Technology and the Future of the Hotel Industry - Research Paper Example

Technology and Its Impact on Hotel Operations Report Name of Institution: TABLE OF CONTENTS Name Page Number Cover Page……………………………………………………………………………………….1 Table of Contents…………………………………………………………………………………2 Introduction………………………………………………………………………………………3 Body/Literature…………………………………………………………………………………..4 Conclusion………………………………………………………………………………………13 Recommendation……………………………………………………………………………….14 References………………………………………………………………………………………15 Introduction Hotel operations are affected by technology in a myriad of ways, which can only mean that such operations do not work properly without the help of technology (Walker and Miller, 2012). Information technology infrastructure includes: its hardware: software purchasing and maintenance, information technology staffing and the implementation of new technology applications. With the advent of information technology, hotels have made various changes in front office, reservations, restaurants, accounting, housekeeping, marketing, security and wireless networks in the various guest rooms and the public areas within an a hotel (Kasavana and Cahill, 2003). In the last decade, Information Technology did change the lodging industrys plans, controls, and manages operations. The growing demands in the hotel industry are very many the demands are largely brought about by globalization, increased security threats and needed for controls in business (Solomon, 2008). The hotel industry is starting to use kiosks and self-service technologies to change the hotel industry (Solomon, 2008). Through globalization, technology has had great impacts on the hospitality industry several ways: organizational culture, management styles and organizational structure. These three ways shape up how an organization is set up from its decision-making offices to the operations department (Solomon, 2008). This paper, therefore, seeks to draw important regions upon which technology influences the hotel industry. Proper insight will focus mainly on operations, and customer experiences and relations in the hotel environment. It is a report and not a research paper as it may seem to appear. LITERATURE Impact or effect on Security of Hotel industry Hotel industry is affected by various issues regarding security from a global to a local perspective respectively. The ability to assure a tourist that, they are safe in a given destination can mean a lot to the proprietors of a given hotel business line (Solomon, 2008). Security threats have made the industry suffer several setbacks that can only translate into losses worth billions of dollars (Kasavana and Cahill, 2003). Travel bans are offered to countries with such security issues, and they incur up to millions of dollars in losses, which can only mean that even the internal operations of such a countrys hotel is affected. Back at home, when the hotel is prone to high instances of theft, and robbery consumers of their products feel more paranoid to visit such establishment (Kasavana and Cahill, 2003). It can only mean that such organizations are closed, and jobs and investments get lost. So how does technology impact or effect on security of the hotel Industry? Managers have developed a cashless payment system through the use of the RFID system. They do it so that, they can offer security and variety in payment options. In line with security, they say that RFID uses antennas and computer chips, and it allows them to communicate wirelessly with the receiver. It can only mean that security can upgrade itself through such systems both in the operation rooms and the business and its competitors. In this industry, RFID systems become integrated with POS systems to process credit cards and debit account transactions. Further security threats have pushed multinational hotels to adopt biometric security systems. The biometrics take the form of iris scans, fingerprints or hand geometric analysis systems (Walker and Miller, 2012). It, therefore, means that, security as an essential ammeter of success in the hotel industry has improved by technology and improvements in acceptance of technology in the hotel industry. Effect on Revenue With the advent of new technologies, many changes occur in the books of accounts of many hoteliers. Improved revenues are brought forth with the application of better customer experiences (Solomon, 2008). The use of the world-wide-web by most hotel chains has an effect on getting the majority of bookings. They say that, the emerging cost reductions are predictable to be large and substantial, with the collective gross savings for the period between the years 2000 to 2003 estimated to reach approximately 1.3 billion dollars in terms of profits profits in the year 2000 (Kasavana and Cahill, 2003).These improvements make the industry improve its competitive advantage over other chains in the same business environment. The introduction of e-distribution and e-procurement makes organization to improve on their customer bookings and with these in mind the graph of growth is only exponential in nature (Solomon, 2008). This is because instances of unsold lodges are eliminated permanently, simply because consumers save on the cost of traveling to make their