As hotel and restaurant executives tear the last pages of 2009 from their desk calendars and look ahead to 2010, many are wondering what the new year will bring. Executives are tasked with deciding where to invest their resources, and how their 2010 ideas and initiatives stack up against what others are doing.
The editors at Hospitality Technology
had the same questions, and so we asked them. We asked them of you, our readers, via online surveys that allowed us to capture and evaluate macro trends relating to economic recovery, 2010 budgets and more. The results of that online survey are detailed here, based on the responses of more than 260 hotel and restaurant executives to five key questions.
In addition, we went in-depth with a focus group of hotel and restaurant executives who provided detailed answers to even more of our burning questions: things like, what technology initiatives are most important to your organization in the year ahead, and how are you using social networking tools at your company? Their answers are shared here in our "Industry Q&A." Together, the results of the reader survey and the answers to the industry Q&A are compiled and analyzed in Hospitality Technology's
Industry Outlook 2010.
#1: Most important initiatives
When asked to share which initiatives were most important to their company in the coming year, the industry was fairly split (chart 1, right). Most respondents report that they're looking to attract more customers (36.4%), but a close second are those operators who are most focused on new revenue-generating opportunities (34.9%). These two elements combined, however, give a favorable picture of the direction the industry is heading. No longer are the majority of hotels and restaurants hunkered down, focusing solely on internal issues such as trimming fat and preserving capital. Instead, two-thirds of the industry is looking for ways to grow, either via new customers or new ideas. That said, efficiency is still an important factor in 2010, with 26.8% of respondents focused on streamlining operations and seeking out business efficiencies.
There's currently very little industry focus on beefing up internal resources, capturing only 1.9% of responses. This result is consistent with a recession recovery period; adding staff back into the organization, especially after downsizing, is more likely to occur once business strength improves.
#2: Recovery vs. recession?
In the online survey, Hospitality Technology
asked its readers to tell us where their company sits in the emerging recovery period (chart 2, left), and here's what we found out. Nearly half of respondents (49.8%) tell us that they're starting to see signs of a turn-around but are proceeding with caution. Added to the 6.5% who are experiencing strong recovery, and the 11.8% who never even felt the recession, the overall numbers are promising: just less than 70% of the industry is in a healthier position. However, one-third of respondents (31.9%) indicate that they are still grappling with the impact of the recession. In most cases, the luxury segment was the hardest hit and will continue to focus on delivering value to bring in customers.
#3: Customer engagement efforts
With more than one-third of the industry looking to attract more customers, as shown in chart 1
(and another third seeking out new revenue-generating opportunities), Hospitality Technology
wanted to uncover how hotels and restaurants are going about customer engagement in 2010 (chart 3, right). Here's what you told us: most operators are targeting new customer segments beyond their traditional focus (33.8%). This is evidenced by the efforts of QSR companies like McDonald's looking to capture more of the fast-casual and coffee segments with its McCafé initiative.
Coming in a close second, 30.8% of respondents tell us they're adding value to attract new customers. For example, many up-scale dining establishments have added value-oriented, pre-fixe menus. The challenge here comes in preserving an up-scale image and the relationship with fine-dining's core audience. Coming in third, 26.6% of respondents tell us that they are focusing on service to attract more customers.
In all cases, for better or worse, customer engagement efforts are not especially focused on the current, most loyal customers. This is evidenced in the fact that just 8.7% of respondents tell us that they're seeking to engage their current, most profitable guests. The sentiment here, perhaps, is that with customer spending down, even loyal, profitable guests can only contribute so much to the bottom line.
#4: Reacting to social trends
Respondents to the survey were asked to indicate which social trends are the most likely to impact their company initiatives in the year ahead (chart 4, left). Given its cultural explosion within the last 12 months it is not surprising that 47.1% of survey participants identify social networking as a top company initiative in the year ahead. From Facebook to Twitter, and everything in between, hospitality companies are tapping into social networking at growing rates to build brand loyalty and to keep their fingers on the pulse of consumer discussions. What's more, an arsenal of apps, plug-ins and analytic tools are available that make it even easier for businesses to track and drill-down into user data.
TwitterAnalyzer, often referred to as the "Google Analytics for Twitter users," is just one example. (For more specifics on how the industry is leveraging social networking tools, check out the answers in our Industry Q&A portion).
Although the fever surrounding green initiatives may have cooled off slightly over the past year due to the economy, environmental interests are still alive and well. Approximately 27% of survey participants indicate that green and sustainability are top initiatives for 2010.
