Oracle Hospitality provides applications, services and hardware for point-of-sale, property management, reservations, distribution, sales and catering, kitchen management, mobility and loyalty systems that are used in restaurants, bars, hotels, casinos, stadiums, theme parks, universities, hospitals, and cruise lines. Dr Peter Agel, global segment leader for hotels, speaks to Hotel Management Middle East about how cloud solutions are changing the hospitality industry.
What changes to the industry have been the most significant?
Dr Peter Agel: The hotel industry is undergoing disruptive transformation that is forcing chains and independent operators to become agile and responsive to customer expectations. This is driven by the modern guest who can control and personalise their experience before, during and after their stay by simply pushing a button. In a sense, the customer has seized control of the hotelier's business.
These savvy guests are mobile and expect to seamlessly use their devices to make reservations, check in, interact with staff, tap into entertainment options, check out and provide instant feedback. They are also informed through social media, empowered by the growth of OTAs and access meta-search engines that make it easy to compare prices across brands. Adding to a highly competitive hotel is the growth of non-traditional accommodators such as Airbnb.
What does this mean for hotels?
While the marketplace for travel transforms, hotels face intense pressure to control costs, standardise operational systems, maintain IT infrastructures, enhance technology offerings and equip staff to respond quickly to service requests. They need to account for the necessity to secure customer information and financial data from hackers. These challenges are magnified within hotel groups that grow through mergers and acquisitions.
Despite this, when managing bookings, the solution remains simple: give discerning travellers efficient and personal service, whether the interaction is over the phone, via email, on an internal website, via a travel agency or through an internet partner. Many hoteliers face slimmer margins as they rely increasingly on bookings through third-party intermediates such as OTAs , meta-search engines, and GDSs. Some hotels have lost control of their distribution channels entirely.
Can you tell us more about how hotels have lost control of these channels?
When reservations go through intermediaries such as OTAs and GDSs, hotels benefit from these portals' market reach and global marketing activities, but they have limited control over the shopping experience. This method of working with internet partners dominates the industry. According to TravelClick, North American hotels get nearly 20% of room nights via GDSs and 15% via OTAs. While the GDS share has been high for years – and did not decrease as many experts predicted – the OTA share continues to rise. Priceline and other portals are also expanding towards powering booking engines on brand.com.
How do hotels regain control?
In response to these pressures, hotels of all sizes and complexities are turning to cloud-based solutions that remove the need for hotels to set up and maintain IT infrastructure at each property, simplifying the IT environment and reducing costs. Cloud-based operational platforms go beyond property management. They include powerful capabilities for point-of-sale operations and distribution.
How can hotels know what customers want and the prices they will pay, yet still offload inventory to partners?
Cloud solutions help hotels manage distribution channels and make insightful decisions about pricing, customer engagement and inventory management.
Cloud-based distribution systems ensure connectivity to multiple points of sale. They are hosted and managed by a third-party provider, which relieves the hotel of managing the infrastructure. Hotels can select which partners they want to do business with and let the cloud provider make the connections.
These services effectively manage hotels' partner relationships. Hotels can use them to leverage search tools to drive customers to their website and leverage their partners to drive additional bookings at their properties. These services track customer interactions on hotel websites, personalise booking experiences and offer loyalty rewards to customers.
Achieving this level of customer intimacy only happens if hotels effectively manage the distribution process. If they still operate their own central-reservation system or work with allotments, they probably depend on a compilation of services to facilitate direct connections with clients. This involves manually informing OTAs of inventory statuses.
After a booking is completed, they have to manually update their hotel system. Or they might be using a channel-management service provider that acts as a compiling-inventory service. In either case, there is an exchange of inventory between two databases that needs to be continually synchronised.
It is not a real-time exchange, and the database connections have to be updated constantly to reflect available inventory. What is being offered and sold comes off of a 'retail shelf' and is far away from the reality of real-time rates and room availability.
Why is the cloud such a powerful solution?
Cloud-based distribution systems take the lag out of these network connections. They simplify manual processes, transform operations and empower staff to be more responsive to clients. Staying in touch with inventory and managing the activities of online partners increases profitability since hotels can choose how much inventory to sell directly and how much to shift to partners.
In addition, on-premises-hotel-operations systems can be replaced with a cloud service that is controlled centrally. There isn't a need to integrate a booking engine with a property system; simply connect it to a multi-tenant cloud service. Cloud-based systems are easier to use and less expensive because hardware and software infrastructure needn't be bought and managed. This is a state-of-the art distribution system with direct links to global travel agency partners, without up-front costs, rapid turn-up and a predictable monthly fee. The added benefit is being closer to a real-time enterprise, with visibility into current inventory at all times for all the channels and partners.
A cloud service can consolidate bookings and broker connections with GDSs such as Amadeus, Sabre, Galileo and Worldspan. Room rates and restrictions across all connected internet distribution sites can be managed. Hotels are able to connect to OTAs, yet still control how much they are selling through each channel. For example, during peak periods they can retain more inventory to boost margins. During lean periods they can be more aggressive with pricing and offer inventory to other channels.
What is your advice to hoteliers not yet connected to a cloud-based system?
Managing connectivity with global partners and distribution systems is an ongoing challenge. Working with a cloud provider not only gives real-time updates on inventory but also instant access to new industry aggregators and new industry channels as they become available.
Cloud services offer the opportunity to reach more customers with targeted marketing. Hotels can improve brand visibility and grow revenue while simplifying technology infrastructure.
Look to the cloud. Take the complexity out of hotel systems and meet the competition head-on with a modern, nimble and extensive set of information systems that will improve the guest experience, boost margins and increase customer loyalty.