bookings. Rather they do so from the comfort of their living rooms and their PCs (Walker and Miller, 2012). Revenue improvements are visible from other technologies like the yield management system. According to Wang Jin-Zhao and Wang Jing, revenue collection can improve greatly through the application of the yield management system (Kasavana and Cahill, 2003). This computerized payment system will allow managers to match the demand, with available room rates. High demand rates mean that there is a higher rate because of lessened discounts and low demand result in higher discounts (Solomon, 2008). Yield management is a demand forecasting system designed solely to maximize revenue or profits. It achieves this in two major ways; first it normally increases the rates during periods of when the number of guests are many (Puri and Chand, 2009). Also, it decreases room rates during times of lower turnover of guest-room or lower demand. Yield management is critical to maximizing hospitalitys profitability. The concept is applied to every revenue department and every department in the hospitality portfolio. The yield management systems job is to maximize revenue earned per available room (Kasavana and Cahill, 2003). This is through selling rooms to the appropriate customers, and at the correct pricing, and at the most appropriate time. By these, we are sure to state that the introduction of technology in the hotel industry has improved matters revenue (Kasavana and Cahill, 2003). It goes without mentioning that this industry has gained so much so that they can be able to improve on revenue collection and forecast on the future prospects. Effect on Distribution The channel of distribution is defined as one which gives sufficient information, at the right time, place, and the right people. It also allows a purchasing decision to be made. It also provides a mechanism where consumers can purchase the required product (Lockyer, 2007). An effective distribution is important in airline, cruise sectors and the hotel since such products do not span for a long time. Electronic distribution systems have in them many advantages as compared to traditional systems that used paper, pen, and means of transport (Kasavana and Cahill, 2003). The traditional systems were labor intensive and could mean many expenses were incurred by the distributor before the final product reached its destination. On the hand, e-distribution has few limitations. It has a wide geographical reach, a low marginal cost and it can incorporate dynamic data, like room rates (Walker and Miller, 2012). Moreover, the traditional channels have to be in use in pairs, and this includes the use of media for advertising (e.g. brochures or guidebooks) and interactive media (a telesales agent or travel agent) to complete the transaction- electronic systems can potentially fulfill both roles (Solomon, 2008).Thereby, allowing travelers to make reservations in a fraction of a second (time), cost and inconvenience associated with traditional systems (Walker and Miller, 2012). These benefits have changed the manner in which goods and services are sold and distributed in any chain of business. That is to say that, traditional forms of distribution made business transactions to cost more than the use of technology. Electronic distribution of the hospitality products is centered on the travel agent called the Global Distribution Systems (Lockyer, 2007). GDS help travel agents to see real time availability or pricing information and to make instant bookings that are very valuable benefits to traveling agents. Effect on Procurement Using technology in the procurement process of hotels can help reduce the cost incurred in purchasing a product (Puri and Chand, 2009). By digitizing the process of tendering in the hotel industry, great efficiency can be arrived at when ordering, sourcing, tracking, specifying, delivering and paying for purchases (Nyheim and McFadden, 2005). E-procurement involves the process of electronically managing the whole purchasing process from the identification of the product to its payment. E-procurement associate itself with many advantages as compared to traditional systems. The benefits come in the form of labor and administrative cost associated with purchasing, being reduced considerably (Nyheim and McFadden, 2005). The use of technology in procurement enables the process of vendor comparison to be easier (Kasavana and Cahill, 2003). It also results into tightened adherence to approved products and vendors and at the same time ensuring standards are of high quality. Good systems also help the hoteliers to identify appropriate suppliers and thereafter facilitate the accumulation of small purchases from multiple units (Puri and Chand, 2009). The process enables smaller hotels to benefit from advantages that come with economies of scale, which could previously lead to the monopolization of bigger and well established hotels (Nyheim and McFadden, 2005). The ubiquitous communication media created by e-procurement enables buyers and sellers to meet into what is known as ‘marketplace. It is the most widely used platform of e-procurement, and it enhances the business communication brought forth the use of technology (Kasavana and Cahill, 2003). Several