Where should the hospitality industry be putting its technology investment? Cloud computing? Artificial intelligence? Sunsetting legacy technology? What are the priorities and is it spending enough?
Recent research from Amadeus into hospitality technology investment trends revealed that 70% of IT decision makers are planning “moderate” investment in technology next year while 24% are planning “heavy” investment. The rapid pace of change combined with the many existing technical challenges faced by the industry makes for interesting discussion at industry events.
Some of the issues and challenges from technical debt to cloud migration and AI to cybersecurity were debated at Mews Unfold in Amsterdam last week. PhocusWire gathered some of the insights from the event below.
Generative AI has fast become part of discussions at pretty much every travel conference. Rapid developments from companies including OpenAIand Google have driven a greater thirst for knowledge, but how and where to start is often the question.
David Edelman, a Massachusetts Institute of Technology academic and U.S. policymaker who worked with the Obama administration on technology and innovation issues, advised the audience to “use this technology for yourself right now and challenge it.”
“This is not high level IT, this is understanding the technology in its absolute infancy. When was the best time to start using AI? Yesterday. When was the second best time? Today."
Edelman went on to say that no one is more than 18 months behind with the technology and urged the audience to get familiar with it as a first step.
"We’re all kids in using this particular technology, and it actually empowers people who don't have a lot of digital incumbency. They’re very natural interactions. The first thing is just getting that experience, the second is requiring people around you to do the same. The third is really to recognize the data assets that everyone is sitting on. … The industry has a lot of data, and it’s that data that is the core to making these machine learning tools useful.”
Setting priorities
Sound advice but does that mean hoteliers should be prioritizing artificial intelligence? Mews CEO Matt Welle doesn’t believe so because there are many other challenges to overcome first.
“I don't think we're at a stage where AI is going to solve all the problems we already have. I think if they just upgraded to the cloud — I can’t believe we’re still talking about the cloud being innovation; unfortunately for our industry, it still is — and embrace the automation that exists. AI is for that last 10%, but if we’re still at 50%, let’s just get to the 90% through the tools that already exist."
While he acknowledged use cases for it, he added that hospitality leaders should not "live their life thinking how they should be using AI today.”
Addressing the travel industry’s technical debt is one of the greatest challenges and is often described by executives across aviation and hospitality as open-heart surgery.
About two years ago, Strawberry Hotels (formerly Nordic Choice Hotels) embarked on a technology transformation. Until that point, Eirik Bogsnes, executive vice president of hotel services, said the company had always built its technology in-house.
“We came from legacy software, but we were very ambitious also with tech. We were early to do self-check-in and mobile keys, but that old legacy stack was hindering us."
The move was part of the company's bid to be "more relevant to more people more often," said Bogsnes, and Strawberry has spent the past two years changing everything in its technology stack.
"It has been a rough ride at times, but now we’re reaping the benefits. We’re taking market share, we get better prices, we can see it in our statistics, we can yield our restaurants differently, we’re using artificial intelligence for accounting, nobody likes to do accounting. Working with new systems is so much easier to connect and easier to train staff.”
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It’s rare for hotel groups to take on such a huge transformation. Marriott International took the decision recently to replace its property management, reservation and loyalty platforms. Meanwhile, Hyatt has partnered with Sabre for a new reservations system.
But Welle believes technical debt is being "addressed somehow poorly."
"What you see with the big brands is that the people that make the decisions are in those jobs for a short period of time, and they might not make the most innovative bets, because you want to keep your job and if put yourself out there to do something really, really innovative, it’s hard. In a company like Strawberry, the top team has been so stable and they know the tech stack and they made a real bet on the future. It's now starting to pay off. But that conversation started five years ago, and to get complete migration took such a long time.”
He added that the perception of transformation that hoteliers have may no longer be the reality, although it is still hard work.
“In my days in Hilton with migration it was lock yourself up in a meeting room for several days to import reservations and correct them one-by-one," Welle said. "That’s the vision that most hotels have of this because we’ve all gone through that at some point.”
Head in the cloud?
When it comes to how much of the industry is considering open-heart surgery, Welle said the large-scale projects of legacy providers moving to the cloud is driving hotels to take a look at what else is on the market.
That said, cloud technologies are being viewed as the answer to a lot of travel technology problems in terms of the ability to build on them in a more secure, scalable and cost-effective way. But the industry is being urged to do even more with cloud technology than it does today with the existing technologies.
Mews chief product and technology officer Pepa Starýchfojtů questioned why the industry is investing an average of only 3% of revenue on systems and solutions when technology is playing an increasing role in everyday life
“It continues to surprise us. Everyone talks about AI today, we didn’t talk about it two years ago. What I also see is that there is not just more tech, but it’s also coming faster.”
He referenced the two months it took ChatGPT to reach 100 million users as an example versus the four and a half years it took Facebook.
“Most people think of the biggest technology transformation as being from on-premises to cloud. That happened 10 years ago in the wider industry, but we still speak about that in hospitality. We need to look beyond that, beyond transforming to cloud and looking at technology as a major business driver, as a solution to the biggest problems.”
The advances in phone cameras and the pictures they produce are another example, he said, of how we look at technology in the industry versus how we should be looking at it.
“It’s an example of how the view of tech has shifted in the past few years. It used to be that people obsessed about the technical spec and how many megapixels. That has shifted. We look at the outcome, for better pictures. We ask what it can do. It’s not something I see in the wider industry. Instead of asking for better outcomes, we ask for the same things from cloud. I encourage you to ask for more, much more.”
The recent research from Amadeus on hospitality investment trends revealed that cloud is an investment priority for the industry in the next 12 months after AI, digital payments and data analytics. What the study didn’t flag was cybersecurity, despite how prevalent attacks are across the travel industry.
“It’s an attractive industry," said Fiona McDonnell, vice president of global partner services for Booking.com, "and of course cybercrime comes where there’s money, we expect to see more of it.”
While the company employs some 500 data scientists to “predict, prevent and remedy any fraud when we do get there,” she said, she’d like to see a more collaborative approach to trust and security. McDonnell shared that when it comes to what is really going to change the industry, her money is on trust and security.
"AI is undoubtedly going to disrupt things, but I think it's the way we are going to collectively approach trust and safety. Trust and safety software - I saw an alarming stat recently that it is going to go from something around $7 billion to more than $15 billion in terms of that industry itself."
She explained that the growth in the cybersecurity industry would not only be about fighting cybercrime but the investment required into the processes, systems and technology backbone.
*The reporter's attendance at the event was supported by Mews.