Resurging Business Challenges Hotel IT Systems

Not long ago, when Henry Harteveldt tried to book a room at a Sheraton hotel in Salt Lake City, the company's website told him that the property was full. But when Harteveldt called the hotel directly, he got a reservation immediately.

Harteveldt's experience highlights one of the key challenges for CIOs in the hotel industry: Hotels are increasingly dependent on IT but bedeviled by a mishmash of aging systems that don't work well together.

Focus On: Hotels
Top Business Challenge:
Integrating disparate IT systems, complying with new credit card security regulations and upgrading in-room technology
Cost; franchised operations have inconsistent IT across hotels with the same brand name.
What's Next:
Regulations will force some security upgrades; catch-up elsewhere is ongoing.

"Hotels are still struggling with cruddy property management and central reservation systems," says Harteveldt, a travel analyst at Cambridge, Mass.-based Forrester Research Inc. CIOs, Harteveldt says, "have to manage too many disparate systems." In addition to tracking rooms, hotel systems track other points of sale, such as restaurants and catering. "The demands for technology are so great, and generally hotels don't spend more than 4% of revenue on IT," Harteveldt says.

The hospitality industry is recovering from years of sliding revenue caused by 9/11 and a sluggish economy, notes a recent report by Frost & Sullivan, a New York-based consulting firm. Hotel occupancy rates have surged, and the hospitality industry is expected to spend $4 billion on telecom services in 2005 -- spending that Frost & Sullivan predicts will grow 3% annually over the next several years.

Yet the resurgence of travel will weigh heavily on hotels' already overtaxed IT systems. Forrester, for example, estimates that the number of Americans who book travel online will increase from 30 million in 2005 to 46.4 million by 2009. So while online travel revenue will grow from $53 billion to almost $111 billion, demands on technology will grow much faster than IT investments.

This was first published in January 2006

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