The hospitality vertical is booming across the Middle East. Specialist vendors and focused integrators are springing up in response.
IT in demand|~|HaniNofal3Com.gif|~|Hani Nofal, enterprise accounts manager at networking vendor 3Com|~|To say that hospitality is booming in the Middle East is probably an understatement considering the growth the sector has seen over the past few years. According to the World Tourism Organisation almost thirty million visitors touched down in the region during 2002, a rise of 17% on numbers from the previous year. Double-digit growth continued last year, with a 10% year-on-year increase in visitors. Hospitality is flourishing, and with it, so too is the demand for IT services and solutions. “There is no sector today which is more vibrant than hospitality,” says Ajay Kapoor, assistant sales manager at KIT, a GCC-based provider for Micros Fidelio management information solutions. “All the major expansion projects are in hospitality, from airports and hotels to restaurants, clubs, arenas and stadiums, and we have seen our growth keep pace with that expansion.” The type of products in demand covers the entire IT spectrum: wireless networks, property management systems (PMS) and interactive entertainment solutions are all on the list of ‘hot’ items that hotels and restaurants are clamouring for. The amount of money spent on IT can be phenomenal — as much as 10% of a hotel’s construction budget according to one source in the IT industry. The new 440-room Conference Palace Hotel in Abu Dhabi, for example, has a budget of around US$13m for the hotel’s technology infrastructure. With new projects spending millions of dollars on IT, the opportunities for the channel are massive, particularly with the boom in hotel construction. “It is almost a default now for any hotel or furnished apartment to have an IT infrastructure,” says Hani Nofal, enterprise accounts manager at networking vendor 3Com. “Business travelers and tourists would always prefer to stay in a hotel with a landline, a high speed internet connection in their room, or, as a next step, wireless.” Big name vendors such as Oracle, 3Com, Cisco and Mitel are involved in these vast projects, as well as smaller players like Micros-Fidelio, G-Hanz and Scala. But have a look at their partners and you will find that IT integrators in hospitality are a rare breed, despite the amount of money being bandied about. Companies that are partnering with the vendors mentioned above are operating solely in the hospitality vertical or at the very least are headed in that direction. Hotels and entertainment establishments have rapidly developed over the last few years and they are looking for customised solutions that can be rapidly implemented. “The hospitality sector and particularly hotels are interested in ‘ready made solutions’ in the true sense of the word,” comments Ayman Abouseif, MEA senior marketing director at Oracle. “They do not usually develop applications, they do not have large IT teams and do not have the time to wait for something to be developed for them. This includes everything from room reservation systems to guest relations and history, as well as high speed internet access and self service billing. You rarely find a hotel shopping for a software development tool.” ||**||Increasing integration|~|AymanOracle.gif|~|Ayman Abouseif, MEA senior marketing director at Oracle|~|The message for IT companies who are looking to jump on the bandwagon and serve hospitality companies is clear: get specialised and go niche. “There are more and more companies that are devoting themselves to the hospitality field,” notes 3Com’s Nofal. “In certain parts of the Middle East there are companies operating only in hospitality, and integrators are realising the business that is there to be picked up. We have one partner in Kuwait, who decided to set up a department only nine months ago to look after this sector after noting the increasing demand.” For IT companies who have still to get in on the act, there are contracts to be won for the smaller hospitality venues that need basic solutions and services. The less glitzy side of hospitality — cafes and restaurants — are getting in on the act and installing basic facilities for their customers, from Wi-Fi hotspots to point-of-sales (POS) kits. “We have solutions to target small shops and coffee houses, where the whole outlet can be made a wireless zone in a matter of hours,” adds Nofal. Activity in the lower reaches of hospitality has become much more intense over the last few years and this has had a major effect on profit. “For certain areas we sell into, take POS systems as an example, there are many more IT firms offering their wares to restaurants and the like,” concedes Kapoor at KIT. “Because of this competition in the market margins have dropped drastically from what the IT industry used to make a few years ago.” Much of the spending on IT comes from the resorts and hotels in the Middle East. Luxury five-star projects are pushing for increasingly complex solutions to assist in managing their operations and mine business information. “There is such