Emerging Technologies and Hospitality Industry Business Transformation

Technology buzzwords like business transformation often lessen the magnitude and importance of the underlying phenomena they are used to describe. Such is the case with the mutually symbiotic relationship between emerging technologies and lodging industry transformation.

Lodging's transformation will affect virtually every facet and stakeholder in the industry, including the prominence and direction of spending on information technology (IT). The transformation derives from the culmination of forces and entails a change in orientation from physical assets and products to brands and customer relationships. It is evidenced by trends such as hotel companies':

  • divestiture of all but the most strategically important assets
  • recruitment of senior executives from brand-intensive companies
  • branding of an increasingly diversified array products; and
  • merchandising of branded products.

The drivers of growth and competitive advantage for brand-oriented companies are different from their predecessors. Of paramount importance is the creation of a brand premium that drives value for owners and system growth for hotel companies through management contracts, franchised agreements, license fees and other services. Different strategies, competencies and tools will be required to build powerful brands capable of resonating on an emotional level with a specifically targeted set of loyal, high-value customers.

Emerging technologies tied to enhancing customer value will be the key tools used to build newly required competencies. These technologies move beyond highly visible, high-tech guestroom amenities to more “behind-the-scenes” capabilities that enable unique customer experiences. They will include things like converged networks, radio frequency identification (RFID), services-oriented application design, integrated call/contact centers, and new business intelligence software.

Disparate and antiquated legacy systems have robbed the industry of strategic technology investment dollars for too long, nor will they suffice in the future. The investment needed in strategic technologies will force companies to explore new ways to retain the strategic value of non-core support operations at a lower cost. This may cause many to adopt their own business model and explore the pros and cons of contracting others to undertake all or portions of non-core activities: an option they should understand, for it is what they propose to hotel owners on a daily basis.

Clay Dickinson is a vice president and client industry executive in EDS' Global Travel and Hospitality group and a speaker at the HOT conference. He may be reached at clay.dickinson@eds.com or 770 754 4390.

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