The old senile Hospitality tech!

The technology and the architecture of some of the core-backend systems in hospitality were built much before floppy disks ever existed. Built for an old disconnected world without reliable connectivity & internet it continues to ruin the experiences of the travellers around the world!

Hospitality industry is an industry that thrives on customer experience, there is probably no other industry where experience matters the most. And they have consistently focused on improving this aspect. This is quite evident in the focus on technology deployment across most guest facing touch-points today - Right from hotel discovery via brand sites, OTAs, in premise digital check-in options, IoT enablement in the rooms, QR coding of restaurant menu, and many such examples. The beast lies in the darkness and every hotel industry veteran would agree that backend systems that are used to plan, operate, execute and analyze are defunct and broken, disconnected in a best case scenario. The distribution systems in hotels that exist today were designed and architected(figuratively) by Sabre technologies. The behemoth of a company in the travel and hospitality industry, who took up the insane task of aggregating, standardizing and distributing flight information in the 1960s in the USA. As hospitality was a closely allied industry, they built a similar distribution mechanism, via tour operators and travel agents to combine and push air travel and hotel stay options together. Along came Amadeus in Europe and built on the success of Sabre. These were in the pre-internet era, so aggregation of availability information across the globe or even a continent was an unthinkable task, which no other player succeeded in.

Over time with computers they started building databases and EDI interfaces for hotels and channel partners to access this information and thus emerged the GDS - Global Distribution System. Today Sabre, Amadeus and Travelport together control 95% of market share in air travel bookings owing to the early mover advantage and the high moat of legacy. With the turn of the century, players like Booking and Expedia started to become more prevalent, and began participating not just in the customer facing OTA business, but also in the distribution focused solutions. Considering the non-uniform ecosystem that exists of different disparate systems, varying by region, across hotels, hotel chains, geographies, franchisee or ownership models, home grown mechanisms and softwares to manage and distribute inventory - (can be judgemental here and say, that) the whole hotel distribution environment is opaque, disconnected, operating on data caches, inventory being transferred via emails(!) and localized databases. The 294,000,000 search results(really!!) on a google search of "Hotel API", will give you an indication of the size of problem and the barrage of companies who provide quickfix solution to the disconnected mess!

Without fixing the root problem of distribution control and transparency, further applications started crowding up the IT landscape - like Revenue management systems and dynamic pricing solutions. The one product that has brought a lot of respite here is the Channel Manager-? trying to make sense of different streams of data and inventory, consolidating, standardising them and distributing them further down the chain. Unfortunately they have been built to support the decades old distribution model, rather than replace it. This meant any contracts on pricing, minimum retail sell price and margin structures were unenforceable and just words on the paper. While large chains used their muscle power to penalize non-complying channel partners for lapses on pricing or sales commitment, smaller chains were at the mercy of the distribution channel. And today hospitality industry, who have always avoided investments in distribution technology, are on not-so-happy receiving end of this decision

Online Travel Agencies(OTA) brought an interesting play and complication to the whole scenario. OTAs made inventory transparent to the end users. Now a guest from Fiji could book a room in Madagascar in a matter of minutes. This increased the importance of an OTA in the customer purchase journey, making them irreplaceable. This gradually created a love-hate relationship between the hotels and the OTAs. Hotels today cannot survive without an OTA. The customer purchase decision now has additional criteria - visibility on the website, recommendations, ratings & reputation; all of which are controlled by the OTA directly and not by the hotels. Bringing yet another player between the hotel and the guest - taking away control on pricing, visibility and distribution. Every hotelier knows this and is nodding their head as they read this!

Phew! Not all is gloom!

Hotel industry has an opportunity to leapfrog by adopting new age solutions, which give them transparency, flexibility and control that never existed. Blockchain saves the day! Over the next few posts, I intend to clearly call out specific challenges that hotels face, and how a blockchain based solution could help them overcome some of the challenges they face. Sorry, blockchain cant cover for your COVID business impact. :(

The specific focus of the series of articles I intend to write for the coming days will focus on how there is a major tide of change waiting to happen in the space of distribution, revenue management and pricing for hotels, enabled by blockchain technology. So hoteliers, channel partners, OTAs and technology solution providers - follow up and keep reading!

Thank you Ron Tarro, Rahul Nair, Brij Bhushan Chachra, Ashish Khanna & April Key for your inputs over calls or youtube videos!

@ Industry veterans & channel partners: Let me know if this is right, wrong or misunderstood, in the comments below!