The primary reason hotels hire expensive in-house technology professionals and invest in technology is to have proprietary control over the developed product or service. While it may favor hotels in certain circumstances, hospitality businesses have already tried it and have faced massive failures with in-house development.
“Some hoteliers (brands & management companies) believe that developing tech solutions in-house is cheaper and provides better customization to the hotelier’s concrete needs and control over the ongoing maintenance and performance.
Another school of industry-thought believes that hoteliers should focus on their core competencies: providing the best customer experience and best returns possible to ownership and outsource technology applications, products, and solutions to specialized vendors.
So the question is, in this era of rapid technological advancements and adoption of next-gen technologies such as AI, IoT, automation, robotics, blockchain, etc., should hoteliers keep technology developments in-house or outsource to specialized, well-funded vendors?”
Henri Roelings, Founder & CEO at Hospitality Net
As interest and investment increases in hospitality, hotel managers and owners are constantly asking the all-important question, “should we build in-house or outsource?”
An experienced hotel owner will immediately realize that technology systems are not their specialist expertise to manage. A smart hotelier will readily choose a hospitality technology management company to undertake research, manage technology, and develop solutions for their brand.
In 2015, Marriott Hotels Group won the 2015 CIO 100 Award, which “recognizes organizations around the world that exemplify the highest level of operational and strategic excellence in information technology.”
Even the biggest hotel group in the world partnered with the mobile app development company, Punchkick to redesign their mobile app. Marriott has since then accumulated over $1 billion in revenue from its BonVoy mobile app.
Finding the Right People
The most important factor when building in-house tech solutions and I.T. backbones, it is simply essential to have the best resources on board. Hotel technology management companies are equipped with the right personnel, who have the ideal skills to build, deploy, manage, and support hotel technology systems.
Sourcing and hiring technology resources can also be a massive hurdle with the onboarding process itself capable of consuming half a year. Comparatively, hotel technology management providers already carry engineers, project managers, technology consultants, and cybersecurity specialists to assist hotels proactively.
Once hired, hotels also have to manage their technology teams on an on-going basis. This means a significant rise in the wage bill of the properties. Salaries, benefits, bonuses, holidays, training, etc. are just a few of the factors that hoteliers must manage with in-house tech teams.
A professional hotel technology management company specializes in hiring, managing and assessing the performance of technology personnel. They also remunerate and train these resources so the hotel bears no additional cost of hiring a technology management team.
“Building tech in-house can be cheaper and can provide more customized solutions, but only if you know what you are doing and you invest properly. You need to understand how to build software and, more importantly, how to maintain it. It is never an “invest and rest,” you will always be enhancing and fixing bugs.
That said, I think you should feel comfortable investing here for the right projects. I don’t mean huge things like a PMS, but perhaps a service that automates certain tasks in your PMS via its API, or your own website and mobile app. Extend or enhance things to make your company more efficient.There seems to be a general fear of building things in-house, and a desire to have someone else be responsible for maintaining it, but it isn’t that hard if you treat it the same way you would if you were going to build a hotel. Find the right people, plan it out the right way, and invest in it properly and you can have tech that works exactly how you want it to, instead of having to work around limitations in existing software.”
Lyle Worthington – Technology Executive and Consultant & Past President of HFTP Global
Building Future Proofed Technology Systems
In addition to having specialist professionals, building in-house tech solutions require hotels to carry a sophisticated tech infrastructure that offers business continuity with future-proofed systems.
Technology has its own biosphere and its own speed of innovation. For instance, while hotels look to integrate artificial intelligence, the market for A.I. research & development will grow to a mammoth $190 billion. Intel alone has invested an estimated $117 million in A.I. innovations in 2019.
Hotels usually lack the capability and willingness to invest such significant amounts in R&D for tech solutions that will feature five years to a decade later. Most hotel brands outsource their technology innovation, development, and integration to specialists who do have the willingness and infrastructure to build their desired solutions.
One of the most important aspects of technology to understand is that it will eventually go obsolete in the long run. Just like metal keys were replaced by plastic cards, and then cards with Bluetooth & NFC keys, there are no guaranteed expiry dates for technology solutions.
A sound technology solution requires constant oversight, monitoring, upgrades, compliance checks, and testing before it goes into action. The primary consideration when setting up an in-house tech team to built solutions will always remain the hotel technology infrastructure including the resources, hardware, software, and the ability to upgrade it.
“A large chain may have more resources better suited to development in house. This requires a high level of funding, process maturity, infrastructure, and deep skill sets. In return for the customization and control they get over the environment, they also take on the responsibility to make sure they are incorporating all of the legal, statutory, and regulatory requirements, no small task these days!
Smaller chains won’t have these same resources and will definitely not want to take on the risk and liability to make sure privacy by design, PCI, and GDPR are built-in. Even if they had a small development team, there is a higher risk of having that in house knowledge in the hands of just a few people.
What happens if someone takes a job with a new company, gets a long term illness, etc? Better for the small hotel companies to outsource to professional companies with a proven reputation, and specific skill sets focused on this rapidly evolving next-gen space.”
Bryan Hammer – Vice President IT at Belmond
Conclusion
As technology progresses in the hospitality industry, hotels will eventually begin to realize that they should definitely outsource technology to specialist managers. Larger hotel franchises like the Marriott, Hilton, and IHG are already contracted with dedicated hospitality technology companies that manage their short term & long term tech requirements.
We hope our article gave you a clearer view of the topic. For more interesting reads, opinions, insights, and news remember to bookmark our blog.
Until next time, see you again soon.
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