Deciphering ROI from tech investment can be complicated

RLHC recently rolled out a series of new technology initiatives aimed at enhancing the guest experience in its hotels.

Technology can be a tricky thing in the hotel industry. Not only are hotels notorious for being behind the curve when it comes to the latest technology, but hoteliers are also faced with trying to decipher what tech investments will provide the greatest return. Some technology trends are elements that hotels need to survive, while some technology is simply a fad.

“We love technology, and we’d all like to find the best and greatest thing. But sometimes we waste a lot of money doing so,” said Maria D’Alessandro, senior vice president and CFO of Hospitality Ventures Management Group.

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The truth is that no one really knows what technology is best to invest in to maximize return on investment, D’Alessandro said. For example, some tech, such as supporting core processes, is required for operations, but isn't necessarily ROI-based.

She said back-of-house systems such as financial reporting are key to operational success that can lead to great ROI. HVMG invested in technology that pulls all of its operational reporting systems together so that management and ownership can see hotel performance in one place.

“It makes forecasting more relevant because they can use real-time information,” she said. “It also makes investors happy because you can give them visibility. It’s more of a partnership.” The system also saves time for GMs because they can access information at their fingertips and spend less time sitting at the computer doing forecasts. They can focus their attention on the front of the house.

“There’s ROI from our perspective, but we didn’t justify it by saying, ‘Here’s a return of 30 percent,’” she said. “It’s more intangible.”

Guest-Facing Tech

Front-of-house technology is more of a gamble, D’Alessandro said. “There are definite fads here. There are some hotel companies or franchisors that want to be cutting edge and bring tech to guests. Sometimes we have to play along with those, and those can tend to be more of a fad, but some are critical for differentiating from neighbors.”

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Some brand companies see the value of investing in guest-facing technology. For example, RLH Corporation recently rolled out a series of new technology initiatives aimed at enhancing the guest experience in its hotels. The rollouts include an Apple TV in-room experience, an updated Hello Rewards app, and Apple Watch and iPad self-service kiosks.

“Our properties continue to see increases in guest and staff mobile needs, and we expect mobile requirements to continue changing as more and more devices come online,” said John Edwards, chief information officer for RLHC.

“In some cases, such as our enhancements to mobile websites or our loyalty app, the ROI is simple to measure,” he said. “But with investment in mobile infrastructure, it’s more about trying to stay ahead so we can continue to innovate and deliver new solutions easily.”

RLHC also is beginning to experiment with alternative payment solutions, Edwards said.

“There are new payment apps, digital wallets or even currencies being created all over the world, and more guests are starting to experiment with these solutions as payment options,” he said. “The ROI on some of these solutions might not be immediate, but by starting to develop solutions for these technologies we begin learning how to integrate them into our systems and processes.”

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Edwards said hoteliers can leverage the information and tools already available to begin working to find the right solutions and technology in which to invest time and money. He suggested looking at guest feedback and listening to corporate hotel teams who travel as great places to start. Keeping an eye on consumer trends can also help to guide tech decisions.

“Ultimately, it's about creating a technology strategy that matches with your organization and then researching solutions that fit into that strategy,” he said.

D’Alessandro said that many want technology to be the magic bullet that’s implemented and immediately solves all problems—but that’s rarely the case.

“A lot of times, it’s easier to go out and buy tech than to fix a broken process. Take the time and look at the process and what and why you’re doing it,” she said. “If you’re expecting to invest in automation and not addressing the change-management aspect, you will not get an optimal return on that tech.

“You can’t just buy, implement and expect it to be optimized. Invest in a change-management program to make sure you are getting best bang for your buck.”

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