Hotel technology and hotel operations are management disciplines more joined at the hip today than ever before. Hospitality technology enables operations to provide superior guest services more consistently with fewer personnel. The operations management team demands improved performance, functionality and reliability from IT, constantly pushing the envelope of what IT can and should deliver to the business.

As we approach HITEC, it seems time to reflect upon broad trends driving the behavior of operations and technology executives. Key ones include:

• High-Definition Television (HDTV) migration
• Converged Networks
• Consolidation

The consumer electronics world will note that 2007 is the year HDTV technology went mainstream. Many hotel operators will see it as the year that mandates from corporate IT departments — and/or competitors who have already installed HD equipment — blew up capital budgets. In either event, many hotels are investing money in HD services and gear today, displacing capital expenditures from everything spanning new property management systems (PMS) and the proverbial ballroom carpet.

Some key points about the HDTV arms race in hotels:

• The fight is already over in the home: 35 million American homes now have HDTVs, roughly one-third of the total. Nine million of these were purchased during the 2006 holiday season. And if consumers have HD in the home, do you think they will be satisfied with less in your hotel?

• HD is a different class of product to install and support in a hotel. You need more equipment, different furniture and accessories, and you must source free-to-guest and pay-per-view from the same vendor or buy two sets of decryption equipment or run out of bandwidth. And yes, expect to pay more.

• The worst thing the hotelier can do is install HDTVs and not offer HD content. Analog TV signals on an HDTV immensely expose defects and the wider aspect ratio tends to flatten images, especially a problem for sports

• The lack of HD broadcast content is a major challenge for the programming industry

• As with high-speed Internet access (HSIA), when the property across the street gets it, you need to also.

Converged networks represent another broad trend. Many new-build hotels are going up with one wire delivering both voice and data to the room, and some are opening with video and environmental controls on that network as well. This approach puts all communications to the guestroom onto a single IP-based (Internet protocol) network, eliminating much of the old agglomeration of diverse cables going to every room. This reduces cabling costs, especially for conduit, and increases manageability. But the network now requires managing, a challenge associated with realizing the dream of converged networks. Other issues:

• Immature IPTV (Internet protocol television) applications and service providers

• Building codes mandating life safety applications be on a dedicated cable plant

• Corporate data security requirements that guest accessible networks be physically isolated from administrative networks

• Cost of IP telephones for guestrooms

• Lack of IP telephony applications for the guestroom

Consolidation is playing out strongly in both business operations and technology. While Blackstone is acquiring every trophy resort and available brand in sight, the global multiple-brand giants (Marriott, Starwood, Hilton, et al.) get larger and stronger. Speaking of Hilton, the recent acquisition of its international cousins represents another example of consolidation in action.

So what does this consolidation activity have to do with the technology side? For one thing, fewer buyers ultimately means fewer sellers. In fact, we are seeing consolidation in the hotel technology market, with Agilysys adding Visual One to LMS and the other elements of their hospitality technology portfolio; SoftBrands buying the venerable HIS name and product lines; and MICROS Systems buying a number of niche POS providers. Travelport, which already owned the Galileo GDS, snapped up competitor Worldspan, and Sabre Holdings is being acquired by a private-equity consortium. To bring things full circle, the leading provider of HDTV services to hotels, LodgeNet Entertainment, is acquiring its only meaningful competitor, On Command Corp. And this game of musical chairs is only beginning!

Mark G. Haley is a partner at The Prism Partnership, a Boston-based boutique consultancy servicing the global hospitality industry. For more information, call 978-521-3600 or visit http://theprismpartnership.com.