Why Total Cost of Ownership (TCO) is one of the most important metrics when it comes to hotel technology and how to lower it without sacrificing best-in-class system capabilities or service
By Steve Lapekas, Chief Operations Officer and EVP, Business Development for Above Property Services (APS)
For the sake of this article, let me introduce you to a hypothetical young couple who, after four years spent living together in a rented condo in the city, plan to purchase their first home together. After meeting with their financial advisor, they’ve determined a comfortable budget that considers their combined income and monthly spending habits, as well as their plans for the future. When they begin their search, the housing market is undeniably competitive, and, to get the location and square footage they want, they decide to opt for a ‘fixer-upper.’ The property they place an offer on is quaint but offers a central location in a great district and has, as the experts on HGTV love to say, “great bones,” which can be brought to life with a few (or many) renovations and projects. Over time, they trust that this house will become the home they always wanted, and it can grow and evolve with them to suit their needs and preferences as their budget grows to accommodate upgrades.
Now, let me introduce you to another hypothetical young couple who is ready for a change after purchasing, renovating, and living in their current home for five years. Their family has grown, as well as their careers, and the wish list they hand over to their real estate agent is admittedly much longer than the one they brought to the market as first-time homebuyers. Leveraging their profit from flipping their first home, they are now looking for a larger, move-in-ready house that can accommodate their still-growing family, with many of the bells and whistles their first house never had. Essentially, they are hunting for their “dream house” – a property that will become (and remain) their home for the foreseeable future.
The scenarios described here are both relevant because, in many ways, they mirror the circumstances faced by hotel brands as they establish (and then subsequently build out) the technological infrastructure supporting their operation. Much like buying a home, purchasing software is an evolutionary process. As hotels grow, evolve their offering, and look to cater to emerging guest preferences and demands, their tech stack grows and changes. In some cases, this growth is signified by the adoption of disparate systems (much like a home renovation) or the purchase of a new, all-in-one platform (much like the purchase of a dream home).
Just like homeowners, hoteliers can either have it all – or only have the solutions they need for the time being. However, hotels must consider the total cost of ownership when considering their tech adoption roadmap. Just as renovations shouldn’t cost more than the move-in ready house, an accumulation of disparate systems shouldn’t eat away at a hotel’s bottom line – nor should it stand in the way of operational efficiency and scalability.
The Cost of Fragmentation
In this digital era, we’ve become increasingly accustomed to a ‘divide and conquer’ approach to platform adoption. Even on an individual level, many of us have iPhones bursting at the seams with apps – one app for our mobile banking, one for our home thermostat, one for our email, one for mobile payments, one for fitness tracking, and so on. On the other hand, hotels are often split between two extremes; either relying on monolithic, legacy systems or overloaded tech stacks.
While an accumulation of modern platforms is, in many ways, a positive departure from legacy technology, it’s important to recognize that hotels can become weighed down by their tech stacks beyond the issue of operational efficiency as data silos emerge and hotel staff are split across multiple platforms. This can become a costly endeavor. Hoteliers must consider not only the upfront cost of each system but also the cost of acquisition/implementation, training, updates/upgrades, and integration fees. Only paying for what you need is a great idea in theory – but if the total cost of ownership of an overwrought tech stack begins to supersede the comparative cost of modern all-in-one platforms – does that approach still have merit?
Can Hotels Really Have it All?
In the past, hotels simply never had the option to purchase an all-in-one platform that maintained flexibility and scalability. In this regard, legacy tech could often be described as a jack of all trades but a master of none. Its inefficiencies quickly began to outrun any benefit offered by sticking with a singular platform and vendor. This reality began to nudge hoteliers in the direction of tech stacks, and we entered an era of hospitality technology in which systems prioritized excellence in one pillar of business. Hotels would seek out the best PMS vendor, the best S&C vendor, the best RMS vendor, and so on until they comprised what they felt was the ultimate platform ecosystem for their hotel. But what if I told you there now exists an all-in-one solution that is affordable and flexible and offers best-in-class functionality across all core hospitality applications? Moreover, what if I told you that you can shift your framework over to this single-source provider easily, iteratively based on contract obligations? What if I told you that, yes, hotels really can have it all?
APS (Above Property Services) was built precisely for this future. In a future in which hotels could leverage the power of microservices, they are free to completely customize their solution from the ground up according to the unique needs of their property. Each loosely coupled service/application we offer acts as a digital building block that runs as a separate process but can facilitate seamless data exchange through open APIs. This cohesive yet independent plug-and-play functionality opens up a new world of possibilities for hoteliers looking to enhance efficiency, revenue, and performance without sacrificing simplicity and user experience.
Now, hotels can easily integrate our best-in-class applications into their existing ecosystem using a systematic technology adoption roadmap we provide or adopt a gift-wrapped, all-in-one solution designed for independent hotels. With Hotel-In-A-Box, hotels have everything they need in one easy-to-use and easy-to-scale platform, including an internet booking engine, a channel manager, inline revenue management, and a property management system. By encompassing all operational application requirements for your hotel, the Hotel-In-A-Box platform eliminates the need for due diligence during the tech adoption process, as the hotelier will no longer need to assess multiple platforms or systems providers.
Using this platform, hotels can finally begin to shed the weight of their overloaded tech stack and enjoy a framework that offers all the bells and whistles with none of the operational headaches. Leveraging the power of microservices, hotels are free to completely customize their solution from the ground up according to the unique needs of their property. As you might have guessed, this is the “dream house” of hospitality tech, and it is entirely move-in ready.
