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The Strategic Guide to a Modern Hotel Technology Stack

by Jeremy Kressman + Luke Bujarski + Skift Team
Hospitality
Travel Tech

Skift Research Take

The world of hotel technology software, or the “tech stack” as it’s often called, has long existed as a fragmented puzzle of competing platforms, competitors and solutions. Now, growing signs of consolidation loom as big players from both inside and outside the category vie for a bigger piece of the pie. What solutions and strategies will be most important to help hotel owners stay competitive, and profitable, in the years to come?

Executive Summary

The world of hotel technology software, or the “tech stack” as it sometimes known, exists as a fragmented, piecemeal set of solutions aimed at optimizing hotel functions like operations, revenue management, marketing, and guest services. Now there are growing signs of consolidation as big players inside and outside the category vie for a bigger piece of the billions of dollars spent each year by hotels. Traditional online travel agency heavyweights like Priceline and Expedia have spent the last five years acquiring companies that position them with the business-to-business services space. Meanwhile enterprise software giants like Oracle and SAP are spending billions to buy their way into hospitality services and integrated property management solutions.

Yet, even as more companies eye an entrance into the lucrative hotel tech space, many hotel owners are sitting on the sidelines. The biggest challenge for hotel executives is figuring out what types of software solutions are right for their business. Hotels can now choose from a wide range of technology solutions to assist with virtually any task, from on-site property management, to reservations to setting consistent prices on different online travel websites.

In addition, challenges like limited IT budgets, questions about measurement of ROI, and worries about how systems actually impact the guest experience all complicate decision-making. Changes in consumer behavior and ever-rising guest expectations in technology also make the task of finding the best hotel tech solutions even more challenging.

According to senior-level hotel executives interviewed for this report, the right way to proceed in such an environment is by keeping a laser focus on defining the right business goals, before going after the solutions.

Hotel IT solutions tend to fall into four buckets: Marketing and distribution; hotel operations; real estate development; and finance & accounting. The scope of this report focuses on the first two buckets. These are the intersections between the hotel and travel consumer.

chart1

Property Operations: These are the types of systems that help hotel staff manage guest requests, handle maintenance issues and oversee front desk operations like check-in and check-out. Typically (though not exclusively) these tools are best used to improve the hotel’s efficiency. A “property management system” (PMS) is one of the best examples of property operations technology.

These PMS platforms serve as a crucial linchpin to help streamline all aspects of the hotel experience, from more cost-efficient operations to the delivery of guest services. The below graphic offers a great overview of just how deeply connect the PMS platform is to all other aspects of the hotel experience, from booking to guest management to customer relationship management and reservations.

Property Management Systems in Hospitality Technology

The back-end technology that powers property management systems often serves as the foundation for a variety of other hotel initiatives from mobile apps to booking software. (source)

The back-end technology that powers property management systems often serves as the foundation for a variety of other hotel initiatives from mobile apps to booking software. (source)

While there are a wide variety of companies that create PMS solutions, some of the market’s top players, particularly for larger hotel chains, are represented in the below graphic, with enterprise IT firms like Oracle and GDS player’s like Amadeus’ Itesso controlling much of the market.

Marketing and Distribution: A wide variety of other tools fall into the bucket of marketing and distribution. The tools related to marketing and distribution help the hotel manage a variety of services, including keeping track of current and upcoming reservations, managing where and how the hotel sells its rooms online, and maintaining the profitability of the prices charged for rooms based on current market demand.

The types of software solutions connected to these disciplines typically include everything from central reservation systems (CRS) to channel manager products, CRM (customer relationship management) and revenue management systems.

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