Rounding out the list of social trends, consumer self-service and health consciousness captured 13.4% and 12.3% of responses, respectively.
#5: IT budgets in 2010
Lastly, the online survey asked participants to describe how the economic climate has affected their company's information technology budgets for 2010. The majority of participants expect to see reduced IT budgets in 2010 (chart 5, right). Just over a quarter of participants (25.5%) indicate that their IT budgets have been significantly reduced, while 40.3% of participants indicate that their 2010 IT budgets were slightly reduced verses their 2009 financials. Numbers like this show that although the industry is starting to see a slight turnaround overall (49.8% as indicated in chart), the majority of information technology departments will not immediately benefit from the upswing. Instead they will be required to work on even slimmer wallets in the year ahead, validating the sentiment that hospitality organizations remain cautious when dedicating money to IT initiatives in 2010.
Meanwhile, at the other end of the spectrum, a small percentage of participants (9.9%) will see an expanded IT budget in 2010, and 24.3% of participants' IT budgets remain unchanged.
Q: How are you using social networking tools at your company?
Hoyt Harper, SVP Brand Management, Sheraton Hotels & Resorts
"Sheraton Hotels & Resorts recently announced the launch of the new sheraton.com
- the first hotel industry website to feature Facebook Connect, which allows visitors to connect to their friends and family and have a two-way, global dialogue about their travel experiences...The new site enables users to connect to their Facebook community and interact over travel experiences by sharing photos, tips about their best travel finds, destination favorites and passion for travel. Users can post stories by visiting sheraton.com, and logging into their Facebook account via Facebook Connect."
Melody Jones, Regional Director of IS, Hawaiian Hotels & Resorts
"We have partnered with Travel Spike to manage the Social Media and click thru process. We have Twitter and Facebook accounts for each hotel and Travel Spike will manage the content and updates."
Steve Brooks, Director of Mission Control, Tumbleweed Southwest Grill
"We have established a presence on Facebook, Twitter and MySpace for each Tumbleweed location...Customers sign up in our database with a home store, so we can promote fundraisers, specials and community events on an individual store basis. On Twitter we often have contests for customers who re-tweet our messages. We often give out meals to random Facebook fans."
Chris Demery, VP Enterprise Application Development, Dominos Pizza
"We have implemented an eLearning site for our 5,000 domestic stores using an Open Source software platform called Liferay Portal. The portal, with confined secure access to our stores, allows our team members to share their collective experience and help other store team members become successful at everything from 'driving sales' to 'solving personnel problems'. The portal provides a Content Management System and various plug-ins and portlets that allows us to design a site our team members want to come to.
Q: What technology investment is a high priority at your company right now?
Andy Schwalb, SVP & CTO, Walt Disney Parks and Resorts
"We are investing in two key areas. First -- technologies that improve the overall guest experience. These include technologies that help us tell our stories better as well as technologies that remove barriers for our guests, such as the wireless POS handhelds that we use at pool bars to reduce the time from ordering to delivery. Second -- core infrastructure. We are expanding on our base technology infrastructure to ensure our foundation is world class."
Chuck Marratt, Vice President, Information Technology, MTM Luxury Lodging
"Redesigning the hotel websites to incorporate social media tools in order to facilitate communication with potential guests and meeting clients. The other technology initiatives are the reduction of cost within the MTM-IT infrastructure through the use of virtualization and also services in the cloud such as remote back up services, hosted e-mail, private IM and SharePoint services."
Tanya Mareno, VP of Franchise Sales & Development, Petrus Brands (Shanes Rib Shack & Planet Smoothie)
"We are in the process of revamping our websites. While the growth in social media is evident and a great avenue for customer interaction, people still visit websites and we want ours to stand out. We also are developing micro-sites for our franchisees, so that they can feature local specials, events and news relevant to their individual location."
Brooks, Tumbleweed Southwest Grill
"Our next big project is loyalty. We are currently interviewing several companies who can help us build the best loyalty program. We plan on combining the data from our guests with our Business Intelligence data in Mirus. As we continue to come out the recession it is more important to improve loyalty at our restaurant."
David Lehn, VP of IT, Noodles & Company
"POS and IT infrastructure: update / upgrade older systems to improve availability, reduce the number of trouble tickets, and solidify the platform for growth (of units, applications, etc.).
