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Volume 31, Number 4 Winter 2017

Bottomline
T H E

T HE J O U R NA L O F H O S P ITA LITY FIN A NCIAL AND TECHNOL OGY PROF ESSIONAL S


C O N TEN TS

THE JOURNAL OF
HOSPITALITY FINANCIAL AND
TECHNOLOGY PROFESSIONALS
Volume 31, Number 4
HFTP® and HITEC® are registered service
marks of Hospitality Financial and Technology
Professionals.

Submissions and Inquiries


Individuals interested in submitting an article
for publication should contact the editor. The
WINTER • 2017
Bottomline is a peer review journal. All ma-
terials submitted for publication are reviewed
by members of the editorial review board or
recognized experts in the field.
The Bottomline (ISSN 0279-1889), the journal FEATURES
of Hospitality Financial and Technology Profes-
sionals, Inc., is published four times a year by
HFTP®. Copyright © by Hospitality Financial 10 Demystifying The Digital Marketplace, Part II: The Financial
and Technology Professionals. All rights are
reserved. All opinions expressed herein represent
Impact of Changing Booking Behavior
the views of the authors. The Bottomline and An excerpt from "Demystifying the Digital Marketplace: Spotlight on the Hospitality Industry"
HFTP disclaim any responsibility for views By Cindy Estis Green and Matt Carrier
expressed or statements made in any articles
published. HFTP disclaims any liability with
respect to the use of or reliance on any such 14 Device Management: How Travelers Secure Electronics During a
information. The information contained in this
publication is in no way to be construed as Hotel Stay
a recommendation by HFTP or any industry Part I of III: This study report examines travelers' security practices for phones, tablets and
standard, or as a recommendation of any kind laptops during hotel stays. Part I covers guests staying in U.S.-based hotels.
to be adopted or binding upon any member of
the hospitality industry. Written consent must be
By Agnes DeFranco, Ed.D., CHAE and Cristian Morosan, Ph.D.
obtained from HFTP before reprinting articles.
Subscription fee of $30 for HFTP members
is included in the membership fee. HFTP is 22 The Role of the Asset Manager
headquartered at 11709 Boulder Lane, Suite A report on the skills required of asset managers and the type of services that they offer to lodging
110, Austin, Texas 78726. establishments.
By Tanya Venegas, MBA, MHM, CHIA; Agnes L. DeFranco, Ed.D., CHAE and Arlene Ramirez,
MBA, CHAE, CHE, CHIA

29 Do Self-service Technologies Matter In Improving Consumer


Commitment?
THE BOTTOMLINE STAFF
The integration of an increasingly popular service delivery mode — SSTs — has the potential of
delivering a transcendent experience to the consumers and further influences their commitment
Eliza R. Selig
Editor/Director of Communications By Wei Wei, Ph.D.; Edwin Torres, Ph.D. and Nan Hua, Ph.D.
Eliza.Selig@hftp.org

Jennifer Lee, CAE


Chief Marketing Officer 32 A Tribute to The Bottomline — Past, Present and Future
Jennifer.Lee@hftp.org In celebration of HFTP's 65 year anniversary, a historical review of HFTP's journal.
Frank Wolfe, CAE
Chief Executive Officer
By Agnes DeFranco, Ed.D., CHAE and Tanya Venegas, MBA, MHM, CHIA
Frank.Wolfe@hftp.org

HFTP OFFICERS
President
Lyle Worthington, CHTP DEPARTMENTS
The Student Hotel
Amsterdam, The Netherlands

Vice President
4 Between the Lines
Timothy G. Nauss, CHAE HITEC Times Three — Get ready — after 45 years of producing the largest hospitality
Macao Studio City
Taipa, Macao, SAR
technology event, HFTP expands in 2017 with two additional HITECs
Treasurer
Scot Campbell, CHTP 6 HFTP News & Notes
SMC Hospitality Consulting Profile: Talking Tech with Carson Booth — The three-decade, hospitality technology
Henderson, Nevada USA
expert, discusses why in a hospitality company's IT program it is important to make it
Secretary
Michael Levie, CHTP flexible and customizable.
citizenM
Voorschoten, The Netherlands

