When faced with the decision to invest in new hotel technology, some hoteliers view the choice as either spending money or saving it. In reality, this is a false choice. In much the same way as choosing to not ‘invest’ in putting gas in your car results in saving that gas money. Partially true perhaps – until the car runs out of it. Then the true implications of that ‘saving money’ decision become evident – and it becomes clear that no money was in fact ‘saved’ at all. The cost was inevitable – all you did was delay the spend, not eliminate the need for it.
The Cost of Waiting
Hotels need technology to survive and thrive in the modern age. Choosing to put off investment in hotel technology does not remove the need to do it – it only delays the hotel and guest benefits that result from implementing the technology. Wait long enough to update/upgrade the hotel and guests will choose to stay elsewhere. And like the car with no gas, the empty hotel will now require far more effort and investment to get going again than it would have before. Calculating the cost of replacing existing technology includes calculating the cost of not replacing it.
The true cost of procrastination on hotel technology includes many things:
- Increasing cost of maintenance for aging infrastructure
- Increasing cost of slower legacy systems vs more economical modern options
- Ability of technology to automate routine human tasks more efficiently
- Opportunity cost of reallocating that human labor to a more necessary function
One method to determine the true cost of procrastination on hotel technology is called a Production Possibilities Curve. This calculation reveals the production efficiency of an entity based on all possible variations of resource allocation. Most financial models used to calculate ROI for tech purchases in hotels evaluate capital investment vs customer engagement. A more modern formula is the ROI on Advanced Hotel Technology formula that calculates ROI as equal to the net gain on technology divided by the cost incurred to implement the tech. Therefore, to get positive ROI you have to focus on both increasing gain and reducing capital cost.
The true cost of procrastination on hotel technology may be the failure of your enterprise. The changing expectations of hotel guests are dictating technology enablement in properties today. Hotels that don’t offer mobile booking, free, fast WiFi, mobile check-in, mobile keyless entry and audio and video streaming are rapidly falling behind the curve of competition. There’s no money saved by not investing to keep a hotel competitive – only a blind-sided preference to delay the inevitable. An outcome that market competitors will applaud when the doors close.