This article originally appeared in the August 2010 issue of INTERNET TELEPHONY

The hospitality industry has taken a hit in recent months due to the recession and fluctuating gas prices. Nonetheless, it remains a key vertical on which telecom and IT solutions providers are focused, and these companies say hotels can use this time to leverage communications to lower costs, build customer loyalty and drive new revenues.

“An industry previously projected to grow its wages and employment by 17 percent between 2004 and 2014 is now wrestling with low occupancy rates, a credit crunch, and increased layoffs as businesses and consumers cut back on their travel and associated leisure spending,” said Cort Isernhagen, vice president of Industry Insights, an IDC (News - Alert) company, in an April 2009 conversation with Avaya. “In light of the economic reality, the industry is seeking ways to attract and retain guests while operationally managing their capex during the credit crunch.”

Welcome to Hotel Optimization

The top 10 companies in the U.S travel and hospitality industry spent the largest portion of their IT budgets (29 percent) on hardware, according to a recent research report at companiesandmarkets.com. The second large spends by the group were on software and services.

While that group certainly is interesting, Meredith Whalen, group vice president of vertical market business units with Industry Insights, says it’s the small and medium hotels that are really holding up despite the down economy. However, she adds, the typical IT spend of this group is just 1 to 1.5 percent of operating expenses. So it should come as no surprise that improving operating efficiencies is the No. 1 business priority in medium-sized hospitality organizations.

“It is important to remember that optimization does not just mean cost reduction; it also means an increase in efficiency,” she says. “Initiatives that can improve efficiency, even with the same cost base, will become a priority, especially if performance improvement can translate into revenue gains.”

Investments in call centers, cloud-based solutions, IP telephony systems, mobile and wireless infrastructure and unified communications solutions can often result in new efficiencies, as well as other benefits, according to INTERNET TELEPHONY sources.

In fact, Hotel Technology Next Generation, a non-profit trade association for hospitality technology, says “the emergence of cloud computing and reliable networks has led to an opportunity to dramatically alter the cost/performance landscape for the hospitality industry through the sharing of many technology services across multiple hotel companies.”

The organization surveyed the CIOs and other top IT folks from 20 of the largest hotel companies to determine there is great interest in this new computing model.

“We believe that we’re at a watershed moment for this industry,” says Douglas Rice, executive vice president and CEO of HTNG. “This model can offer efficiencies and performance enhancements that will redefine standards of delivery, quality and performance for hospitality technology functionality for decades. Indeed, more than 80 percent of the participating IT executives were willing to share such applications as guest-room device management, concierge, point of sale, housekeeping, facilities management, and applications for several back-office and human resource functions.”

Daryl Page, managing director of global hospitality at Avaya (News - Alert) tells INTERNET TELEPHONY there’s a lot of interest by hotels, especially U.S.-based multi-property ones, in moving to a hosted PBX model. That’s because such solutions as Avaya Aura can sit on top of other PBXs while allowing an organization to move its applications and management to a centralized location off the hotel properties. However, ultimately, he says, everyone would like to go to a cloud-based/utilization model.

Here’s a Map to the Property

In a separate initiative by HTNG, the group in May released specifications for new standard interfaces to enable the connection of hotel guest kiosks to property management systems, as well as for simplifying connectivity of payment systems. These specs are among the many interconnectivity guidelines provided by the HTNG, and they’re all about allowing for easier integration of multiple communications and management systems.

In fact, Avaya in June introduced the Avaya Hospitality Enablement Suite, which is server software that allows hotel PBXs and popular property management systems to interface in a standards-based way. Page says that enables hotels to keep track of and more efficiently respond to guest requests, such as room service, housecleaning and restaurant reservations. The platform also supports and tracks key hotel staff functions, such as the posting of mini-bar charges and room status updates directly from the room. New efficiencies in terms of faster response times and elimination of paper waste can save hotels significantly, says Page, adding the reduction of hard copy materials alone can amount to nearly $100,000 annually for the typical 300-room hotel.