Immediate Past President


Arlene Ramirez, CHAE, CHE, CHIA, MBA
ADR Hospitality Consulting
The Woodlands, Texas USA

The Bottomline 3
Between the Lines

HITEC Times Three


Get ready — after 45 years of producing the
largest hospitality technology event, HFTP
expands in 2017 with two additional HITECs

H
ello, World! This past Janu- room talking about industry needs, hot new trends and general education
ary, I traveled from Amster- ranging from super technical to finance, marketing, revenue management,
dam to Toronto for two days international business and ethics. It is going to be an amazing HITEC. Soon
of strategic meetings — the HFTP we'll be releasing the session blueprint, and I encourage you to submit ses-
Vendor Advisory Council and the sion ideas and submit yourself for consideration as a speaker.
HITEC Toronto Advisory Council After these two days, I couldn't be more excited about the amazing things
meetings. The feedback from the HFTP is doing this year. This month we will host our first-ever European
Vendor Advisory Council was all HITEC in Amsterdam, and a few months after that, our North American
very positive and I heard more than HITEC will be held for the first time outside of the States in Toronto, Ontario
once that it was the best meeting Canada. And on November 14–15, we will debut our first ever HITEC Middle
we've had yet. HFTP is constantly East in Dubai. International expansion has been a key priority in all HFTP
striving to provide more to all of strategic plans for well over a decade, and after many years of planning, re-
our members, which includes our search and due diligence, we are moving full steam ahead.
vendor members, and this year is no This is an interesting time for our North American HITEC and Club and
different. We are constantly listen- Hotel Controllers Conference attendees, some of which may have never trav-
ing, and are working hard every day eled to Canada before. We will be putting out a series of informational articles
to increase the value of your mem- and webinars on what to expect, but I know everyone will love Toronto and
bership through better conferences, the city is very excited to have us. You do need a passport to travel to Canada
strong relationships with other asso- from the States, so if you don't have one, now is a good time to get one and
ciations, year-round education and start filling it with stamps! Stay tuned for more information from HFTP staff
better networking opportunities. If on travel tips, how to smooth your transition through the border, and how to
you haven't recently, I encourage you ship things in and out. You'll find Toronto is an easy (and cheap!) city to fly in
to look at all of the HFTP member to from most major U.S. cities, and I highly recommend you add an extra day
benefits. or two to your trip to explore the city and see the Canadian side of Niagara
The HITEC Toronto Advisory Falls — just a short drive away.
Council, chaired by International As a not-for-profit association, all the money HFTP takes in goes back out
Hospitality Technology Hall of Fame to our members and the hospitality industry as a whole. Our board, councils
inductee Prakash Shukla had its first and committees are all filled with volunteers who are working to make a dif-
meeting of the year to determine ference in the industry. It is one of the things I'm very proud of, and why I feel
the education agenda for the North HITEC is so different (and cheaper!) than other for-profit shows. It truly is an
American HITEC show. Such an industry conference, and HFTP truly is all about our members. I hope you're
incredible group of people all in one as proud as I am to be a part of it, and I look forward to seeing you all soon. ■

HFTP Global President Lyle Worthington, CHTP is chief information officer for The Student Hotel in Amsterdam, The Netherlands.

4 Winter 2017
The Bottomline 5
TALKING TECH WITH CARSON BOOTH
HITEC AMSTERDAM ADVISORY COUNCIL CHAIR

The three-decade, hospitality technology expert,


discusses why in a hospitality company's IT program
it is important to make it flexible and customizable.

This March 28–30, HFTP is producing its newest endeavour, HITEC


Amsterdam, a smaller, boutique version of the ongoing, popular 45-year
event. Helping to guide the educational component is long-time HFTP
member, Carson Booth, former vice president of global technology for
Marriott International (Starwood). Using his expertise in the European, and
international, hotel market, Booth leads a council of advisors to make the
program uniquely European, with global appeal.

