Build vs Buy: Valuable Lessons From Hilton and HotelKey 

Hilton recently announced its large-scale rollout of HotelKey’s Property Engagement Platform (PEP) and set a great example in the battle over build vs buy. Already at over 1,000 properties, it’s going to reach over 7,000 worldwide Hilton properties by 2026. Designed to act as a hub for a suite of software, PEP enables faster employee training (40 hours vs four hours, according to Hilton) while reducing complexity and errors. Most importantly, it replaces on-site with cloud-based systems. This helps to reduce cost and deployment times as well as removing on-site servicing of systems.

After having used an in-house developed system, Hilton decided to buy instead of build its next generation of property management software. Let’s look into why this was a good decision and how buying vs building can help keep companies at the forefront of technology and provide a competitive advantage.  

Build vs Buy: Flexibility  

One of the main reasons to buy software instead of building it in-house is the flexibility it affords the buyer. Hilton and HotelKey partnered to design PEP, which is unique to Hilton and will be used exclusively by their properties. While fantastic off-the-shelf solutions exist, a large brand like Hilton is going to have unique requirements to meet the demands of such a large and complex global property structure. The benefit of outsourcing development is that the client has the ability to provide input during the design process. Post-launch, you’re going to want to add features to continue to remain competitive and satisfy guests.  

Large clients will have dedicated staff (from the software provider) available to them to ensure the software is working properly and for everything from designing new features to troubleshooting bugs. If you think about any software that you use, from Windows to individual phone apps, there are constant updates being pushed out. There are stability improvements, new features, compatibility with new systems, etc. These take a lot of time and manpower, and it’s something you never have to worry about when you don’t develop it yourself.  

Build vs Buy: Cost  

Often when developing software in-house, companies fail to take into account the ongoing maintenance and further development. Cost-cutting measures tend to cut down on those developers over time while company priorities shift, resulting in outdated software that becomes a thorn in the side of guests and results in poor reviews. Purchasing software keeps development headcount off of the client’s books. As mentioned earlier, the continued development of the software will remain in the forefront, avoiding any declines in performance or guest satisfaction. Finally, keep in mind that when you buy, there is software ready to go. Yes, some customization happens for large clients, but it’s usually 90% there from the start. The cost of hiring and training developers and then starting to build software from the ground up is a cost you avoid when buying instead of building.   

Build vs Buy: Pace  

When deploying new software across a large portfolio the like of Hilton’s, it’s going to take a while. Hilton rolled out PEP to 500 properties over two years (starting in 2020) with the full rollout not complete until 2026. This is normal as there’s going to be a period of beta testing at the beginning followed by a period where stability needs to be observed across a selection of properties. Then features get dialed in before a larger rollout.  

When approaching something like this from an in-house perspective, the sunk cost is significant. There is this pressure to roll out as fast as possible to potentially reduce the amount of staff needed during rollout vs afterward. Going back to the cost topic, there is a risk of funding being reduced or headcount cut before the rollout is complete, potentially stalling progress and leaving many properties in the lurch. These issues are largely avoided when purchasing software, allowing a relatively small in-house team to take its time with logical beta and rollout periods.  

Build vs Buy: Options 

Lastly, when it comes to deciding between build vs buy, what buying gets you is options. From mobile ordering apps like Toast to room-cleaning robots, there are companies out there to leverage instead of building in-house. These companies do one thing and do that one thing very well. They are experts in developing, maintaining, and supporting their software and services and the clients that use it. Furthermore, interactions between solutions are becoming easier and easier. For example, Virdee’s own Virtual Reception is integrated with HotelKey’s technology along with numerous other PMS, lock, and payment providers. The ease of deploying and maintaining a purchased solution vs an in-house one is becoming better every day.