Hotel IT Departments Fight for Relevance

By Mike Kistner President, Chief Executive Officer & Chairman of the Board, Pegasus Solutions | October 24, 2010

I recently had to give a prediction for the future of IT in the next five years to Computerworld magazine for their list of premier leaders in IT. They asked me to offer my boldest, most out-on-a-limb prediction. Mine was that the traditional IT department operating in a specific industry will cease to exist as IT will continue to migrate towards the community model. If you work for a major hotel company in an IT position, the nature of your job will change, period.

My evidence? The Industrial Revolution. For the hospitality industry to accommodate today's demands, often using yesterday's systems, it comes down to division of labor. Also known as economic specialization, division of labor is defined as assigning specific, circumscribed tasks and roles to those best suited, or skilled, to fulfill them, which ultimately leads to the rise of total output and trade, i.e. capitalism.

Demand increases from a transaction volume and complexity standpoint

The recent positive business trends we've been reporting in The Pegasus View continue to prevail. Booking volumes for the combined channels of global distribution systems (GDS) and alternative distribution systems (ADS) have, at times, reflected double-digit growth over the prior year, with future bookings through September indicating similar good news.

In both channels, which reflect business and leisure travel respectively, it is undoubtedly consumer demand that is the driver. Decreasing supply growth is certainly a key ingredient, but RevPAR gains are clearly being fueled by higher occupancy. Increasing demand, from a transaction volume and complexity standpoint, necessitates a new look at hotel reservations technology.

In the world of hospitality IT, property management systems (PMS), back office systems, central reservation systems (CRS) and many other core periphery systems never accounted for the volume or the business complexity being placed on them today – we're processing as many as five billion transactions a month with look-to-books increasing more than 50% above what they were a year ago. As the industry comes out of the economic trough, advanced hardware, applications, and delivery models will enable suppliers and distributors to optimize their revenues and reach new markets.

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