Five star functionality

The booming Middle East hospitality sector is driving huge investment in technology. Hotels are looking to property management systems and reporting software to streamline business processes and increase efficiency. At the same time, data networks and customer relationship management tools are being used to improve customer satisfaction.

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By  Patrick Phelvin Published  February 29, 2004

|~|NME_M.jpg|~|Sameh Ibrahim, director of information technology at Dubai’s Ritz-Carlton.|~|The Middle East’s growing hospitality industry shows no signs of abating, with dozens of new hotels planned in the coming months by both international chains and independent operators. This year will see the completion of a number of major projects, like the US$200million Conference Palace hotel in Abu Dhabi and the US$750 million Citystars Heliopolis development in Egypt. Aside from the boon this investment delivers to the construction and tourism industries of each nation, there is also an impact on the local IT sector as hotels invest in technology to ensure their businesses are streamlined and do not compromise on the industry’s make-or-break dynamic, customer satisfaction. “In accounting and back office we use all the modules: stock management, accounts payable, accounts receivable and general ledger every day. I have used other solutions but Scala is user friendly and transparent, you can follow your transactions back very easily,” says Serpil Delval, the hotel’s assistant finance director. “The software is open to imports and exports and can integrate with other solutions which is essential for us, we are currently interfacing Scala with three different applications,” she adds. Moving forward, the hotel, which has been running Scala since it opened in March 2003, is upgrading the software’s stock control modules. The upgrade will enable access to realtime stock information, meaning the hotel’s purchasing will become more efficient and ordering will be automatic. “The nature of materials management is that it is quite complicated as it involves other departments,” says Delval. “For stock management the developments of Scala have come a long way. It works fine now, but [Scala] is trying to provide us with more records and accurate costs by linking it to consumption automatically. We are already doing this with beverages and it is working well,” she adds. Moreover, while this investment used to be limited to enterprise resource planning (ERP) software, integrated with best-of-breed property management solutions (PMSs) from the likes of Micros-Fidelio, hotels are opening up to a whole gamut of technical solutions to govern everything from guest check-in through to food and beverage point of sale (POS) and staffing levels. The hotel industry’s back office applications are also evolving, and financial reporting and customer relationship management (CRM) applications are starting to deliver the possibility of greater fiscal analysis and increased guest loyalty. This ongoing investment in technology means that the IT budgets of new hotels have grown out of proportion to other parts of the hospitality industry’s spend. Those behind the new 440-room Conference Palace Hotel in Abu Dhabi, for example, have set aside around Dhs48million for the hotel’s technology infrastructure. The increase in IT spending has seen a raft of software and support firms flocking to the Middle East. “There is not really an issue of saturation in the region yet, especially in Dubai. The Palm Islands are coming, there will be 18 new five-star hotels coming on these islands, the opportunities are booming and Qatar, Bahrain, Egypt and Jordan are all doing well in the tourism industry. We see new opportunities in these countries for at least the next five years,” says Ziad Aqrabawi, Scala Middle East’s managing director. Much of this spend will be on the next generation of ERP software, which is tailored for the hospitality industry to offer more sophisticated functionality and better back-office integration with accounting packages like Excel. In anticipation of the growing demand for this technology, Scala Hospitality has expanded its team to target the sector with its hotel information management solution. The company’s largest implementation in the region to date, Dubai’s 860-room Grand Hyatt, saw the solution integrated with Micros-Fidelio’s front office solution, automating everything from financial and material management transactions to human resources transactions and payroll. It also offers hotel managers a wide range of realtime reporting features so they can compare variables at different times throughout the day, month or year. The solution has made the hotel’s day-to-day operations more efficient.||**||Finding new markets|~|martin.jpg|~|Large or small, hotels have similar demands, says Systems Union’s Martin Kaczmarek.