality, there’s more ownership of guest experience on the front lines; guest service experience *is* better at luxury, than mid-range hotel brands. But operations in a hotel, especially in this modern world of revenue management and complex distribution, have fundamentally changed, and not all adhere to the same rigorous service standards that they used to. Training is not always seen as this altruistic indoctrination of an up and coming hospitality professional, but more about a war of attrition in turnover, and just getting bodies on the front line. This is industry-wide, and not as prevalent in luxury hotels (less turnover, more employee loyalty), but “hospitality” isn’t thought of as a noble profession like it might be back in Europe. Until you are the penultimate of luxury, most of the time a person at the front desk is just that… a person with a job that they may not be too excited about. There’s some of us trying to change that attitude, but until then, even if your app is endorsed by corporate, and by executive management, it could be one slight kink in the management hierarchy that totally submarines your success, right at the point of the guest.
If you can find a luxury business hotel brand with a loyalty system, you could probably piggy back on the back end of that and get into people’s pockets. But doing the rounds of one hotel or one small chain will strap your resources, I bet. It’s exhausting. We’re conservative. We don’t have money. The market is awash in similar apps. More skepticism about privacy and permissions…. you want to disrupt hospitality, without disrupting the people you are selling too. I get that your app is probably the most important thing in the world, but if you don’t understand that you are in hospitality, and you choose bravado over obsequiousness when you try to break through to us…. it’s not going to work. I only say this because we need more smart, humble, and helpful technology people asking the right questions that we hotel people don’t even know to ask. Before you spend time and money making an app you know we need, it might be wise to make sure we need it first. You might be able to convince the lay public that they need another way to filter yet another photo from their smartphone, but it’s going to take a lot more to convince a hotelier. We may be slow to innovate, and we may be overly conservative. Don’t mistake that for stupidity. Understand that we have a fundamental difference of opinion when it comes to the power of technology, and what it should be used for.
TL;DR – If you think you have an app for luxury hotels that interrupts the ability of the hotel to be face to face with our guest, your app is neither about luxury nor hospitality.
——————————–the Property Management System info… from the question “Why do PMS range so greatly in pricing”?
a) PMS: The insane range of PMS costs are due in large part to hotels using them. Say a 6 room Guest House type B&B, all the way up to a 3000 room casino with a spa, 10 restaurants, etc. So you need things that will meet all those needs. You have “free” PMS that are cloud based, SaaS models that are just monthly costs. Hoteliers like me are skeptical of that. Cloud is the future, for everything, *BUT* incredibly sensitive guest information that could be exploited. There’s significant security issues with the cloud, coupled with engineering in multiple points of failure – power outage at your prop, or the co-lo, etc. Hoteliers like to touch and hold and have access to systems, so that when something goes on the blink, we can get to it and fix it. Hospitality is an industry of necessary up time…. you can’t check people in and out when your cloud system is out, etc. So that moves us for these cheap CD rom type cloud services that charge you almost nothing… also there are transaction fees for reservations, so a lot of PMS make up their money there, and business model goes that route, accordingly.
Our properties range from 20 – 175 rooms. We work with a property management system that is simple, concise, and we have a great working relationship with the guys, so our back end reporting is highly customized, none of that work order ticket stuff when we need something taken care of, etc. They also developed a booking engine that they throw in for free, and there’s ZERO commission etc. We own it, and every rez we get has zero transaction costs, which is sublime. But that’s rare. At other properties we work with Autoclerk, which is a stripped down and overly simplistic PMS. It’s probably around $30K. Then you get into the bigger PMS that mimic the huge guys – they can handle outlets, etc, but they’re not the strongest. Those are around $100K. When you get over that $100K mark, you are paying for bells and whistles. There’s a certain point where PMS are just bloat. Micros’ Opera is a good example…. it has everything you need, and then it has endless stuff you will never use, or line employees won’t understand, etc. The other thing you pay for is reporting. Autoclerk’s reporting is just horrible… but that’s why you pay less. Agilysys Visual One has INSANE reporting, such that the end of the month reports (which are incredibly complex) is basically just pushing a button, vs a controller spending a dozens of hours working on them. You get your reports for the month by 10am first of the month, instead of 2 weeks in. You also have outlets posting charges in a seemless, integrated, real time way… which is rare for legacy PMS. So from the perspective of ownership, investing capital in the pre-opening budget for an overly pricey PMS that is couched in millions of a development budget may actually make more sense than the ongoing liability of expensive labor. So, the ownership, and the management, have a LOT to say about the PMS in the sense that it pilots the numbers that run the business. That’s why properties you talk to will say “we hate this PMS”, because on the back end the owners and management company have their numbers, and that’s all that matters. The nuances or idiosyncrasies on the front end for a line employee seem bizarre, or don’t make sense…. but it’s because the back end is doing it’s job. There’s also costs associated with changing PMS, upgrading etc…. so you see a lot of legacy systems that don’t even work properly, etc. Much of that is because hotels don’t budget right, or plan ahead to use capital wisely to stay competitive with more modern systems.
SO… simple answer: the range of PMS pricing and types is about accommodating the mom and pop B&B to the huge mega properties. There’s 1000′s of them. Most are overcharging for what they actually provide.
UPDATE SAME DAY, 9.24p
I just found a fantastic new article that quotes David Kong from a few weeks ago. He sums my whole point of view perfectly. I sort of a have a hotelier crush on the guy. Very bright gent:
“Best Western’s Kong: Technology, to a large extent, desensitizes people, and it has the potential of rendering our industry into a commodity. If the hotel is nothing but self-check-in and kiosks and you don’t have interaction with anyone, then that type of experience can be easily copied. We all read comment cards and letters that come to us. They almost never write about the product experience. It’s always about people, whether it’s a compliment or a complaint. It’s always the front desk people, how they were received, or the housekeeper. This industry is called the hospitality industry for a reason. If we, for the sake of technology and efficiency, give that up, then we’ll be like the airlines. We’ll be a commodity.”
The flip phone comment is not hyperbole: