Insights From The 2020 Hospitality Technology Lodging Study

May 1, 2020 | Insights

Hospitality Technology published its annual study on the state of lodging technology, with a focus on how hotels will use technology to achieve strategic goals, stay competitive, and create authentic experiences for their guests in 2020. This study showed Point of Sale is a technology to receive renewed attention.

Since this study was conducted before the global outbreak of COVID-19, the overall amount of IT investment in hotels may shift, however, we believe that the fundamentals remain sound and that many hotels will continue to pursue the strategies outlined here.

Here are our four key takeaways from the study:

  1. Hospitality technology innovation outpaces the increase in IT budgets for hotels
  2. Over half of the hotels (54%) surveyed by the study, planned to increase their IT spending in 2019, which is commensurate with the percentage of hotels that fell into the midrange category for hotel technology spending (37%) – a 9% increase since 2018.

     Hotel IT tech spending behavior graph

    However, the increase in IT spending hasn’t materialized in terms of an increase in IT budgets as a percentage of overall revenue – which sat at only 4.6% of hotel revenue in 2019.

    This poses challenges for hotels looking to keep a decisive competitive advantage, stay proactive in leveraging innovation (digitization and automation) in their operations and guest experience, and profit by finding new revenue streams. There is an upside, however, as hotels look to grow IT investments in 2020 and beyond for precisely these reasons.

  3. Overall increase in hotel competitive confidence due to hospitality technology strategy
  4. The study finds four main pillars of competitive advantage, tied to the technology strategy instituted by hotels – overall technology, analytics maturity, guest-facing technology, and operational technology.

    Across the board, hotels feel confident that they have a competitive edge in all four pillars, which maintains the upward trend indicated in the report for 2020 and beyond.

    The only pillar that has seen a slight drop in terms of competitive confidence for hotels is hotel operations platforms, which saw an 8% drop in 2019 compared to 2018. The competitive lag could be attributed to the limited distribution of hardware and software and over growing concerns around privacy and security. This is also coupled with hotels’ need to find flexible operational technology capable of scaling with growth and expansion.

  5. Hotels look to overcome challenges, achieve goals, and profit through technology
  6. Though there is an overall increase in revenue and mergers and acquisitions across the industry, the number 1 challenge reported to implement effective hospitality technology strategies is insufficient IT budgets.

    40% of respondents agree that ‘enhancing payment and data security’ is the number one strategic goal for their hotel, which has foreshadowed an increase in IT spending on security in 2020 by 14%. There will also be a shift in the way hotels look to identify new revenue streams in 2020 – with a growing number of hotels associating this end with strategic IT investments. We believe this emphasizes providing online delivery options, for example, as a potential revenue stream, especially during disruptions like the COVID-19 crisis.

  7. Hotel management system software will drive IT spend for hotels in 2020, but point of sale systems will receive due attention

The study notes that point of sale systems will be receiving renewed attention in 2020 for the strategic role they play in leveraging data to understand guest behavior and identify new revenue potential.

A flexible hotel point of sale with a robust property management system integration affords hotels with powerful data analysis and actionable insights, capable of tracking granular guest purchases, such as, what they order at a hotel restaurant. This allows hotels to “think outside the room,” and bundle amenities and off-property services – that are increasingly finding appeal with the next generation of hotel guests.

As we move into the future, an IT infrastructure that leverages innovation is crucial for a hotel or resort to stay purposeful, proactive, and profitable.

Choosing hospitality technology with a healthy ecosystem of partners and integrations can ensure that IT and operations teams have access to highly flexible and customizable systems—capable of effectively addressing the unique requirements of your business.

To learn more about the integrations that are available to the hotel & resort space, view the partner ecosystems page to see a list of options.