|~|ERP vendors have traditionally been keen to target the higher-end of the hospitality market, like the Grand Hyatt, because the large number of guests and scale of logistics operations deem such solutions necessary. However, in order to find new markets more vendors are aiming their solutions at mid-range and small hotels, which have fewer than 200 rooms. To further its ambitions in the midmarket Scala has penned an agreement with Accor. Elsewhere, Systems Union has set up a Middle East branch office to tout its back office financial reporting solution, Sun Systems, which will target this sector. As part of this midmarket drive, the vendor recently implemented the back office financials software the 138-room Ritz-Carlton Hotel in Dubai. “Users have to look at where the business is not performing properly and they need information management tools to do this. Whether they are running a 100-room hotel or a 500-room hotel the issues are very much the same. Hence the reason we are trying to offer a solution to the midmarket,” explains Martin Kaczmarek, general manager of Systems Union Holdings’ Dubai office. “We have to be very careful not to dilute the solution we are putting in there [to the midmarket]. It has more to do with pricing rather than reducing the functionality. We have to ensure that the proposition is attractive and affordable to the midmarket as well as the larger luxury hotels,” he adds. The Ritz-Carlton’s Sun Systems implementation came about as a result of the hotel’s desire to improve the reporting features of its back end financials package. Added to this, Micros-Fidelio, which supplies the hotel with front office solutions, halted development of Fidelio back office, the Ritz-Carlton’s legacy solution, in favour of a tie-in deal with Sun Systems, which has seen Sun Systems re-branded as part of the Micros-Fidelio Financials (MFF) package. The new solution took 12 days to implement, which included five days of data migration from the legacy system. “Migration took a long time because we were migrating all transactions, not just balances, for 2003 and this is a lot of data. It was not difficult but it took some time and some effort. To migrate the data is simple but to ensure the data is migrated correctly is very important,” says Sameh Ibrahim, the hotel’s director of IT. The Oracle-based solution sits on a separate server running on Windows 2000 in the hotel’s IT room, and has so far proved reliable. “The advantage is that it is robust and has a powerful reporting system. I can pull any report you can imagine off the system, and it integrates with Excel, which the old system did not. Data had to be input manually and this took time and there was room for error. Now we can take any information [from the back end] and import it straight into Excel,” explains Ibrahim. While intricate financial reporting tools can do much to help managers make sound business decisions, they will not bring customers through the door. For this, a number of hotels are looking to customer relationship management (CRM) software, which promises improved repeat customer rate, the ultimate aim of the hospitality industry. This technology is being leveraged with great effect by the Ritz-Carlton through its low-tech, low-cost CLASS (Customer Loyalty Anticipation and Satisfaction System). The solution relies on members of staff collecting customer preferences, which range from how guests like their tea to their children’s names and the date of their wedding anniversaries. These are updated by IP address onto a single, global, database sitting in the USA, which operates in realtime. If a guest books a room in a Ritz-Carlton hotel, the database is searched to see if they have any customer preferences already logged. These preferences are then relayed to staff prior to their check in during morning briefings. The system has been in operation at Dubai’s Ritz-Carlton for five years and the hotel has enjoyed considerable success with it. “We have 40% repeat client base and 60% repeat client base from our Club [executive] members. Every year many of our guests return and this is all attributed to CLASS. People’s number-one request is to feel that they are special and the system allows us to do this,” explains Lorey Heynike, the hotel’s public relations manager. Despite its success, the CLASS system relies on the participation of the hotel’s staff who must discretely fill out slips of paper as they log preferences. This has been upgraded with the addition of a voicemail system so they can do so without leaving their posts. Moving forward, the hotel is working on plans to dispense with the paper-based system entirely and integrate CLASS with its Micros-Fidelio front office software. Also adding value to a guest’s experience of staying at a hotel is internet connectivity. Increasingly, businesspeople look for the availability of high-speed internet connectivity when they book, and investment in a wireless local area network (WLAN) is seen as an extra way of appealing to high-value customers.||**||Connected services|~|niroomand.jpg|~|Vendors will start to focus their wares at the region’s different hotel verticals, says Kaweh Niroomand.