Ms. Rheams

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The Impact of the Internet on Hotel Operations

By Connie Rheams, Global Business Development, Altiuspar

The Internet has caused massive change in the hotel industry-new technologies, new competitors and newly-empowered customers have fundamentally altered the face of our business. But massive change can also bring opportunity.

Much has been written about how the Internet-and the rise of online travel sites-has been a boon to the consumer, but what about the impact to the hotelier?

It really boils down to two things: complexity and control.

Complexity

There is no question that the Internet has brought about incredible changes in the way we live our lives. Today we can buy a car, pay bills, listen to music-even find a spouse!-all using the Internet. This newfound power has dramatically changed the way we interact, both professionally and personally. And it's had a tremendous impact on the hotel industry.

Fifteen years ago it would have been unthinkable for a hotelier to ask the question "who is my customer?" or to consider that there was any question at all as to who "owns" that customer. But that is entirely different today. The rise of online travel sites, the sheer availability of information and the ubiquity of technology have given customers options they never had before, and, with those options, a whole new world of pressures for the hotelier. There are new players, new tools, new issues and, most importantly, new risks and opportunities.

Control

Everyone talks about the incredible impact of the Internet in making information accessible to consumers. How empowering to go to a Web site, shop the price of cars, check out the reviews and set off for the showroom, with up-to-the-minute information in hand. But what about the impact to the car dealer who now must contend with a customer who knows exactly where his profit point lies? You could say that the Internet has become a zero-sum game for many industries that have made the move online: for one party to gain control, another has to lose it.

But is that really true? It is if you assume that the only impact of the Internet is increased pricing pressure for the seller, and more information for the consumer. But that does not have to be the case. Technology can also provide unparalleled visibility into your business, which can be used to the hotelier's advantage.

As the hotelier, you can control the information you publish and distribute to most booking channels (except for sites such as TripAdvisor). And you have a real opportunity to create great content for those booking channels.

Now let's take a look at some of the implications of increased business visibility for the hotelier.

Consider the fact that in our industry it is common practice for hoteliers to provide a pre-set number of rooms to online booking agents twice yearly. As the holiday season approaches, the rooms become filled and the agent has the only rooms left-and can start charging as much as it wants for them. The impact to the hotel? No rooms left to offer-and the online agency, not the hotelier, reaps the benefit).

Now consider what it would mean to have real-time access to inventory and pricing data-across all of your distribution channels. You would know with minute precision where you stand with room rates and availability and be able to make adjustments according to supply and demand. Armed with that information, you could make a much different deal with the online travel company. You wouldn't be locked into a set arrangement or allocation and could regain control over your asset at the moment it becomes most valuable.

And there's the question of basic productivity and the ability to streamline activities, like manual input, that today take multiple steps. Or consider what happens when a customer cancels his or her stay. There can be a ripple effect across not only inventory, but catering, spa services and available tee times.

There are some really interesting ways in which technology can be used creatively to enrich the experience of the guest and the bottom line of the hotelier. One recent example is an RFID wristband that is being used by a The Great Wolf Lodge in the Poconos resort in Pennsylvania. The wristband, which was developed by a company called Precision Dynamics Corporation, takes the place of the guest's money and keys so that everything the guest needs-from entering his room to paying for goods and services--is digitally stored in the wristband. It's even waterproof, so guests can wear it while swimming.

Now imagine what happens if that kind of information were aggregated along with other inventory, sales and pricing data to provide a richer picture of guest preferences and patterns of behavior. You could make a whole range of business decisions about everything from what brand of bottled water to stock by the pool to how to redeploy employees during busy times at the gym to offering guests a recently vacant appointment at the spa-and make many of those decisions more proactively than was possible before. You could see trends as they are happening, as opposed to in retrospect.

With the right information shared across all distribution channels you have limitless ways to know your customers better, coordinate their requests, anticipate their needs, develop appealing promotions and improve service.

Ultimately, any technology solution must be tied to, and implemented to support, the hotel's business strategy. That is the only way to achieve truly consistent benefits once the "wow" factor wears off. It's also critical to look at the impact, to people and processes, of any major technology deployment. But, bottom line, the only way to address the challenges posed by technology is to use technology to your advantage.

Our industry has been more cautious than most when it comes to technology adoption. True, up until now there has been a dearth of robust and reliable options that speak to our business. And it's been a difficult time to invest in large capital projects that require extensive-and expensive-integration with existing systems.

But the Internet has also had an additional consequence-the availability of technology tools that are delivered as a service via the Internet. These solutions do not require a large capital expense-they are delivered on demand, allow you to pay as you go on a subscription basis and don't require a large and risky capital outlay. So the risk of implementing them is much smaller, the cost of entry is much lower, and, as a result, the potential return on investment (ROI) is much higher.

Imagine what ROI could look like if, instead of just enduring the impact of the Internet, you turned it to your advantage. With the right technology solution-one that provides you with more business visibility, connects disparate operations and channels and uses the Internet as a delivery tool-you can manage the complexity of your business, and regain that control.

The Internet doesn't have to be a threat. It can be your friend.

Connie Rheams heads strategic corporate initiatives at AltiusPAR, including partner relations, global business development and marketing. Ms. Rheams was VP of the Travel Distribution Hospitality and Leisure Group at Cendant Corporation. She led business development, management of sales initiatives, and implementation of programs. Prior to Cendant, she was president of TRUST Inc. She spent 14 years at AMR Corporation, where she served on the Latin American Task Force at American Airlines, led the hospitality division at TeleService Resources, and was head of product marketing for SABRE. Ms. Rheams can be contacted at 940-497-5300 or connie.l.rheams@altiuspar.com Extended Bio...

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