What were some technology challenges that you faced early in your today’s property-based IT manager.
career? What are some of the top challenges you are facing today in the This creates gaps in security and
workplace? And how are you resolving them? service levels. Fortunately, above-
I started my career in the late-'80s at the beginning of the technology revolu- property solutions with professional-
tion and have since witnessed the complete immersion of technology in most ized service level agreements (SLA)
essential and non-essential activities. The evolution of usage went from users and security management are now
who were non-technical who then became tech-savvy, but still functioned maturing and the whole industry will
well without the support of technology. Then as personal technology became continue to benefit.
universal, the tech-savvy user became tech-dependent. Extending further, we
are now in the app era where users self-support personal experiences and What technology developments
expect accelerated technology release cycles with new functionality — always interest you most and why?
seeking something “more.” Augmented Intelligence — The inter-
This ultimately results in the BYOD/BYOT blurring of business and person- section of technology advancements
al use. Tech-dependence and devices in every pocket create very disruptive in mobile and cloud computing deliv-
challenges to organizations trying to control the need for standard processes ers untethered, real-time informa-
and data security against app-proliferation. Neither the food and beverage tion, communication and enhanced
director, nor their niece, should be allowed to download an inventory man- decision-making capabilities. The
agement app. Or even more concerning, develop one themselves. hospitality industry has a significant
In addition to the BYOT concerns of today, technology sophistication, opportunity to profit from these ad-
especially technology security, has far exceeded most skills and capabilities of vancements by recognizing that our

6 Winter 2017
HFTP is pleased to introduce the new member resource: news.hftp.org.
HFTP News Delivers:
• Member benefits and highlights • The latest HFTP social media posts
• Chapter news • Industry reports and feature articles
• HFTP press releases • Photos from HFTP Global and chapter events
• Blog posts from HFTP Connect • Discussion highlights from Community@HFTP

Monthly HFTP News Digest Submit Content


HFTP is sending out a monthly e-newsletter with The HFTP News site welcomes news related to
links to the top stories from the HFTP News page. chapter events and professional milestones. Contact
Look for the publication in your e-mail inbox. HFTP Public Relations Manager Jessica Blankenship
(jessica.blankenship@hftp.org) for details.

The Bottomline 7
guests are empowered by this intersection. Companies Hotels need to carefully prioritize their investment deci-
should redefine Data as an organizational strategic asset sions and consider the following best practices:
and build customer intelligence programs to leverage this Remain agile in product choice and contracting terms.
data to ultimately provide a highly personalized experi- The balance of right fit and terms needs to be weighed
ence for the guest. against medium- and long-term technology trends in the
Micro-services Architecture — Technology sophistica- industry. Lengthy contract terms will hinder an organiza-
tion for an individual hotel has surpassed its ability to tion’s ability to pivot when necessary.
manage and secure it. This sophistication tipping point, Keep it simple. If it feels complicated and is not well-
along with industry advancements in cloud services, is understood, then it should be reconsidered and ques-
driving technology above property and locking hoteliers tioned more.
into recurring services models where product suites can Spend constrained training funds on life-long learning
stagnate. Developers and suppliers that adopt a flexible, skills and not on IT training. The technology of the day is
micro-services architecture will create a significant share transitory and so are the training investments in certi-
shift by enabling a more flexible, open and modular ap- fications for IT staff. It is more critical and will provide
proach to applications which suit an operation’s needs greater lasting value for IT teams to learn life-long skills
and provides best product choice. like public speaking and financial management for non-

" Developers and suppliers that adopt a flexible, micro-services architecture will create
a significant share shift by enabling a more flexible, open and modular approach to
applications which suit an operation’s needs and provides best product choice."