|~|In light of these demands hotels have invested heavily. The Ritz-Carlton, for example, has installed a WLAN in its executive floor and recently upgraded bandwidth availability to 256kbits/s in every room. Because most hotel networks are retro-fitted into the buildings, implementation can pose some challenges. The staff at the Ritz-Carlton waited until rooms were empty, or block booked them to install Category Five ethernet cables. Every floor was fitted with three Cisco switches, each with ten ports, which in turn was fitted to a billing server in the computer room. While there was some guest requirement for internet services before the billing server was installed, a temporary interface with the hotel’s PMS was built so guests could be charged for usage. At the same time a WLAN was built into the fifth and sixth floors of the hotel, which serve as the executive suite. Ibrahim believes the hotspot was among the first in the United Arab Emirates. Users of the executive suite can borrow a laptop and use the wireless connection free of charge or configure their own machine to do so. For guests arriving at the hotel with a laptop that is not equipped with a network card, the hotel will provide one for no charge and install it in their computer for the duration of their stay. For those who do not have a computer, the hotel has standby machines available. The hotel reports that, since the implementation, the number of business customers frequenting the Ritz-Carlton has increased, as have revenues gained from online services. “We receive many comments from guests who say they chose the hotel because it has wireless, or they needed internet access in their room,” says Ibrahim. “On the reservations side, I know there are a large number of queries about internet from people looking for a hotel room. Demand for such services is very high and growing all the time,” he adds. But in the same way as network implementation in the hospitality sector differs from that in the enterprise space, the hotel support model is also different. Guests must have access 24 hours a day, every day of the week. The Ritz-Carlton has risen to this challenge in two ways. First, all guests are provided with a 24-hour toll-free number that connects them to a helpdesk manned by multi-lingual Intertouch staff. If the guest’s problem cannot be resolved over the telephone, the hotel’s inhouse staff are called to deal with the matter. Ibrahim has been responsible for the training of ten hotel staff, including all duty managers, who are now capable of providing technical support. Such support service leverages the hotel’s existing expertise in building customer loyalty, a major component of the hospitality industry. And, so far, the region’s hotel sector has looked upon IT investment as a way of drawing customers in and add to their satisfaction of the overall experience. But in terms of selling internet connectivity to guests, the region’s hotels have yet to realise significant, if any, profits for their network investment. “We didn’t want a cash cow when we were designing our [internet access] IT packages,” explains Tom Flanagan, IT manager of the 246-room Radisson Diplomat in Bahrain. “We treat it as a loss leader that will get customers thinking of us as their first choice for accommodation in Bahrain. The service pays for itself but has much more intrinsic value when you take into account guest loyalty,” he adds. The Radisson recently upgraded to 512Kbits/s connections in all rooms as part of the hotel group’s Easy Connect initiative. The Cisco technology, implemented by Danish company Netpoint, supplied the hotel with a fault-tolerant, completely redundant and constantly monitored private network. The hotel now boasts internet kiosks in the lobby and in its business class facility, the Royal Club Lounge, as well as wireless internet access in the hotel lobby, three restaurants and poolside terrace. The hotel has implemented a range of charges for the service which scale up to US$18.50 for 24-hours’ connection. Despite the industry investment in internet services, legislation in many Middle East countries means that guests cannot be charged for access to WLAN networks. This factor, coupled with the fact that hotels only realise modest returns on their investment in wired network infrastructure, means these services are provided as more of a value add rather than something that hotels are looking to realise a significant return on. The next step for both internet services and back office apps in the hospitality sector is integration, as managers strive for greater efficiency. Also, as hotel chains concentrate their efforts on different speciality sectors within the market, vendors are tailoring solutions to fit different needs. “I believe the direction of the industry will be that there are more and more defined verticals because of competition in the market. There will be spa hotels, resort hotels, golf hotels and entertainment hotels. This is because hotels grew on the horizontal in the past, now we have enough of them and people are looking more and more to the vertical side. Each of these hotels will have slightly different requirements and we have to cater for these,” explains Kaweh Niroomand, executive vice president of Micros-Fidelio Europe, Africa & Middle East. And, with Middle East’s hospitality spending showing little sign of let up, vendors remain bullish about the prospects in the region. “The focus for us in the region is huge growth in the hospitality industry, although Sun Systems is a general product, hospitality is probably our biggest growth sector,” adds Systems Union’s Kaczmarek. ||**||

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