a high level of integration of various systems, from customer relationship management software to point-of-sales, enterprise resource planning and property management systems. All these products are combined into one system to generate a single view report, for different departments and management. At the end of the day IT is looked upon to automate the process and the seamless interface of data flowing into the back office is what hotels are insisting on,” comments Basil Daniells, indirect channel manager at Scala Middle East. As hotels increasingly insist on a complete solution, integrators have to offer specialist services across the range of solutions and not simply in one area. “Scala partners are fully equipped to provide end-to-end implementation services to customers in their markets,” explains Daniells. “They handle everything and are responsible from the initial sales phase, to implementation and support. We can assist them and offer material assistance, but they are primed to do the job by themselves.” As with other verticals, more and more IT work is shifting towards services, and this is where the channel stands to benefit the most. Many international hotels have an IT staff in place to keep infrastructures ticking over. Daniells at Scala explains: “Our client base of big international hotels have dedicated IT support teams. We emphasise to our clients that they should have IT people, and most of them now have people in place. Without an IT team it will be difficult to support products like ours, and this is why internal IT is very important.” For when systems break down integrators still have to be on hand to provide round the clock backup. “Hospitality requires 24 hour on-call support, and so we have a presence wherever we have a client,” notes Kapoor. ||**||Innovative ideas|~|G-Hanz.gif|~|Ritesh Pathak, project engineer at G-Hanz|~|Even with IT staff in place, hospitality companies still do not perceive the importance of IT solutions that are in effect driving their business. “If you have a hotel with its own IT people who are efficient and know how to use technology then good decisions will be made,” notes Abouseif. “But most people in the hospitality industry do not recognise the importance of IT. Catering, food and beverage and front desk management is ten times more important than IT. When you look at a hotel’s management team to understand the balance of power it is obvious that the banqueting manager and people at the front desk have so much more power than the IT guy.” While awareness of IT remains so limited, the channel has to prove that there is either potential for return on investment (ROI) or, more importantly, that customers are demanding the solution. “Irrespective of what measures the industry uses, the ultimate goal in the five star segment remain the same: superior services provided at a competitive price,” says Hisham Amili, MEA-GCC international sales director at Mitel Networks. “Upper class facilities are now seeking high performance reliable technology to help them achieve a reasonable ROI on entry level and high incremental sales in retention. But it is ultimately about meeting customer demand and taste.” For the latest technology, hospitality will always be reliant on the channel to advise on the solutions they should opt for. G-Hanz, a vendor of products such as hotel interactive television solutions, frequently advises hospitality clients on the most suitable solutions. “Most hotels are not sure as to what they want,” says Ritesh Pathak, project engineer at G-Hanz. “They want a mini Disneyland in each room. We have to sit down with them and talk through their requirements, gain an understanding and educate as to what solution will suit them best.” Competition and rivalry play a part and as soon as one establishment signs up for the latest technology, the rest typically follow suit. “From what we see, every new project wants to be one up on the competition,” notes Kapoor. “That is what is driving the hotels in terms of IT. And the latest fashion is now internet booking services. We are seeing a surge in requests for online booking systems from local chains that are growing aggressively and trying to compete with the internationals.” Innovators will make the most out of the potential in the hospitality industry. All the large chains across the region have an IT infrastructure in place to meet their basic requirements. What is now needed is for integrators and vendors to reach out to the industry, do the hard sell for the latest buzz technology and show hotels how much more they have to gain from IT. “The landscape is endless for innovative IT ideas in the hotel management sector,” surmises Abouseif. “Does it surprise you in the 21st century that hotels still have 12pm check in and check out timing? Or maybe that you occasionally arrive to check in at a hotel only to find that their rooming system is down and that you have to wait until the computer service is restored? All these are issues that can be easily handled by advanced IT solutions.” The channel should check-in and check out the true potential of hospitality. ||**||