models do exist to explain the marketplace and how it helps in reducing costs of the transaction to chain of hotels. For instance, Vertical marketplaces normally support transactions which are specific to a given industry and this is through aggregate buying and selling to reduce transaction costs (Puri and Chand, 2009). Secondly, is the horizontal marketplace which enables sellers and buyers to advertise, share content and also bid on products, and participating on auctions and manage their supply chains (Lockyer, 2007). VerticleNets e-hospitality.com is an electronic platform that provides an access to beverage and food suppliers. The gain of this platform is that buyers can access more sellers and thereby have a good bargaining power to the services on the market. The third model is that of the company marketplace-. This is a system which is made and developed within a franchise. It is further used to retain and attract members (Molz, 2012). In using such a technology, the larger chains can leverage their experiences, knowledge and purchasing ability to re-engineer their relationship with suppliers. This is for purposes of generating a considerable percentage of benefits to their members. In terms of online procurement (e-procurement), more than $20 billion domestically and $10 billion internationally are the figures that were forecasted by travel and tourism intelligence in 2001. Effect on Mobility Mobile is the new revolutionary face of the hospitality industry. From the onset, mobile technologies have made serious changes to this industry. They have changed the way people interact in the industry and reduced the operational cost of traditional emails and increased convenience at the very edge (Kasavana and Cahill, 2003). The hospitality industry is one of the areas that the mobile phone industry has had a great impact. According to him, there has been an expectation that because of the nature of hotels, mobile technological innovations have very little impact. However, contrary to that myth, these organizations are leading the pace in terms of using Smartphone, laptops, mobile phones and tablets (Kasavana and Cahill, 2003). Prominent hotels, such as the Hilton Group normally uses Apple iPads to eliminate the manual registration of guests. This is a new technological innovation aimed at improving the delivery of services in this hotel chains. This technological innovation enables the team members of the hotel to access their customers at any part of the world (Gaol, 2014). It also leads to an improvement on the personalized check in-experience, reducing the costs that are associated with the static reception desks and all associated technologies at each and every location. In line with these, the benefits are not attached to large international chains alone (Brotherton, 2003). The capital expenditure investments for mobile products and the heavily reduced software is an indication that mobile technology is a considerable option for small hotel enterprises that seek to develop and come up with an efficient customer service, which can give it a competitive gain over its rivals. In summary, we can understand that mobile inventions have greatly impacted the hospitality industry and their absorption has been tremendously encouraging (Brotherton, 2003). Mobile technologies are appreciated due their increased convenience and portability. Effect on Integration There are several functions within the hospitality industry that are traditionally managed from an individual software system. These functions range from events planning, catering, accommodation and specialized facilities like health spas and golf games. These functions made have been running on an individual software system (Brotherton, 2003). Despite the encouraging improvements, these systems give out silos of information that is some cases may not be useful after all. The process of integrating these systems can be of benefit to these organizations. It is because integrating the systems provides a more inclusive management information system, and faster reporting and a true comprehensive view of profits. For instance, integrating hotel management system with say the restaurant point of sale or reception means that the hotel under consideration has an efficient view of revenue per guest (Brotherton, 2003). It can pull an holistic report for the management information and customer communication. It has to connect a central reservations system through the HTNG open interface (Brotherton, 2003). On the other end, CRM applications have been linked through flexible web services integration, that have an open APIs which are compliant with the standards of the industry. Integration can offer the possibility of "revenue managing" the guests across all areas of their stay (Lockyer, 2007). The process requires transaction level interfaces, but it should not be complex to use. In critical sense, it aligns the marketing-based tailored offer with a financial outcome of the revenue that is secured. Effect on Customer Experience and Satisfaction An email survey was carried out by the American Hoteliers and Lodges Association in 2007 about hotel operations and the impact of technology on staffing and general operations (Buhalis and Jun, 2011). The respondents