Both 2008 and 2009 were very difficult years for the hospitality industry in terms of point-of-sale (POS) shipments. The Great Recession of those years resulted in Americans taking fewer trips for business and pleasure, individuals and families spending more of their food dollars on at-home meals, and when Americans did eat out, they generally trended towards more casual and inexpensive dining options. The state of the economy remains somewhat in flux looking at 2011; in fact a significant divide exists among analysts. Some feel that a full recovery is right around the corner towards the middle of 2011, while others believe that high unemployment coupled with continued record-high foreclosures and other negative indicators mean that a true recovery is nowhere in sight. Whichever view you ascribe to, it is clear that by the end of 2010, the hospitality industry chose to move forward with expansion and new POS purchases.
According IHL Group’s “The North American Hospitality POS Terminal Market Study,” shipments to the industry were up nearly 5% for the year, with shipments to QSR/Fast Food leading the way, up 6.4% over 2009. Almost 54% of all hospitality POS shipments were made to QSR/Fast Food establishments, and that vertical remains the largest market for potential POS devices. It is noteworthy that only around 60% of the cash points in QSR/Fast Food currently utilize a PC-based device. IHL counts only devices that have Intel class processors, a PC operating system and are LAN-able devices as being PC-based. Because we do not include ROM-based devices, the penetration rate of PC-based devices can appear to be quite low. Additionally, of these devices, the trend in recent years has been to move away from DOS and towards the newer versions of Windows. Additionally, restaurateurs have looked to graphic interfaces and touchscreens as a way to hold down training costs for employees, an important cost control, considering that annual turnover in this segment often approaches 100% or more.
Growth in lodging
Another vertical of interest was lodging, which saw a 5.7% growth in shipments when compared to 2009. While only accounting for roughly 5% of all hospitality shipments, POS shipments to lodging still provides a significant opportunity for new POS devices and peripherals. There remain a large number of gift shops and other small stores within hotels and resorts that utilize electronic cash registers. There is pressure on operators to integrate those cash points with the rest of the property management system, and thus enable these new devices (particularly in a resort setting) to accept payment via an all-inclusive card that allows guests to enjoy (and spend) effortlessly throughout the property. While many lodging POS systems tend not to be very enhanced in terms of software functionality, it is vital that they are rugged systems that can withstand a wide variety of environments.
Mobile POS expectations
At any gathering of analysts and retailers/hospitality providers over the last year, perhaps the most talked about issue has been one of mobility and the potential game-changing aspects of it. While most of the attention is focused (and rightfully so) on the power that consumers now hold in the palm of their hands with mobile devices, the real revolution might come with successful applications of mobile POS. Hospitality is a perfect industry within which to roll out mobile POS. Whether it be through traditional line-busting applications, equipping servers with mobile devices in sit down establishments, or providing beer and peanut vendors with card readers at ballparks, there are countless ways in which mobile POS would benefit hospitality providers. While there are few full rollouts that we are aware of, there are numerous hospitality providers that are experimenting with mobile POS. We expect that to be an area of growth going forward.
For the coming years, we expect to see continued, moderate growth in hospitality POS shipments. While there might be questions regarding the overall strength and stability of the general economy, we see several strong indicators for hospitality. The number of cruise ships on order remains steady at around 10 per year, fast food has seen strong store opening growth over the last year, and RevPAR forecasts for the year ahead are encouraging. All of these factors indicate a need for new POS shipments, along with a steady demand for replacement units.
About the study
The “North American Hospitality POS Terminal Market Study” contains specific information regarding the number of POS units that currently make up the hospitality market’s installed base (broken down by both processor type and operating system) as well as the specific number of shipments (by operating system). This data and analysis is presented for the whole of the North American Hospitality Market split into five categories: Bar/Restaurant, Quick Service Restaurants/Fast Food, Lodging, Entertainment – Casinos & Cruises, and Entertainment – Theme & Ball Parks, Theatres, etc. For more information on this study, including a full list of figures and a sample of the content contained in the report, please visit IHL Group.
Sean M. Alexander is a Technology Analyst with IHL Group, a global research and advisory firm.