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7 Facts About Hotel Technology Spending in 2017

by Jason Q. Freed, Managing Editor |

In the era of OTA booking dominance and increasing competition from the likes of Airbnb, boosting hotel loyalty has never been more critical. Airbnb has doubled the amount of lodging supply in many markets, a fact that can no longer be denied. And while OTAs remain great partners in driving incremental demand, both these outfits threaten to siphon loyal guests away from hotels.

Hoteliers are acutely aware of this and are scrambling quickly to revamp their loyalty programs to cater much more toward the guest experience. Points programs are no longer enough; the future of loyalty is more personalization. Hotels must make loyalty members less of a number and more of an individual guest – recognize them pre-stay, offer them an individual rate based on their “worth,” and personalize their stay from before they arrive on property to after they leave.

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It’s hard to understate the role technology providers will play in this evolution. Sharing guest data from the CRM to the CRS, PMS, RMS, channel manager, etc. has until this point been a major hurdle. But according to the 2017 Lodging Technology Study, published by Hospitality Technology magazine with support from EKN Research and Mehmet Erdem of UNLV Hotel College, that’s exactly the solution hoteliers are looking for from their technology vendors.

Survey respondents representing more than 15,280 chain and independent hotels revealed what is shaping their IT budgets and where they look to invest in 2017.

1. Hotel technology spending is finicky

One interesting illustration from the report is that, while hotels’ IT budgets appear to be shrinking, hoteliers are planning to spend more on technology this year as compared to last year.

Roughly 3.5% of overall revenues were allocated to IT spending in 2016, down from 6% in 2015. But report authors attribute this to a flurry of chip-card reader projects and mobile solutions that drove up spending in 2015, and suggest CIOs reset

their IT budgets to sustainable levels for 2016. In fact, the survey shows that more than half of hotels (57%) plan to spend more on technology in 2017 than they did the year prior, and 42% are planning to spend about the same. Just 2% will decrease their IT spending in 2017.

2. The focus has turned back to the customer

Hotels are now squarely focused on enabling digital customer engagement, with 52% saying it’s their top strategic goal for technology. Other goals include driving more direct reservations (56% said this is their top “omni-experience” goal) and improving guest analytics (56% said it’s a top Business Intelligence goal). “The formula of delivering exactly what the customer wants, when, how and where they want it must also be the central tenant of innovation in hospitality,” the report says.

3. Clear priorities for hotel tech spending

Authors asked hoteliers to evaluate a list of strategic goals for their technology investments, and identify those of high importance. More than half of operators (52%) are focusing on improving digital customer engagement, while a second priority is a continued focus on payment and data security (40%).

4. Cloud computing now ‘standard operating procedure’

Just 13% of operators surveyed named “cloud” a top strategic objective in 2017, but authors of the report suggest that number is a bit misleading. There is no decline in interest to migrate to the cloud, they say, but rather most hotels have already begun the migration and therefore have moved on to new initiatives.

 
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“This year’s research indicates that, by the end of 2017, about half of hotels will have chosen cloud-based systems as their preferred service delivery model for a variety of critical systems, including property management, central reservations, customer relationship management, and revenue management,” the report states. “Cloud computing isn’t a strategic goal — it’s now standard operating procedure.”

5. What exactly are analytics again?

Big data and predictive analytics are rather ubiquitous buzzwords today. To understand the importance of the two, look at hotels’ ability today to track personal preferences. Offering the right rate, at the right moment, for the right hotel, to the right consumer will be a central component to driving more direct reservations, authors say.

For the time being, survey respondents say they are still learning. Fifty percent said they are in education mode for analytics, about a third are critical of their current efforts to explore analytics, with 34% admitting that they lag competitors. Only 11% of operators believe they are leading their competitors in analytics maturity.

6. What do hotels want analytics for?

Presented with a list of areas hotels could mine for deeper business analytics, respondents clearly indicated their desire to grow RevPAR and learn more about their guests. Specifically, 60% of hotels said the ability to optimize RevPAR is a core focus area of business analytics, closely followed by guest insights, at 56%.

“These selections reinforce that hotels have a laser focus on better understanding the guest in order to drive direct reservations and optimize their RevPAR,” the report said.

7. Where hotels will invest in 2017

Which guest-facing technologies are most important to hoteliers today? Not surprisingly, hotels look to improve guest Wi-Fi. In 2017, 45% of respondents said they will upgrade guest WiFi and 5% will switch to a new supplier. About a third of hotels plan to upgrade their current mobile app, and a few more (7%) will roll out an app for the first time. Televisions will continue to get a facelift, with about 1 in 4 hotels planning to upgrade their Smart TVs.

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Jason Q. Freed, Managing Editor

Jason Q. Freed, Managing Editor

Managing Editor at Duetto
Jason joined Duetto as Managing Editor in June 2015 after reporting, writing and editing hotel industry news for a decade at both print and online publications. He’s passionate about content marketing and hotel technology, which leads to unique perspectives on hotel distribution and revenue management best practices.
Jason Q. Freed, Managing Editor

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Jason Q. Freed, Managing Editor

Jason joined Duetto as Managing Editor in June 2015 after reporting, writing and editing hotel industry news for a decade at both print and online publications. He’s passionate about content marketing and hotel technology, which leads to unique perspectives on hotel distribution and revenue management best practices.