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A survey among 10,000 accommodation businesses worldwide shows that all (100%) are planning to increase or maintain their level of IT investments in 2024. Companies see digitization as the most important tool to enhance their competitiveness. Is your company ready for the future?
The rental and accommodation industries are not the only ones facing digital revolutions. Society as a whole, and the business sector in particular, sees digitization as a means to free up time, increase sustainability, and enhance competitiveness.
The survey conducted by Hospitalitytech.com among 10,000 accommodation businesses worldwide, indicates that all businesses are planning to increase or at least maintain current levels of IT investments and costs in their budgets for 2024. IT is taking up a larger portion of companies’ budgets, increasing from 4.0% to 4.2% in the last year. It is likely that European and Nordic businesses are higher than this.
One out of every three euros is allocated to investment in new solutions and development. This suggests that the industry has an increasingly proactive attitude towards the use of digitization in their operations.
What is needed to benefit from the opportunities presented by digitization? 54% of businesses report that a lack of IT competence is a hindrance.
This means that future accommodation businesses must secure this competence to ensure their competitiveness, which should be reflected in HR and recruitment strategies. It will be challenging to reorganize operations to defend recruting of internal IT resources, so a more creative strategy is needed. Typically, securing ordering competence and leveraging the various solutions and resources in the market is a wise approach.
Major chains have already established significant IT departments in their organizations. Major chains have already established significant IT departments in their organizations. This will enlarge their competitive advantage over time. Therefore, independent hotels and smaller accommodation businesses need a solid strategy to meet these changes.
In a traditional Return on Investment (ROI) calculation, the investment (or ongoing costs) is linked to saved costs, such as reduced personnel costs. For example, by implementing self-check-in and digital keys, the need for reception staff can be reduced. It becomes relatively easy to make a calculation by comparing hardware leasing costs against saved costs from reduced staffing. For a business with 50 rooms, profitability would increase by reducing staffing by a 20% position.
Looking at digitization as a whole, and considering that digitizing the guest journey can mean entirely new business models and a fundamentally changed operational form, the picture becomes more complicated and nuanced. How should the effects of increased sustainability, more satisfied customers, increased RevPar (revenue per available room), integrations, and collaboration between systems be calculated into the model? A good IT strategy with clear direction and goals can provide better insight into the effects of investments than the traditional ROI calculation. Regardless of how measurement and evaluation are done, an investment should drive the business towards more profitable operations. (Source: HotelTechReport, Softwares buyers guide, 2024)
International trends are clear. Tomorrow’s guests will demand new standards from accommodation businesses. Self-service is an example that can meet guest expectations for user-friendliness while allowing the business to streamline its operations.
Digitization and the competitive situation it creates will test the profitability of traditionally operated accommodation businesses. The purpose of this blog is to focus on the upcoming changes and encourage active preparation with a sound strategy and plan. I hope you succeed!
Hugo Mølmesdal,CEO
Invite Guest Technology AS
/ 23 January 2024