What are some consumer-driven technology practices finance people. The technical training can be on-the-job
that have driven technology applications in the hotel? or self-study.
Portable personal content is driving two distinct changes Become more agile and responsive to your business
in hotel technology. First, hotel internet service band- partners. Do this by adopting a DevOps approach which
width continues to be a significant detractor to the emphasizes collaboration and communication between
customer experience. Customers compare the internet involved parties to break down the silos of the legacy
access speed/cost ratio against their home/consumer ex- plan-build-run organizational structures. Your business
perience and place a very vocal, highly-weighted critique teams will thank you.
against operators delivering sub-par experiences. On- Celebrate success. Digital/mobile teams receive more
street mobile technology continues to improve in speed praise than IT due to the front-end nature of their solu-
and data caps, and is also driving increased expectations tions; however, do not forget their stuff is a pretty front-
for hotel internet access performance. I look forward to end for complex back-end systems and interfaces. So be
the day where this expectation peaks and the on-street sure to celebrate success across the entire technology
and in-room connection experience is ubiquitous and spectrum.
indistinguishable, delivering an experience on-par with
in-home Wi-Fi. Having worked in hotels across the globe, in what
Second, viewership and purchase of hotel-supplied aspect do you see regional differences?
content continues to decline due to increasing customer There are definite technology expectation and capabil-
expectations and desire for bespoke content and lineups. ity differences by region driven in large part by legisla-
These expectations are supported by capacity increases tion, affordability and other market considerations. For
of portable media devices and cloud services like Netf- example, in the U.S., convenience outweighs privacy.
lix, Amazon and iTunes. These services are driving the Therefore services like automated credit card settlement
guest’s desire to display their personalized content using (chip/signature vs. more secure chip/pin) and keyless
the in-room television and media players. check-ins (registration-free) are examples of trading
additional information or accepting greater data risk for
What are some best practices you have for running an quicker service.
IT department in a field that is always changing? Global and regional operators are constantly tasked
The constant evolution of technology is unsustainable with managing legislation and requirement variances
for the average individual hotel with limited resources. across political-economic unions, like the EU and mem-

8 Winter 2017
ber-states. For example, the registration card remains
paper-based across some EU countries, but not all. Varia- " The third lasting effect, which is personal
tions in VAT and other fiscal requirements for receipts
and financial processing need to be accommodated for; in nature, came with the realization that
as well as, differences in data nationalization efforts for
countries like Russia versus the EU’s General Data Pro- one success doesn’t necessarily translate into a
tection Regulation (GDPR).
In Asia, several differences are noticeable from highly- pattern... Learning how to develop and present a
connected and automated Japan with pervasive 4G, cube
and robot-staffed hotels, to solution inward-looking business case, bring others along and identify when
China which challenge global operators in their quest for
operational, guest-service and data consistency.
to press ahead versus when to walk-away, is one of
There are broader inconsistencies in language require- the most important lessons of my career."
ments and staff capabilities, costs for internet services,
currency exchange and average rates which impact solu-
tion affordability, as well as definite gaps in true global agement solution for all departments. Learning how to
cloud service offerings and service-provider. Its complex develop and present a business case, bring others along
and requires local knowledge with global coordination and identify when to press ahead versus when to walk-
for the larger brands to efficiently deliver consistent tech- away, is one of the most important lessons of my career.
nology solutions to enhance the customer experience.
Leadership and teamwork are always important. De-
Describe a professional experience that has stuck scribe an experience when you led and worked with a
with you. What did you learn from this experience? team to resolve an issue.
Many years ago, U.S. legislation drove the need for great- The decentralized property technology that remained
er accountability in financial reporting for U.S.-owned local created an impediment to our company’s strategy.
assets held around the world. In Europe, we embarked on Our team was tasked with identifying multiple paths
consolidating and raising above-property the hotel-based to advance property technology agility, security and
financial reporting systems for 68 hotels in 10 coun- standardization across the globe. We brought together a
tries to a self-hosted private cloud service. We built and small, but very capable team, to seek solutions internally
deployed a self-managed data center, created appropri- and externally with major tier-1 technology partners.
ate policies and processes, and brought the solution up Enterprise class solutions were preferred, but came
technically. By today’s capabilities, this seems an easy with a significant cost premium which we knew the
and natural solution, but at the time, it was new for our board would struggle to approve. Nine months of effort
users and IT staff. This took an equally-significant effort around design, scalability, iterative pricing negotiations
to win their hearts and minds and to prove the solution and navigating the inherent sacred cows on both sides of
provided the needed security and service levels. the table, led to a tired and very frustrated internal team
This program has had three lasting effects. The first with significant personal/ownership stakes.
being, the program’s IT processes and security program Finally, we had a proposal that we could present and
laid the foundation for Starwood’s Global Information defend to our senior leadership team, but we knew its
Security Policies and started the Information Risk Man- price tag was a long shot and would come down to a few
agement program which is still deemed best in industry minutes pitch followed by a yes, revise or in this case, a
today. The second was the clear establishment of an no. Several weeks prior to this decision, it was impor-
above-property technology strategy for Starwood. tant to start a coping process to help the team transition
The third lasting effect, which is personal in nature, away from their personal ownership stakes and realize
came with the realization that one success doesn’t neces- in any sizable business no one person can make all the
sarily translate into a pattern. Fond memories remain decisions. Most importantly, this included helping them
of the spectacular failure of the immediate subsequent recognize that as a team the journey was a success re-
project to implement a hosted, enterprise project man- gardless of the outcome. ■

