Global Positioning

By Reid A. Paul, Editor-in-Chief | January 01, 2005

Two thousand and two was a year of profound soul searching for the hospitality industry. With the post 9-11 economic and travel hangover still fresh, many hotel companies took the opportunity to re-think their business model from top to bottom. But as a few hotel companies recognized, it was also a time of great opportunity. Rather than retrenching and retreating, industry leaders recognized that the industry was changing, and that they needed to change with it.

For Hyatt International, a U.S.-based hotel management company with an increasingly global perspective, it was the opportune moment to re-assess its corporate philosophy and develop a more global outlook. Announcing the "Global Hyatt" initiative, the company sought to improve coordination of the U.S. and international hotel management operations, real estate activities and corporate functions. The primary reason for the change was to improve the quality and consistency worldwide and better position Hyatt for future growth.

The recent acquisition of the 143-unit AmeriSuites hotel chain from affiliates of the Blackstone Group is yet another step in the process. The move is seen as a key strategic component of the process resulting in the formation of Global Hyatt Corporation, a new parent company over Hyatt's domestic, international, hotel ownership and timeshare divisions. With the new parent company structure in place, and the resolution of the long-standing Hyatt family legal fight, many analysts predict that Hyatt may go public by the end of this year. Big things are expected of Hyatt.

The power of the Hyatt brand
Of course the Global Hyatt initiative is about far more than an IPO. "A primary objective of the Global Hyatt process is to better utilize the power of the Hyatt brand, infrastructure, distribution network and talents of our people more intensively to increase earnings growth without compromising the value of our brand," remarked Thomas Pritzker, Hyatt chairman and CEO in a public statement on the acquisition of AmeriSuites.

Now two years into the project, I sat down with Hyatt's current information technology team to discuss the continued globalization of Hyatt. Traditionally, Hyatt's domestic and international operations were run as two separate divisions. While the two divisions shared many similarities and had similar philosophies, in many cases, the hardware and software systems differed.

"Over the past 20-30 years when the two Hyatt companies were operating almost independently you could have your own way of doing business; your own planning schedules, your own planning approaches, etc. which haven't been that far apart but have been separate," explains Gebhard Rainer, vice president of hotel finance and technology.

Not surprisingly, moving Hyatt to a single group of solutions that are consistently deployed worldwide has been a slow and careful process. "The strategy is to create a unified platform for Hyatt's hospitality related companies in one organizational structure," insists Tom O'Toole, senior vice president strategy and systems. "We are a very methodical organization that is very focused. We are serious, careful, methodical, and prudent. If we say we are going to do this, we do it. That is Hyatt."

Looking at the future
"We started the Global Hyatt process by developing a multi-year plan," adds Bob Bansfield, assistant vice president information technology. "We are looking at where the business is headed and at the technology that supports it in terms of specific applications along with underlying infrastructure. That is really the plan that guides us as we migrate from what has been separate domestic and international solutions into Global Hyatt."

Much of the impetus for developing a Global Hyatt IT strategy began when the company looked to develop a single, global financial system. According to Rainer, Hyatt wanted to allow Global Hyatt consolidation of its budgeting and planning, analytics and analysis. "They are pulled all together now with a new platform that we rolled out in 2004: Hyperion's suite of applications, which we use for consolidation, analytics, reporting and budgeting. That now allows us to have a single view of our business and one version of the truth."

One version of the truth
With an international company there are always areas that need to be addressed with local variations because of the different languages, currencies, cultures and laws, but the key for Hyatt has been to develop a global view and then choose applications and systems that allow the utmost flexibility. It is no longer good enough if an application only functions in North America. With Global Hyatt, only global partners
need apply.

Obviously, building a global corporation with a single global strategy requires accurate data that is consistent enterprise wide. "We are focusing on one version of the truth," insists Rainer. After completing the first stage of the financial project, Hyatt is now moving on to develop a global business intelligence, which will allow Hyatt to extend that single view of its business across operational platforms.

The goal is to provide an information tool to operations that allows everybody to have real-time seamless views into the various components of businessesÃ.‚¬"not just financial, marketing or HR. "When you look at business performance management you have to have all of that in
the way you look at your business. You have to be able to tangibly measure the effects of strategy against results."

Brand value
Ultimately, the value of such an extensive IT project and reorganization is the value it brings to the brand and the efficiencies it generates. For Hyatt, "Hotel management companies today have to justify the value of the brand and the way we manage profits," explains Rainer. "Without the brand, there is no distinction, no separation between Hyatt and other hotel companies."

Whether technology can truly be a differentiator for hotel companies is a subject of much debate. Only companies like Marriott, Hilton and Starwood have the resources to access unique technology solutions. For other companies like Hyatt, it is not what technology is selected, but rather how it is deployed that creates a point of distinction. "You can take two different hotel companies, both can select the same system," argues Bansfield, "but it is how they design it, implement it, and how they integrate it into their operations and service standards that makes it different."
"We have single-image inventory and one PMS in North America and we are moving towards one PMS outside of North America," echoes O'Toole. "This allows us to develop a competitive advantage with technology. For example, we just created the first two-way direct connection to Expedia. There is a lot that we are going to do because we now have a very uniformed IT system."

The next generation
Hyatt also recognizes that playing a leadership role in industry-wide initiatives is another important way to keep the company on top of any new developments. That industry leadership is particularly evident in Hyatt's commitment to HTNG (Hotel Technology Next Generation). With Rainer serving as the current HTNG president, Hyatt has had a bird's eye view of emerging technologies.

The emergence of HTNG also dovetailed with Hyatt's goal of moving away from developing proprietary software. "At HTNG we are trying to bring a vendor community to the same table with the hospitality industry and make them talk to each other and look at solutions and come up with vibrant solutions that allow us to move towards unified messaging without Hyatt or other hotel companies each having to spend $5 million," insists Rainer. "We are not dictating. We are facilitating discussions as a group to come up with a common approach that is realistic for the industry. Hyatt is not a large player in the industry, but we are becoming a large voice by partnering with other players."

The value of industry leadership for Hyatt, of course, goes way beyond that. Hotel technologists have never been shy about sharing problems, concerns or success stories, but as Bansfield notes, "Hyatt truly benefits from hearing the needs, challenges and dilemma's of other hospitality companies and having direct access to any number of solution providers."

Whether it is reshaping itself to respond to global pressures or pushing the lodging industry toward better systems and better integration, Hyatt clearly has taken a proactive approach. As Tom O'Toole insists, it comes down to Hyatt's basic approach to everything it does: "Hyatt wants to be very proactive about what that next generation of systems will look like, we want to be a leader in shaping the direction of the industry."
That single-minded devotion to industry leadership has become a hallmark at Hyatt. Through its Global Hyatt initiative and its emphasis on developing "one version of the truth," Hyatt is clearly becoming a leader.

 

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