Investing in technology solves problems proactively for hotels

07 October 2021
Every single place that provides an overnight stay needs technology to manage its business properly. A small and temporary provider uses Airbnb as the platform to acquire customers. Large full-service hotels have more technology than anyone outside the industry can imagine.

The definition of the word "invest" is that you put money into something hoping for returns that are greater than what you originally put in. You think of money most of the time, but you can invest time, hopes, or emotions in people or businesses. For example, when you invest in a business, you hope to grow and bring you a profit. When talking about more significant investments, most people think of a longer perspective. For example, a hotel is a long-term investment, and it will likely take years to create a reasonable return on that investment. 

New ways to invest

Hoteliers need to make well-grounded decisions to continuously invest in technology to keep up with consumer needs and productivity in managing the business.

There are many different ways to structure the payments of an investment. The traditional way is to pay for something upfront, such as investments in fixtures, furniture, or internet cabling to hotel rooms. Another way is to pay for usages, such as a monthly fee, user, or consumption. Here are two examples.

Hotels invest in their website and booking engine upfront and do not have to pay any commissions on reservations made on the website. Hotels hope that this investment will produce a higher return on investment than other channels for selling the hotel rooms.

Hotels do not want to invest anything in technology needed to build and manage OTA booking websites. Instead, hotels pay a commission on the actual bookings they receive. Hotels hope that this investment will produce a higher return on investment than other channels for selling hotel rooms.

Benefits of using technology

There are only two significant variables in calculating the return on investment in hotels, increasing revenue and reducing costs. Some investments are general productivity improvements, while others specifically solve a problem that will either improve revenue or reduce costs. For example, some vendors of revenue management systems say that their system will increase revenue and eliminate the need for a revenue manager. Another example is mobile check-in/check-out vendors say that their system will reduce labor hours and increase guest satisfaction.

There are also non-monetary benefits of using technology, such as being a great place to work since technology helps reducing mundane work and makes the job more rewarding. In addition, a younger generation expects modern technology in the workplaces as they see the benefits and are already heavy users of the latest technology. Finally, extending the employee length of stay saves recruiting and training costs and minimizes productivity losses. 

Another significant non-monetary benefit for a hotel company is constantly improving management processes to make better decisions, build and keep knowledge in the company, and become less dependent on individual team members.

Balance risk and potential return

Many hoteliers are reluctant to make technology investment decisions because of the investment cost and are not taking a thorough look at the return on investment. However, in every investment, the hotelier needs to balance the risk and the potential return.