I had the opportunity to meet with several executives from leading management companies during the recent New York University International Hospitality Industry Investment Conference in New York and I heard a similar refrain from all that went something like this: “We’re currently in cash-preservation mode.”
That can be read a few different ways, but suffice it to say that these owner/operators will not be starting any major renovations or bolstering staff at their properties any time soon. But what about their position on providing guests with the latest amenities, particularly one as important as technology?
Management at many of today’s properties—regardless of what segment they represent—is faced with a tough balancing act of offering the guest exceptional value and cutting-edge technology (at least as advanced as what they have at home) and still being able to maintain profitability despite reduced rates. In fact, you’re not even in the technology discussion today if you don’t have flat-screen TVs, wireless Internet access throughout the hotel and a clock radio with an iPod docking station.
Most owner/operators will tell you that technology—while in part a cost of doing business and maintaining guest satisfaction—is about return on investment. And for many that investment has already been made in the name of a more seamless infrastructure and enhanced capabilities. Unfortunately, the return, at least for some properties, may be harder to find in these times.
For example, it’s been speculated for years that the window of opportunity for hotels to charge guests for Internet access is closing, but upscale properties and resorts have continued to garner additional income for the service. But with the threat of many guests potentially trading down, you’d have to think this might really spell the end of that strategy once and for all.
Another technology that has generated revenue for hotels in the past is video on demand (VOD), but with many guests coming armed with their own pre-downloaded content or able to download new content to their laptops while at a hotel, the demand for VOD has decreased significantly. Meanwhile, other forms of technology, like revenue management systems, in particular, figure to play a more significant role as hotels wrestle with pricing rooms properly.
There’s no denying that prioritizing which technologies are necessary and which aren’t is more important than ever as hotels battle for a bigger piece of a shrinking pie. However, cutting the technology spend does not seem to be the way to go. For example, if a property had to choose between cutting marketing dollars or slashing its technology investment, the former may be the way to go.
We’ve all heard the expression you can’t be sort of pregnant, and the same is true with technology. You’re either committed to technology or you’re not. But if you’re more concerned about “cash preservation” you may soon find out there won’t be much to preserve if your guests are not satisfied.