3CX is also now discussing the importance of solutions that allow for ease of integration between hotel PBXs from companies like itself and property management systems. Nick Galea, CEO of 3CX, tells INTERNET TELEPHONY that new interfaces allow his company’s reseller partners to more efficiently deliver to the hospitality industry solutions that combine its Windows-based PBX (News - Alert) with systems from companies like MICROS Fidelio and RoomMaster that help hotels manage check in/check out, guest requests and the like.

However, Galea says hotels can benefit from this solution because it is integrated with property manage and allows them to move away from costly proprietary phone systems to open systems like those offered by 3CX. Saying an open IP-based phone solution like the one from 3CX can deliver around 50 percent savings in upfront costs, as well as additional services savings over time, Galea indicates that pitch is resonating with the hospitality industry, given 3CX and its partners (which include Super Technologies) have done more than 100 hotel installations in the past six months.

In other recent news along these lines, Xorcom (News - Alert) Ltd. has partnered with PBillX Inc., developer of P$X FIAS software, to enable the former company’s Asterisk-based IP PBX solutions to interface with Amadeus Hospitality, Micros PMS and Protel PMS property management systems.

Ruth Bridger, Xorcom’s vice president of market, says the company is always on the lookout for vertical markets that could benefit from its solutions, and that hospitality is among the hottest verticals right now. She adds that the Xorcom solution is an ideal one for this vertical given its scalability and ability to support analog phones.

Izzy Gal, Xorcom’s vice president of innovation, also notes that the company earlier this year added Zigbee wireless functionality to its PBX, saying that could enable it to support additional hospitality applications such as property security and energy management on the same platform.

Enjoy Your Stay

In addition to improvements in centralized communications solutions, room-based devices are also seeing a noticeable upgrade.

For example, if you’re lucky, you may have already stayed in one of the rooms equipped with the Avaya Guest Media device. The SIP-based system features a large color touch-screen interface through which guests can make phone calls, set alarms, get stock quotes, check the weather, make restaurant reservations, peruse wine lists, explore local attractions, or set a tee time. Hoteliers also can use it to deliver property-specific applications such as full-motion streaming video, concierge services and real-time property tours.

But what may be most interesting about this solution to hotel owners is its potential to allow them to increase sales of their own products and services, or the products and services of other entities like local businesses.

"Avaya's hospitality solutions are ideal for hotels seeking to provide a one-of-a-kind guest experience," says Page. "They can drive top-line growth by helping hoteliers increase more traditional revenue sources, such as food and beverage sales and spa treatments, while opening new avenues via split-revenue models, where off-site shopping, recreation and other non-hotel attractions can be promoted via the Avaya Guest Media Hub."

Among the hotels using the product are the Park Hotel Weggis, a five-star hotel on Switzerland's Lake Lucerne, and Maxims Hotel at Resorts World Manila in the Philippines, a new six-star property expected to open in November.

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Key Challenges for Hotels During 2010

Maintaining occupancy levels

The global economic downturn has decreased travel-related spend across almost all categories of the industry. The small and medium-sized hospitality executive will need to identify which segments will be least impacted and swing their focus and resources heavily towards them.

Gaining market share

Although the business climate is difficult, savvy companies will use this as a time to gain market share. Often, the guest profile of the traveler using small boutiques or franchisee hotels is one that is more price sensitive and less brand-loyal than those in other segments. The hospitality executive will need to be weary of larger competitors taking market share and adopt preventative strategies.

The special relationship and customer intimacy that often characterize small and medium-sized properties will be especially important to emphasize (along with competitive pricing).

Changing traveler profileDriven by the cost of air travel, as well as increased costs in some cities for lodging, we see different travel patterns emerging. For example, there is a growing trend with business travelers embarking on numerous short-stay trips to multiple destinations rather than a connected, continuous multi-leg journey. IDC also see segments of leisure travelers increasing despite the economic downturn. The small and medium-sized hotelier will need to vary offerings and amenities to accommodate these ever-changing travel preferences.

Source (News - Alert): Industry Insights, an IDC company