March 28–30 • RAI Amsterdam Convention Centre • www.hitec.org


HITEC Amsterdam delivers a top-notch hospitality technology edu-
cation program and expo backed by 4 5 years of planning expertise
from the only organization that globally produces nonprofit hospitality
conferences — HFTP.

The Bottomline 9
Distribution
DEMYSTIFYING THE DIGITAL MARKETPLACE, PART II:
THE FINANCIAL IMPACT OF CHANGING
BOOKING BEHAVIOR By Cindy Estis Green and Matt Carrier

P
An excerpt from art 2 of the new special report from Kalibri Labs, Demystifying the Digital
Marketplace: Spotlight on the Hospitality Industry, dives deeply into the
"Demystifying the intricacies of digital distribution and provides insights into what drives
business today. The report is based on hotel production data and associated
Digital Marketplace: costs for 25,000 hotels from 2014–2016 to examine the patterns of perfor-
mance by hotel type over time and is sponsored by many industry associa-
Spotlight on the tions, including HFTP. The following excerpt shares key findings from Part 2 of
the report.
Hospitality Industry, The analysis looks at three types of revenue or ADR: guest-paid revenue or
ADR includes everything paid to a hotel or third-party to account for mer-
Part II" chant (Net) rates; hotel-collected revenue or ADR reflects the revenue the
hotel collects and shows on the P&L statement; and COPE revenue or ADR
(contribution to operating profit and expense) which is a type of net revenue
that reflects the guest-paid revenue after removing all direct acquisition costs
Download the full report at
such as commissions, transaction fees, loyalty expenses and channel costs. At
www.ahla.com/ddm, with
the U.S. aggregate level the study examines net revenue which additionally
passcode: HFTP2016
removes sales and marketing expense.

Cindy Estis Green is co-founder and CEO of Kalibri Labs, LLC. She is also a director on the HFTP Global Board and an inductee to the HFTP International
Hospitality Technology Hall of Fame. Matt Carrier is director of client engagement at Kalibri Labs.

10 Winter 2017
The Bottomline 11
Distribution

Revenue Capture
Total U.S.
• Across the industry, revenue
capture, or the percentage of
$146.9 B guest-paid revenue that hotels
Guest-paid
Revenue
+4.6% retain after all customer acquisi-
$140.4 B tion costs are paid including sales
and marketing expense, declined
by 0.5 percent from 2015 to 2016.

