Budget

FACING THE CHALLENGES OF THE HOTEL TECHNOLOGY BUDGET

When developing a hotel budget for the coming year, two of the biggest questions hotel executives and managers must answer are in regards to technol...

When developing a hotel budget for the coming year, two of the biggest questions hotel executives and managers must answer are in regards to technology spending: how much should be allocated towards hotel technology, and how should that amount be distributed? Determining which solutions should be a priority for the hotel can be a challenge, given the fast-developing nature of the technology industry and quick-adoption tendencies of hotel guests.

According to the 2016 Lodging Hospitality Study by Hospitality Technology, the average hotel technology budget equals around 6% of revenue. Of that amount, 53% is used to run the business defined as “maintaining existing systems as a cost of business”, and 29% to grow the business, or “improvements to operations and performance within current business models”. Essentially, hotels would prefer to spend more on maintaining current systems, no matter how outdated they are, than adopting new solutions to improve productivity.

Part of the reason hoteliers have an aversion to new solutions is because of the difficulty of measuring an accurate ROI for these solutions. However, the ROI of a new solution doesn’t necessarily manifest itself in the hotel technology budget immediately. If a hotel adopts a new solution, it’s important to keep up with the people using it- either staff or

guests- to receive consistent feedback about its effectiveness. Seeing an increase in productivity and a decrease in guest complaints related to room cleanliness, for example, would indicate that the solution is going to have a positive ROI even before any concrete numbers are available.

It’s easy for hotels to fall behind on developing technology, so hoteliers shouldn’t be afraid to take risks and closely monitor the success of newly adopted solutions to determine if they are really worth the investment. Increasing revenue with solutions that increase productivity and guest satisfaction is the goal of the hotel technology budget, and will keep the hotel running at an optimal pace in the increasingly digital world.

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