Where should the hospitality industry direct its technology investments? Cloud computing? Artificial intelligence? Retiring legacy technology? What are the priorities? Is enough investment being made?
A recent Amadeus survey on technology investment trends in the hospitality industry revealed that 70% of IT decision makers plan to make a “medium” investment in technology in the next year, while 24% plan to make a “significant” investment. The rapid pace of change, coupled with the many existing technological challenges facing the industry, makes for some interesting discussions at industry events.
At Mews Unfold held in Amsterdam last week, several issues and challenges were discussed, ranging from technical debt to cloud migration, AI to cybersecurity. PhocusWire has collated some of the insights gleaned from the event below.
Generative AI has quickly become a topic of discussion at nearly every travel conference, and rapid developments from companies like OpenAI and Google have created a thirst for knowledge, but where and how to start is often a question.
David Edelman, an academic at the Massachusetts Institute of Technology and US policy maker who worked on innovation issues in the Obama administration, advised the audience to “use this technology for yourself right now and take the plunge.”
“This isn't advanced IT, it's understanding technology that's still in its infancy. When was the best time to start using AI? Yesterday. When was the second best time? Today.”
Edelman further noted that no one is more than 18 months behind on this technology, and urged the audience to get familiar with it as a first step.
“We're all kids when it comes to using this particular technology, and it empowers people who don't have a lot of digital work experience. It's a very natural interaction: First, get that experience, and then ask those around you to do the same. The third is recognizing the data assets that we all have. … There's a ton of data in the industry, and that data is at the heart of what makes these machine learning tools useful.”
Setting Priorities
It's good advice, but does that mean hoteliers should make artificial intelligence a priority? Mews CEO Matt Welle doesn't think so, as there are plenty of other hurdles to overcome first.
“I don't think we're at the stage yet where AI will solve all our existing problems. I think we can just upgrade to the cloud and leverage our existing automation. I can't believe we're still talking about cloud as innovation. Unfortunately, that's still the case in our industry. AI is for the last 10%, but if you're still at 50%, use the tools you already have to get to the other 90%.”
While he acknowledged the use cases for AI, he added that hospitality leaders “shouldn't live today thinking about how to use AI.”
Addressing technical debt in the travel industry is one of its biggest challenges, often likened to open-heart surgery by airline and hotel executives.
About two years ago, Strawberry Hotels (formerly Nordic Choice Hotels) embarked on a technology transformation. Up until that point, the company had always built its technology in-house, says Eirik Bogsnes, executive vice president of hotel services.
“We started with legacy software but were very ambitious when it came to technology. We were early adopters of self check-in and mobile key, but our old legacy stack was holding us back.”
Bogsness said the move was part of the company's efforts to be “relevant to more people, more often,” and that Strawberry has been changing every part of its technology stack over the past two years.
“It was tough at times, but we're now seeing the benefits. We've gained market share, our prices have improved, our statistics are showing it, our restaurant revenues have changed, and we use artificial intelligence for accounting. Nobody wants to do accounting anymore. With the new system, it's much easier to connect and easier to train staff.”
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It's rare for a hotel group to undertake such a major transformation: Marriott International recently decided to replace its property management, reservations and loyalty platform, while Hyatt partnered with Sabre for its new reservations system.
But Welle believes that technical debt “isn't being addressed properly for some reason.”
“What we often see with big brands is that the people making the decisions are in their jobs for a short time and may not make the most innovative bets, because it's hard to put yourself out there to do something really innovative because you want to keep your job. At a company like Strawberry, the top team is very stable, they know their tech stack well, and they made a serious bet on the future, and now it's starting to pay off. But those conversations started five years ago and the full transition has taken a very long time.”
He added that while hoteliers' perception of change may no longer be reality, it's still hard work.
“When I worked at Hilton, the migration process involved locking myself in a conference room for days importing reservations and fixing them one by one,” Wells says. “The vision most hotels have for this is because we've all been there at one time.”
Head in the clouds?
As for how many in the industry are considering open-heart surgery, Well said big projects by traditional providers to move to the cloud are causing hotels to consider what else is out there in the market.
That said, cloud technology is seen as a solution to many of travel technology's problems, as it can be built in a more secure, scalable and cost-effective way. But the industry is being asked to do more with cloud technology than what it currently does with existing technology.
Pepa Starifvoyt, chief product and technology officer at Mews, questioned why the industry is investing, on average, just 3% of revenues in systems and solutions, despite technology playing an increasingly important role in everyday life.
“We continue to be amazed. Everyone is talking about AI now, but two years ago we weren't talking about it. And we feel like not only are we seeing more technology, but the speed is also increasing.”
He gave the example that it took ChatGPT two months to reach 100 million users, whereas it took Facebook four and a half years.
“Most people think of the biggest technological transformation as going from on-premise to the cloud. This happened 10 years ago across the industry, but hospitality still talks about it. We need to go beyond the move to the cloud and rethink technology as a key business driver and the solution to our biggest problems.”
He said the advancements in mobile phone cameras and the photos they produce are another example of how we view technology in the industry and how we should view it.
“This is an example of how the way we look at technology has changed over the years. Before, people were obsessed with tech specs and megapixel counts. But that has changed. We look at results, for better photos. We ask what can we do? This is something that is not seen across the industry. Instead of asking for better results, we ask the cloud for the same. I encourage you to ask for more, more.”
A recent Amadeus survey of hospitality investment trends revealed that cloud is the industry's top investment priority over the next 12 months, behind AI, digital payments and data analytics. Cybersecurity was not mentioned in the survey, despite the prevalence of attacks across the travel industry.
“It's a fascinating industry,” says Fiona McDonnell, vice president of global partner services at Booking.com, “and of course, where there's money, there's cybercrime, so we expect to see it continue to grow.”
The company employs about 500 data scientists to “predict, prevent and remediate fraud when it occurs,” but McDonnell said he wants to see a more collaborative approach to trust and security.Trust and security are the two things that will really change the industry, McDonnell said.
“AI is definitely going to disrupt things, but I think it's how we collectively approach trust and security. Trust and security software — I saw an alarming stat recently that the size of that industry itself is going to grow from about $7 billion to over $15 billion.”
She explained that growth in the cybersecurity industry is not just about fighting cybercrime, but also the investments needed in the processes, systems and technology backbone.
*The reporter's participation in the event was made possible with the cooperation of Mews.
