Strategic Hospitality
Technology
Investment
Chapter 11
Technology Strategies for the Hospitality Industry
Nyheim, McFadden, & Connolly
© 2005 Pearson Education, Inc
Upper Saddle River, New Jersey 07458
Interview
Mike DiLeva
Head of Hospitality Division
Unisys
 Background in both operations and IT
 Technology needs to be looked at more
strategically
 Hotel metrics can be applied to IT

Technology Strategies for the Hospitality Industry
Nyheim, McFadden, & Connolly
© 2005 Pearson Education, Inc
Upper Saddle River, New Jersey 07458
1. Introduction

It is not nearly as important to get “lots of
functionality” as it is to get “the right
functionality for your business.”
Technology Strategies for the Hospitality Industry
Nyheim, McFadden, & Connolly
© 2005 Pearson Education, Inc
Upper Saddle River, New Jersey 07458
2. Reducing Expenses and
Increasing Profits
Reduce Cost
 Increase Revenue

Technology Strategies for the Hospitality Industry
Nyheim, McFadden, & Connolly
© 2005 Pearson Education, Inc
Upper Saddle River, New Jersey 07458
Decreased Expenses






Staff reductions
Cost of maintaining systems
Eliminating waste
Periodic maintenance systems
Power control systems
Fixed costs don’t usually go down, they are a
unique cost structure, and some guest service
requirements are not negotiable.
Technology Strategies for the Hospitality Industry
Nyheim, McFadden, & Connolly
© 2005 Pearson Education, Inc
Upper Saddle River, New Jersey 07458
Increased Gross Profit
Not gross revenue
 Directly attributed to the new system

Technology Strategies for the Hospitality Industry
Nyheim, McFadden, & Connolly
© 2005 Pearson Education, Inc
Upper Saddle River, New Jersey 07458
3. System Examples
Yield management
 Restaurant menu management

Technology Strategies for the Hospitality Industry
Nyheim, McFadden, & Connolly
© 2005 Pearson Education, Inc
Upper Saddle River, New Jersey 07458
4. Cash Flow and Costs
ROI = (Increased Profits + Decreased
Costs)/Investment
 Adjust for time and the cost of capital
 Additional costs of a new system
 Costs associated with the project
 Intangibles or “soft” benefits

Technology Strategies for the Hospitality Industry
Nyheim, McFadden, & Connolly
© 2005 Pearson Education, Inc
Upper Saddle River, New Jersey 07458
5. System Selection Process
1.
2.
3.
4.
5.
Conceptual design for the enterprise
Functional and system requirements
Request for proposal (RFP)
Vendor short list
Solicit proposals
Technology Strategies for the Hospitality Industry
Nyheim, McFadden, & Connolly
© 2005 Pearson Education, Inc
Upper Saddle River, New Jersey 07458
5. System Selection Process (cont.)
6.
7.
8.
9.
Assess proposals against criteria
Visit reference sites
Vendor demonstrations
Final selection
Technology Strategies for the Hospitality Industry
Nyheim, McFadden, & Connolly
© 2005 Pearson Education, Inc
Upper Saddle River, New Jersey 07458
Conceptual Design for the
Enterprise
Each application should fit into overall plan
 Functional operations (i.e. matrix)
 Eye towards the future
 End product: A list of component
applications that will be required to create
the entire information infrastructure and a
solid ideas of the system architecture.

Technology Strategies for the Hospitality Industry
Nyheim, McFadden, & Connolly
© 2005 Pearson Education, Inc
Upper Saddle River, New Jersey 07458
Functional and System Requirements
Don’t let management pick the new system
 Don’t automate inefficient processes
 Involvement from multiple departments or
business units
 Clearly define exactly what you need
 Do some research
 Keep expectations in check

Technology Strategies for the Hospitality Industry
Nyheim, McFadden, & Connolly
© 2005 Pearson Education, Inc
Upper Saddle River, New Jersey 07458
Building Consensus
Similar system installations in similar
business units
 Refer to enterprise design
 Speak informally with vendors
 Master requirement list
 Think outside the box, but there are limits
 Prioritize

Technology Strategies for the Hospitality Industry
Nyheim, McFadden, & Connolly
© 2005 Pearson Education, Inc
Upper Saddle River, New Jersey 07458
Request for Proposal (RFP)
Do not do “customization” on a fee basis
 Numbered outline (matrix) or format
 Clearly defined timetable
 Support issues
 Historic and forward-looking build
schedule
 Cost information in the same format

Technology Strategies for the Hospitality Industry
Nyheim, McFadden, & Connolly
© 2005 Pearson Education, Inc
Upper Saddle River, New Jersey 07458
Vendor Short List
Credibility
 Be careful about databases
 Request for information (RFI)

Technology Strategies for the Hospitality Industry
Nyheim, McFadden, & Connolly
© 2005 Pearson Education, Inc
Upper Saddle River, New Jersey 07458
Solicit Proposals

Be realistic in regards to the time frame
8
weeks (4 weeks of just getting to know you)
Technology Strategies for the Hospitality Industry
Nyheim, McFadden, & Connolly
© 2005 Pearson Education, Inc
Upper Saddle River, New Jersey 07458
Assess Proposals

Objective
 Scale:
Each functional and system
requirement
 Individual grade (independently)

Sensitivity Analysis (Larger/Complex
Projects)
Technology Strategies for the Hospitality Industry
Nyheim, McFadden, & Connolly
© 2005 Pearson Education, Inc
Upper Saddle River, New Jersey 07458
Visit Reference Sites
Bring your prioritized requirements
 Install in accordance with schedule
 Supplied system in accordance with
specified requirements
 Software and maintenance fees
 Reliable support
 Migrating and/or scaling

Technology Strategies for the Hospitality Industry
Nyheim, McFadden, & Connolly
© 2005 Pearson Education, Inc
Upper Saddle River, New Jersey 07458
Vendor Demonstrations
Scripted with freestyle
 Don’t waste vendors’ time and money

Technology Strategies for the Hospitality Industry
Nyheim, McFadden, & Connolly
© 2005 Pearson Education, Inc
Upper Saddle River, New Jersey 07458
Final Selection

You have to be willing to walk away.
Technology Strategies for the Hospitality Industry
Nyheim, McFadden, & Connolly
© 2005 Pearson Education, Inc
Upper Saddle River, New Jersey 07458
6. Implementation
1.
2.
3.
4.
5.
Project manager
Set a schedule
Establish a training system
Meet with vendor (Steps 1-3)
Stop and analyze (contingency plan and contact
all stakeholders)
Technology Strategies for the Hospitality Industry
Nyheim, McFadden, & Connolly
© 2005 Pearson Education, Inc
Upper Saddle River, New Jersey 07458
6. Implementation (cont.)
6.
7.
8.
9.
10.
Start implementation in one department
Stop and analyze (monitoring all systems)
Move on to the next department
Stop and analyze again
Rollout the system property wide
Technology Strategies for the Hospitality Industry
Nyheim, McFadden, & Connolly
© 2005 Pearson Education, Inc
Upper Saddle River, New Jersey 07458
7. Summary
Business and Technology understanding
needed
 New systems must either increase
revenue or reduce costs
 ROI and RFP
 Follow process

Technology Strategies for the Hospitality Industry
Nyheim, McFadden, & Connolly
© 2005 Pearson Education, Inc
Upper Saddle River, New Jersey 07458