OPERATIONS, TECHNOLOGY SPARK AT HOT 5
Some of the best minds in lodging converged and engaged in Dallas March 9-11 when Lodging Hospitality and BearingPoint presented the fifth Strategic Conference on Hospitality Operations & Technology.
The event drew about 275 people to the Wyndham Anatole for panels of chief information officers and chief operating officers, along with four tracks of breakout sessions with four panels in each track. The tracks reflect concerns critical to a lodging industry that seems to be on the upswing: revenue management/CRM/marketing/distribution; enterprise architecture; measuring success; and reinventing the guest experience.
In addition, an Ask the Experts panel featuring representatives of key vendors spiced up lunch at the Anatole March 10. All agreed the food was excellent, at that lunch and during receptions March 9 and 10.
The COO panel got down to brass tacks almost immediately when the moderator, BearingPoint Managing Director Donald Gallagher, turned the discussion to ADR. All the COOs agreed that occupancy is up but rate is lagging. One way to remedy that is to install dedicated revenue managers at each property. Jay Stein, COO of Hampshire Hotels and Resorts, said the 10 hotels he manages in New York and Montreal incorporate “real revenue managers” in their executive teams. These managers play strategic roles, not clerical, said Stein, noting his goal is to “reduce the spread” between rates.
Michael Cryan, COO of Windsor Capital Group, a management company with 26 hotels in its portfolio, said Windsor incentivizes its revenue managers and sales managers with bonus programs, tying the awards to RevPAR rise that can be shown to derive from rate growth rather than some other income stream.
“The first thing to do is to raise rates,” said Tom Griffiths, vice president of World Hotels, the Americas. He said he also wants less dependency on the extranet, suggesting that now that business is back, sales by third parties like Expedia and Travelocity are losing their appeal and efficiencies.
Gallagher next steered the talk to expansion and consolidation. While cap rates are lowering, construction costs, particularly for steel and concrete, are up, leading to development in suburbs and tertiary markets rather than in gateway cities. In some cases, said Cryan, “it is cheaper to build than to buy.” David Moyar, COO of Mei Hotels, said his company is expanding through acquisition. He predicted little supply increase through 2006 and expressed hope that Hilton Hotels Corp. and Hilton International would finally merge. Griffiths, who runs a collection of independents, suggested further consolidation would help his cause by making independents more distinctive.
The discussion touched on several other topics, including Sarbanes-Oxley (Moyar said its new accounting requirements are particularly tough on public companies), identity theft (Stein said he had personal experience involving some former Hampshire employees) and the increasing clout of brand.com business.
The push toward best rate guarantees has helped, said Cryan. Meanwhile, Stein suggested that travel shoppers use all kinds of sources. He said he uses opaque third-party provider hotels.com to research a hotel in a strange city, then books the room on that hotel's brand.com site. Griffiths expanded on this, saying World Hotels is trying to partner with some third-party sites because they're better at dynamic packaging than brand.com.
Response to a provocative question from EDS spokesman Clay Dickinson was varied: Is information technology of strategic importance or merely a “necessary evil?”
Buying new technology when the old still works makes no sense, all said. But Cryan stressed the importance of revenue management, Noble Investment Group COO Bob Morse said hospitality is still labor-intensive, and Griffiths said technology is strategic, particularly now that accounts and revenue have to be managed across a global network. Stein enthused about check-in kiosks in full-service hotels.
Key challenges facing hospitality in the next five years are rising interest rates; health care cost increases; terrorism; an airline industry that, Stein said, “needs to change in a lot of ways”; workers' compensation; and amenity creep. Griffiths said that above all, hospitality must focus on the customer; check-in kiosks are fine, but without the human touch, “customers are going to start to revolt.”
CIOS SPEAK OUT
The CIO panel March 11 was more varied, if less dynamic, than the COO panel. Among its concerns: outsourcing, security, the growth of Linux systems.
Outsourcing is a political red herring, suggested Mike Kistner, who recently left Best Western, where he was CIO, for Pegasus Solutions, where he is senior vice president of operations and service delivery. The key is to “find the best resources at the best price,” he said, noting Best Western does business in 83 different countries and can't limit its workforce to North America.
The same goes for InterContinental Hotel Group, said Larry Burns, senior vice president and COO, IHG central shared services. “We're not ashamed of it,” he said of outsourcing. “It's our employees and we are a global company.”
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