• If the revenue capture percent-


$123.3 B age had remained steady year
Net +4.0% Revenue over year, U.S. hotels would have
Revenue (Billions) collectively retained $729 million
$118.5 B
■ 2016 more in net revenue. From a hotel
valuation perspective, this reflects
0 30 60 90 120 150 ■ 2015
a $9 billion erosion of asset
2016 2015 Change values when using an 8 percent
capitalization rate. For every 10th
Revenue Capture Percent 83.9% 84.4% -0.5%
of a point that revenue capture
As revenue capture declines, real estate values erode percentage declines, asset values
Revenue capture loss (-0.5) = $729 million are reduced by $1.8 billion.
12 months ending in June 2015 and 2016 • Source: Kalibri Labs, 2016
• Bookings through OTA, GDS and
FIT/wholesale, or the indirect
Customer Acquisition Costs Rising age customer acquisition costs in a sources of business, represent
A key factor impacting hotel perfor- routine way. an increasing percentage of total
mance in the new digital market- Navigating a virtual spaghetti transient bookings, particularly
place is the rising cost of customer bowl of players in the rapidly chang- due to high growth rates in the
acquisition. Growth in the digital ing digital distribution ecosystem OTA channel. The decline in direct
distribution market for hotels has challenges those in the industry to bookings translates to an increas-
come along with the consolidation of understand the levers available to ing market share of third-party
several large intermediaries and in- them that can affect improvement. intermediaries.
creasing market share of third-party
intermediaries has caused distribu- Hotel Revenue Capture is Declining • The difference between the
tion costs to rise quickly. • The report found that hotel-col- amount the guest pays, guest-paid
These distribution costs, or cus- lected ADR growth (or traditional revenue, and the amount the hotel
tomer acquisition costs, have risen ADR) during the current cycle, reports in their financial state-
from five to 10 percent of guest-paid beginning in 2009, has been sur- ments, hotel-collected revenue,
revenue in the 1990s to 15 to 25 prisingly low. Interestingly, ADR has grown to over $3.5 billion
percent in the U.S., and higher in growth has been well below prior in the 12 months ending in June
other regions, in 2016. Customer cycle peaks despite the strongest 2016. This margin of difference is
acquisition cost is second only to supply/demand relationship and made up of commissions related
labor costs in growth rate and is the highest industry occupancies to merchant (net), opaque and
very difficult to manage. There are of the past 40 years. wholesale net rate bookings.
a myriad of vendors providing sales From an ADR perspective, cur-
and technical services supporting • COPE revenue is growing more rently reported hotel-collected
hotel distribution with various fee slowly than guest-paid revenue ADR values at the total U.S. level
and compensation structures that and hotel-collected revenue. As are understated by about $3 dol-
cause costs to be scattered across consumer demand increases and lars because they do not account
the profit and loss statement or not as guests pay more, hotels are not for the rates paid directly to
shown in accounting records at all. always capturing that incremen- wholesale and OTA third parties
Even the most sophisticated opera- tal value due to added customer and therefore do not reflect actual
tors struggle to quantify and man- acquisition costs. customer spend.