were primarily manager and they represented at 61%; director was at 11%, and 81% were of hotel operation. Of the respondents, 82.4% stated that customer satisfaction was being achieved by the introduction of technology. More than 50% of the people interviewed denoted that the identification of products that positively improves the experiences of a customer is an important near-term goal. According to these respondents, the production of Wi-Fi services normally leads to customer’s satisfaction (Buhalis and Jun, 2011). This is because 82% of customers normally look for these services. According to the statement, in-room entertainment services have witnessed an increased improvement in recent years. The improvement was no small growth in comparison to a rapid growth of technological innovations. Not so long, in-room entertainment was very limited in options. It made guests accept it because the entertainment options were by then very limited (Brotherton, 2003). However, the advent of new technologies has increased awareness and improved on the options to the benefit of customers. Many hotel guests have to think of hotels rooms, as homes and this is because they have similar or better facilities, as those ones found in their homes (Brotherton, 2003). This increasing level of guest expectations has come with it methods of integrating consumer entertainment technologies into hotel rooms. As such, the number of technological devices like Wi-Fi routers, T.V and others has increased guest room entertainment to a very high level. As technologies have increased so have the threats that come with it. One study indicates that the common threats which are known include virus attacks on the computer systems of a hotel. They stand at 71.4% of the total threats (Buhalis and Jun, 2011). To protect themselves as well as their guest from the potential threats, hoteliers have devised several measures to try to bring the problem into control.The strategies initiated include: First the use of anti-virus Software has largely been used by hoteliers to curb the problem of virus attacks.The figures represented by this approach were at 91.9%, followed by hardware and software firewall which stood at 74.3% and 73.0% respectively.Moreover, a significant proportion (68.5%) of hoteliers are stated to be initiating the use of physical security to try to control the problem. Another form of failure emanates from the level of awareness resulting from employee education on the availed software and technological advancement. There is a rise in the need for innovative solutions and solutions in the industry of hospitality. The current techniques in training are ineffective and inefficient in accommodating an industry that has a global and diverse workforce (Buhalis and Jun, 2011). Technology holds many answers to improvement of human capital in the hospitality industry. Another challenge is in the application of the web in the hotel industry as an enabling technology. While developments in the procurements and distribution have been driven by the emergence of the internet, there is still potential for more dramatic developments. Conclusion and Recommendations The advent of technology has had very many effects on the operations of the hotel industry. As many as there are the positive effects, than are the negative. The effort has to be made by any organization to adopt the technology into their operations if they wish to attain their most widely desired visions. Technology impacts hotel industry from increasing revenues to improving customer experience and satisfaction, to high levels of procurement and distribution. On the other hand, it faces challenges from implementation to bugs, malware and other security dynamics. It is, therefore, important to any hotel establishment to apply caution in any line of operation that they feel able to use technology. There is a huge demand for the hotel industry to improve on its education platforms which are to be applied in the training of their operations so that desired goals are achieved. Improving on these standards will help generate greater awareness on the technologies and in the end improve on revenues because clients get the satisfaction from services offered. There is also a desire for proper benchmarks to be established regarding the threats presented by Information technology.Other than the hotel industry, governments should provide policies that can help salvage the poor results of tourist business so that these businesses do not collapse.They need to cushion these establishments from the effects of poor turnover by guest.They can do this either by lowering the taxes or improving on trade tariffs that can help alleviate this business from seasonal shortcomings. Hotels need to grasp better methods of satisfying their clients with higher technologies.The use of technologies such CRM means targeting the companys products towards improving on customer databases and knowing them one on one. The process will help in squeezing such customers for every penny they can yield. Also, analyzing customer databases should help identify best customers or those individuals and corporations that contribute significantly more to the companys success. 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