Cost and implementation woes hamper hotel tech adoption

The pandemic has driven the hotel industry to look at its technology solutions and see where efficiencies can be made.

It’s less about a complete overhaul of central reservation systems (CRS) or property management systems (PMS), according to the global hospitality distribution report from H2c .

The study reveals that only two in 10 hotels chains are considering replacing their CRS over the next three years.

Currently, about 90% of large chains use the CRS as their leading system, i.e., to distribute availability, rates and inventory, while approximately 60% of small chains use a PMS, with an integrated channel manager for distribution.

It is likely that the cost of implementing new technology is the main barrier to hotels changing out their main systems.

The H2c report looks at decision factors when it comes to acquiring a new system with "overall cost and affordable integration options" rising in the rankings as key criteria.

When the study was carried out in 2017, only 24% flagged cost and integration as key criteria. Now it's risen to 69%.

Despite fears around cost, several large hotel companies have taken the plunge in terms of investing in a new system with Marriott announcing its partnership with Amadeus just over a year ago.

Meanwhile, Accor confirmed a year ago it would be using D-Edge for its CRS.

The news came after Accor had initially announced a deal for Sabre to provide it with a “full-service property management capability” in January 2020.

Interesting to note that integrated payment solutions has become a key decision factor with 67% of large hotel chains saying a single provider for e-commerce and hotel on-site solutions is extremely or very important while 59% of hotel chains overall say the same.

Currently, 67% of large hotel chains use different payment providers compared with 46% of all hotel chains, according to the report.

The H2c distribution study also looks at what other technologies hotel chains employ, with 100% using both an internet booking engine and a channel manager, 76% using a CRS, 58% using a revenue management system, 54% using customer relationship management technology and 45% using a loyalty program.

H2c believes hospitality technology companies should be focusing on making booking engines more sophisticated, followed by improved guest profile management and better integration.

Emerging technologies such as attribute-based selling have not yet entered the mainstream, according to the report.

IHG is one of a few players that has been gradually rolling out attribute pricing to its portfolio of 6,000 properties as part of its partnership with Amadeus.

Meanwhile, Sabre has been developing its SynXis Retail Studio , enabling hotels to sell a wider range of products and services offered on property.

Innovation leaders

Researchers asked hotel respondents to list their top innovation leaders in distribution, with Booking.com, SiteMinder, Google and Expedia emerging in the top slots. However, the majority of respondents, six in 10, were unable or unwilling to rank companies.

Participants in the study were also asked to highlight the innovation areas with the greatest growth potential from a provided list with blockchain, 5G and augmented/virtual reality solutions emerging in the top slots.

Sustainability was highlighted by 35% of hotel chains overall, rising to 50% among large chains while artificial intelligence was highlighted by 35%.

H2c says that it expects ongoing challenges of high operational costs combined with staff shortages will mean hotels will need to continue to drive efficiency and that those that invest in technology upgrades will be “well-rewarded.”

During the recent Fitur event in Madrid, hotel distribution experts discussed potential changes in the landscape in 2023.

Pablo Delgado, CEO of Mirai , shares that while he doesn’t anticipate significant changes, he believes hotels need to be prepared for rising distribution costs.

The study also looks at online bookings to reveal that six in 10 bookings are online and that bookings via hotels’ own websites doubled from 10% in 2017 to 20% in 2022.

Third-party bookings such as online travel agencies and bed banks increased by five percentage points to 35% in the same period.