Cloud computing is the next big thing in hotel technology. Sometimes called software-as-a-service, cloud computing refers to hotel systems and software hosted at a brand or management company headquarters, a server farm or even a vendor facility. Hotels on the cloud no longer have the burden of housing and servicing hardware onsite; instead, a secure high-speed Internet connection gives them access to all their operational technologies.

Darrin Pinkham and Benchmark Hospitality International are quickly becoming evangelists for cloud computing. The Houston-based operator of 30 conference centers, hotels and resorts is in the middle of a project launched late last year to move as many of its hotels and systems to the cloud as possible. The company’s tech vendors, including Northwind, Aptech, Delphi, Micros and others, are helping with the transition.

We recently chatted with Pinkham, Benchmark’s vice president of information technology, on the company’s cloud strategy and future plans:

How does Benchmark employ cloud computing?
We have 12 different software solutions that we host. Some of our properties use all of them; we’ll upgrade the rest of the properties this year so they’ll all be in the cloud. It covers a myriad of applications: PMS, back office financial and accounting, business intelligence and more. It’s all sitting in the cloud and accessible through the web.

We’re also looking at PCI-related solutions like a global credit card solution, which is a tokenized version, so all our transactional systems go to one central hub. That way, we’re not capturing credit cards numbers on internal systems and violating PCI. We’re also looking at interfaces, like our GDS, in which we use a hosted model for serving up our reservations through the data center.

Where are the applications hosted?
We host everything ourselves. We’ve looked at the vendor-hosted model but we can do it better, cheaper and more effectively ourselves. We’re taking all the property server equipment and moving it to the cloud so each hotel doesn’t have the expense of refreshing their server technology. We do it for them as part of our IT services fee so they get very expensive, hardened technology at a fraction of the cost on a monthly basis.

What are the advantages of a cloud approach?
Over the long term, you need fewer IT people at the property and the competency of the IT people at the property doesn’t have to be at a director level. Getting the equipment off the property is huge because it’s a nightmare to recycle technology and keep it up to date.

How do you sell owners on this approach?
One of the reasons they like Benchmark is that we come in with a full turnkey solution. We can tell them you don’t need all those servers on property. We can rent you the software and house it for you. You have full access to it and it’s your data. It’s a win for the properties and the owners because they don’t have to buy technology. If you run the total-cost-of-ownership calculation, it’s a quick return because they don’t have the upfront capital outlay or the worry about the refreshment of that technology in three to four years.

Benchmark’s Turtle Bay Resort on the north shore of Oahu.

What are possible pitfalls of cloud technology?
Connectivity to the property can be an issue. For example, I wouldn’t yet want to put cloud computing in our hotel at Turtle Bay in Hawaii. It’s a great property, 450 rooms, one of our hottest properties in our portfolio and one of the highest revenue producers and return on investment properties. The challenge in Hawaii is all the wire that goes into the property is above the ground on telephone polls. In Hawaii, there are 40- to 50-mile-per-hour winds three quarters of the year, which is enough to cause degradation of service. We’ve tried to partner with [a local cable company] to provide additional types of solutions, but we won’t [go to the cloud] until I have a rock-solid connection that gives me solid T1-type speed and a meg and a half of bandwidth. That’s our minimum standard.

What are the staffing and training issues when a property goes to the cloud?
The positive benefit is we can quickly stage up a Maestro property management system from Northwind or we can give financials directly to a property from Aptech. We can basically turn up without having to put any equipment on site, and if someone has Internet access on a PC we can give them access [to the technology] by creating a secure layer to our MPLS network. That is very effective when we’re taking over a property, because we can quickly get a staff up and running. From a training element, we standardized on all applications, so when we do training everyone gets the same training. We don’t want 15 different versions of the same software.

The cloud is nice because we can update once and everyone has access to that update, instead of having to do it 32 times. We have 5,000 employees, and many of them have been with the company 20-plus years so when they move from one property to another or we open a new hotel it’s great having that platform with similar systems.

We’re not a company that says all hotels must have the same systems. We give the properties some autonomy. We give them a choice of several solutions for PMS, or point of sales. However, some of our systems like sales and catering or back-office financials, are standardized.

We look at each property separately to determine the best solutions for the long term. Any time we take over a property or it’s a new investment, or an existing one that needs an upgrade, we’ll always look at the cloud solution model first because it’s the lowest cost solution for the long term.

What other IT initiatives are you working on?
The hot topic is high-speed Internet and whether you charge for it or not. We give Internet free in most places; a couple places we charge for it. Now we’re increasing the pipe to every property so Internet will be a better experience for the guest. Also, we’re looking at creating a gateway approach in which we’ll give it to you free if you want to surf the Internet or maybe do some webmail, but here are your other options if you’re doing more elaborate stuff. We’re finding if we can create this model, the property has some level of success in paying back the solution. High-speed isn’t free. Hot water costs us money and it’s always embedded in the room rate, so I would like to give away some Internet for free and possibly have a model in which people can pay for better-quality bandwidth.