The days of vertical integration are in the past. Companies today, especially SaaS (Software as a Service) companies, specialize in areas where they have unique expertise. In order to expand their offerings, they partner with experts in other areas or license technology. Apple doesn’t build its own OLED panels and instead sources them mainly from Samsung, a leader in OLED technology. Getting to that level of expertise would be costly for Apple and result in years of lower-level screens vs the competition. Why reinvent the wheel when someone else has already designed a great version that you can leverage?
Property technology is innovative yet fragmented
Property technology broadly and hospitality technology more specifically have a lot of moving parts. You can’t just download a few windows applications and be up and running your property. The three basic building blocks of a hotel’s tech stack are PMS (property management system), locks (assuming they are electronic), and payment provider. The PMS market, for one, is very fragmented. The biggest player has only a 6.3% share of hotels by property and 16% share of rooms globally (Skift). New cloud-based companies are joining the fray all the time, providing hoteliers with ever more choices and improved features.
When it comes to locks and payment providers, there isn’t exactly a dearth in options, either. Online locks with Bluetooth and RFID are revolutionizing the industry and enabling smooth guest experiences and easier management. Payment options, as we see in any consumer-facing industry, is the lifeblood of any business. Guests and customers want to pay in their preferred manner.
Beyond the basic three necessities, there are optional offerings that aim to customize the guest experience. These include customer relationship management software (like Cendyn), custom mapping software (like MapsPeople), and guest services software (like Crave). The benefit of all these software companies inventing new and creative ways to engage guests is that properties have options to increase revenue, drive guest satisfaction, and relieve staffing pressures in ways that were unheard of a few years ago.
How do you bring it all together?
There isn’t a single company that provides all of the technologies listed above. They have to be sourced individually and then incorporated into each property’s system. Of course, guests don’t care about the work needed to get it to work. They just want an enjoyable experience without any hiccups. With so much technology, you have to be able to pull it all together. That is where front-of-house hubs come into play, enabling the coexistence of all these technologies and to guarantee that the end goal, a better guest experience, is reached.
Yes, some lock and PMS companies provide remote check-in and/or mobile key technology in addition to their base products and services. There are still many other technologies left to be consolidated. A single app that can integrate with the PMS while providing a mobile key, enabling guest communications, and serving up a customized map of the property is the key to herding the technological cats. Imagine having to asks guests to download three or more apps in order to access everything that your property offers.
What about building it yourself?
Remember the example of Apple and its Samsung-sourced OLED screens? Yes, some large hotel brands build and manage their own apps. With enough resources, this can definitely be accomplished. What many even large companies fail to realize until later is that the regular maintenance of these apps let alone the continued evolution and integration of new features can result in high costs and can get deprioritized if the company is facing budget cuts. By outsourcing this type of work, you enjoy customized software that remains up to date and the ability to relatively easily change providers.
In closing, if you’re a hotel, multifamily property, or any other property looking to enhance your tenant- and guest-facing technology, look to hubs that can pull everything together for you. They will have the ability to scale in the future to include new technologies and will allow you to better concentrate on your core competencies while still enhancing the experience of being at your property.
