46 Hospitality Upgrade | Summer 2008 www.hospitalityupgrade.com

T e c H n o l o g y B a S i c ST e c H n o l o g y B a S i c S

by Tina McCrossan

Capital planning for technology has be-come quite an adventure. Brands define technology and vendor standards. GMs

decide what they need now. Owners and asset managers decide what to actually fund. These three key constituencies have different motiva-tions and the power to thwart the desires of others.

Today, revenue performance risk is creat-ing an interesting brew of motivations and the relationship dynamics are changing. GMs are postponing non-ROI projects and looking for tools to help stay on their numbers. Brand CIOs are trading off technology refresh dollars and are becoming flexible on brand standards. Mean-while the third party in the balance of power, asset managers, stands ready to fund any ROI-based technology project.

The balance of power challenge is built into the history of the relationship. Brand CIOs define vendor standards and project priorities after exhaustive evaluation processes. They want GMs to place these projects in their budgets and owners to fund them. Owners want ROI com-mitments on anything they fund and faster brand technology review cycles on projects and strategy adjustments they sponsor. GMs want whatever projects are being pushed by brands or owners to work as represented and not be a burden for their property team.

Historically, satisfying everyone’s expecta-tions has been a frustrating process. Communica-tion between brands, owners and management companies has been improving. VP Information Technology at Thayer Lodging Group Mike Uwe Dickersbach said, “Marriott’s approach to orga-

nizing IT-specific meetings with ownership groups is a great form of communication by the brand. Owners need to be involved in the brand’s technology strategy process.” In addition these entities may all have their own CIOs indicating the growing importance of technology in their business strategy.

Brand CIOs have a difficult challenge. They need to set standards and define proj-ect priorities so the brand moves forward cohesively. They have to satisfy the needs of a wide spectrum of properties, which often dictates feature-rich, high-cost and complex solutions. Often their partners struggle with a one size fits all solution strategy.

It’s not easy for owners either. Having many brands in their portfolio exposes them to lots of technology standards. Their asset managers pay close attention to improve-ments or problems at their assigned proper-ties and seek to understand the causes.

VP Asset Management Chartres Lodg-ing Group Cody Bradshaw has been part of the balance of power for years. He focuses on the GM relationship and finds new things to try when a brand standard doesn’t seem to fit or an opportunity to improve perfor-mance is recognized. Bradshaw’s challenge comes when a brand steps in to make an evaluation before a project can proceed. In this situation Chartres is ready to write the checks, the GM wants it, but the brand has to bless it. Bradshaw said, “The biggest challenge for us is when a brand halts a project to complete an evaluation. A one- or two-year delay in rolling out a project may

Thayer lodging groupThayer is a unique player in the

ownership world. The company ac-quires properties focused on dramatic revenue and profit increase goals in a three year to five year window. Aggressive investments in major refurbishments and technology are part of its formula. Thayer has a repu-tation for successfully testing new technology. However, because it won’t typically own a property for more then five years, some brand standard proj-ects may not make sense. Mike Uwe Dickersbach said, “Understanding each other and adjusting strategies to go after common objectives is the key to relationship success.”

noble investment groupNoble Investment Group is both

the owner and the management company for most of its properties. The company has more flexibility in adopting mandated brand technology standards. In Noble’s case, brand executives will often bring in an idea to try something new. Nelson Garrido, VP Information Technology, said, “A tight relationship with our property teams gives us an advantage. It makes sense for us to get involved early when brands make changes or new technology ideas arise at the brand.”

Balance of

POWER

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What should a brand CIO be doing?

... Make sure counterparts in management companies and ownership groups understand your strategy and are getting feedback and input opportunities.

...Recognize owners today want to fund technology. If your project selection and GM budget presentation emphasizes an ROI result commitment, owners will write the checks.

...Tune in to the conversations going on between GMs and asset managers.

...Use partners as test beds for trying new things or exploring alternative suppliers.

...Speed up technology review processes – there has to be a fast-track for ownership-spon-sored technology. If you are the last to know about great ideas being funded and brought to life in your properties, it may be because field teams don’t want to slow down their projects.

...Emphasize the strategy you have for assuring quality delivery and ongoing support around standards you mandate.

...Recognize that one size fits all approaches to setting standards and priori-tizing projects is a major cause of frustration.

...If a mandated standard is not getting funded or owners are pushing for vendor change, it may not be misguided owners, there may be a better technol-ogy option.

What should an owner be doing?

...Attend brand-sponsored IT meetings and voice issues and ideas in these formats.

...Make sure brands know of your willingness to be a partner in exploring new technology or vendor standards.

...Explore technology and develop your own ideas to present to willing GMs. Make sure one property’s experience pollinates all of the others.

...Sponsor ROI projects with funding that is incremental to the current capital year plan, but require measurable improvement commitments to get that funding.

...Partner with your GMs. When you have technology you want to push, recognize you need buy in from your GMs.

...Seek understanding on black hole budget items like IT refresh. Require ROI commitments from GMs requesting funding for technology projects, but recognize some necessary projects will not have an ROI implication. Don’t expend everyone’s energy on trying to justify something which can’t be justified.

cause an opportunity to be missed.”Early pioneers in the asset manager role have

witnessed a lot of change over the years. In the begin-ning, asset managers had little power. Today they have a voice and although this means teams must cooperate and communicate, it can yield a better result. Asset managers focus on what is being purchased and want GMs to agree with the return expectation. Bradshaw said, “Today asset managers are more technology literate and recognize the power of technology to positively impact performance. Owners are ready to fund technology when their GMs are willing to sign up for the ROI.”

Tina McCrossan is the CEO of Cross Hospital-ity. She can be reached at tmccrossan@crosshos-pitality.com.

DiamondRock Hospitality company

As a publicly traded REIT, DiamondRock’s team is focused on building earnings per share. Its contracts are long term as opposed to the five year terms common today. DiamondRock stays out of trying to influence a PMS choice or server standard, but with other standards seeks to understand the business case and if the company sees red flags, will raise them. DiamondRock also stays on the lookout for new ideas. Working directly with GMs to find and fund new technology projects which will have a direct effect on profit performance. VP Asset Management Jeff Bond pointed out that GMs have to be receptive. “Today we are seeing greater willingness to explore new ideas and ways of doing things that can increase revenues and cut costs. We are ready to fund anything which has an ROI,” he said.

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