Backup and Disaster Recovery: Implementing solutions so that key systems and people are "always on & available". The H1N1 crisis has been a good opening for these kinds of discussions with my fellow department heads ("what if half your team was out sick, or out tending to sick family members" and "what if we had to close the office for days for some super sterilization effort") and has allowed me to highlight how and why our existing investments (virtualization, SAN, IP telephony, Citrix) can be easily re-purposed to keep the lights on in the face of disasters."
Q: What do you identify as a top POS hardware or software trend?
Marratt, MTM Luxury Lodging
"The use of tablets for mobile POS use. We are starting to use tablets with InfoGenesis at two of our properties and the effect is that they increase the efficiency of the wait staff as well as increase the service to the guest since the servers spend more time on the floor."
Jones, Hawaiian Hotels & Resorts
"I think the trend should be pay at table technology and quick service kiosk to enhance customer experience and drop the bottom line for restaurants."
Curtis Stalnaker, MCSA, CISSP, Director of Information Technology, Godfather's Pizza, Inc.
"I think 2-way integration with data warehouse services that allow companies to see customer data not only at the corporate office, but across all stores in a chain, integration with online ordering and email marketing services, etc."
Mareno, Petrus Brands
"Electronic menu-boards and pay-at-the-table technology is a growing trend that we are watching and evaluating. We also believe integrating POS with customer loyalty/rewards programs is and important and growing trend. The ability to link marketing programs, such as email and mobile, to purchases through the POS is valuable data to grow a loyal customer base."
Brooks, Tumbleweed Southwest Grill
"Software as a service continues to be a popular trend for restaurant POS. Whether it is Business Intelligence or hosted VOIP, restaurants can afford to be a part of projects with large ROI's. BI has saved us over 10 times what we spend each year and hosted VOIP should save even more on an annual basis. Right now it looks like the payoff is in six months and the monthly cost is 10% of the old phone lines. We could have paid more up front and owned the VOIP, but hosted VOIP has a much smaller cost on the front-end and is perfect for a smaller-sized company."
Lehn, Noodles & Company
"Securing / encrypting card data at swipe; this will be a huge relief for the thousands of small restaurateurs in their PCI compliance efforts, and will help the bigger players too (level 1 & 2). Also, POS content management...a system to manage all items, prices, descriptions and images across a variety of platforms, such as the typical POS but also online and smartphone applications, and in-restaurant digital menu boards and signage. I want one-stop-shopping so I can change the price of a fountain drink once and have it instantly propagate any and all places where both guests and team members interact with that price."
Q: How are you gaining support for your IT initiatives?
Schwalb, Walt Disney Parks and Resorts
"By telling the story...By being very clear about how the IT initiative will help the business unit realize the desired value. In fact, every initiative is really a business technology initiative - it's no longer just an "IT initiative."
Harper, Sheraton Hotels & Resorts
"We gain support by sharing the successful results of our initiatives. Sheraton's $6 billion global revitalization investment was concentrated on differentiating the customer experience and brand, and IT was a key component of this multi-billion dollar effort."
Marratt, MTM Luxury Lodging
"MTM is a hotel management company and all new technology initiatives or upgrades usually have to be approved by individual owners of the hotels. In the past MTM would suggest upgrades and initiatives without really involving the management team of the specific properties. This year we have taken a new approach where we are trying to create a groundswell within the properties for specific technology initiatives in order to use their feedback and suggestions as part of the ownership approval process. Also the buy-in by the property will also insure that the new technology is successfully installed and utilized."
Jones, Hawaiian Hotels & Resorts
"We are getting support because there are many special deals out there in hardware and services available. Everything must show a ROI within 36 months to get the best results."
Stalnaker, Godfather's Pizza, Inc.
"The most important thing is to make well-thought out, intelligent, and timely presentations to your stakeholders that clearly solve business problems or can be shown to have an impact on top-line sales. To use the best example from a year-ago, it was presenting online ordering in a way that made it a mistake for us to not go forward with it."
Mareno, Petrus Brands
"We have been hosting monthly webinars to educate and coach our franchisees on social media. This has been well received and our franchisees recognize the value of this growing marketing medium."
Demery, Dominos Pizza
"My job is to help focus our IT investments on initiatives that provide tangible results, like the eLearning portal in question #1 [use of social media]. We use flexible, agile development methods to allow us to prototype in order to rapidly prove out concepts and to identify potential business value. Once we identify potential business value we engage the operators at the appropriate operational level to drive the requests and desire to finalize the initiative."