12 Winter 2017
Distribution

Sources of Business are Shifting


As seen in the Source of Business 2016 Demand Share
chart at right, digital channels now Total U.S.
account for 42 percent of total room
nights. Growth in Brand.com, OTA Source of Business
and GDS has come at the expense of Percent of Actualized Voice,
Room Nights 8.1%
more traditional sources of business
such as property direct and voice.
The Brand.com room night share of
the total U.S. market for the year end- Property Direct,
Brand.com, 20%
ed June 2016 was 20 percent while 34.3%
OTA was 12.4 percent; GDS was 9.5
percent; voice 8.1 percent; group
14.2 percent; FIT 1.4 percent; and
property direct was 34.3 percent. Group,
For the industry, as a whole, direct 14.2%
OTA,
booking channels are dominant, led 12.4%
by the huge amount of business that GDS,
still comes direct to the property. This 9.5%
FIT Wholesale, 1.4%
is predominantly driven by chain
scales at the lower end of the ADR 12 months ending in June 2016 • Source: Kalibri Labs, 2016
range in the industry and are exam-
ined in more detail in the full report.
While OTA room night share with guest-paid revenue. However, percent, followed by the midscale
growth was most dramatic over across the board all customer acqui- and upper midscale chain scales at
the period of 2014 to 2016 at 28 sition costs have increased over the 7.6 percent and 7.4 percent respec-
percent, it was on a much smaller 2014 to 2016 period. tively. The economy chain scale had
base than Brand.com which rose 9 the strongest loyalty penetration
percent while GDS gained 6.5 per- The Power of Loyalty growth, 32.6 percent, but was build-
cent. Property direct’s decline was Third party intermediary marketing ing on a smaller base at roughly half
the largest at 12.8 percent. Modest budgets dwarf those of hotel brands; of the loyalty penetration of other
changes were found in group with a Expedia and Priceline reportedly chain scales.
0.2 percent gain and FIT with a 0.9 spend close to $6 billion in Google
percent decline. search alone. However, the penetra- Key Takeaways
tion of hotel brand loyalty programs The changing and increasingly
The Impact on Booking Costs clearly conveys a powerful value digital distribution marketplace in
The report finds that bookings made proposition to consumers. Hotel the hotel industry affects different
directly with the property or brand brands have a strong hold on certain segments in different ways. There
are more profitable than those made segments of the market, such as busi- are broad trends of declining or flat
with an intermediary. This is largely ness travel and government, due to room night shares coming through
because indirect bookings contain loyalty programs while OTAs domi- legacy channels, property direct and
commissions in addition to channel nate amongst non-loyal consumers voice, along with a marked shift in
fees and are likely to be at discount- buying leisure products. OTA. The increases in Brand.com
ed rates. In fact, as a percentage The share of room nights associ- business in certain tiers and chain
of Guest-Paid Revenue, OTA costs ated with loyalty member bookings scales show the impact of loyalty-
are approximately double those of was over 50 percent for the upper focused marketing campaigns while
Brand.com. and middle tiers, upper midscale the dramatic growth in OTA business
The report also found that the and above chain scales, and about 25 highlights the continued efforts that
growth rate of OTA commissions is percent that for the lower tier, mid- stay brands will need to undertake
outpacing the growth rate of guest- scale and economy chain scales. The in order to sustain acceptable net
paid revenue. Specifically, OTA com- tiers, discussed further in the full revenue results for their hotels. ■
missions are growing at nearly three report, break U.S. hotels into group-
times the rate of guest-paid revenue ings based on their rate performance To access Part 2 of the report from
and two times the rate of loyalty fees. and business profiles. Growth rates Demystifying the Digital Marketplace:
By comparison, retail travel agency for Brand.com loyalty penetration Spotlight on the Hospitality Industry,
commissions (traditional TA busi- from 2014 to 2016 are strong within visit www.ahla.com/ddm; passcode
ness) have grown pretty much in line the upper upscale chain scale at 8.5 HFTP2016.

The Bottomline 13
Security
DEVICE MANAGEMENT
HOW TRAVELERS SECURE ELECTRONICS
DURING A HOTEL STAY By Agnes DeFranco, Ed.D., CHAE
and Cristian Morosan, Ph.D.

Part I of III
I
n today’s world, one cannot escape news about cybersecurity, and the hotel
community is no different. From Omni to Marriott, from IHG to Trump (Mc-
This study report examines Millian, 2016; Osborne, 2016; Pagliery, 2016; Scott, 2016), no one is immune.
Hotels strive to provide a safe network environment for their guests. Yet,
travelers' security practices guests’ behavior often influences the degree to which the network environ-
ment can be kept safe. From rogue sites to guests inadvertently opening spam
for phones, tablets and e-mails, malware can then enter the hotel Internet portal and infect entire
systems, compromising not just the operations of the hotel, but all activities
laptops during hotel stays. that guests do as well. Therefore, this article is the first of a three-part com-
prehensive study documenting how guests view the security level of hotel
Part I covers guests staying network connectivity based on 24 computing behaviors and what practices
in U.S.-based hotels. guests have when staying with us. This first article was based on 1,301 guests
who stayed in hotels within the United States. The second article was based
on 1,017 guests who stayed in hotels outside the U.S. This second article
is of importance as many of our hotels own, manage or operate properties
internationally, and therefore the results have significant implications to your

Agnes DeFranco, Ed.D., CHAE (ALDeFranco@Central.UH.EDU) is a distinguished chair and professor at the Conrad N. Hilton College of Hotel & Restau-
rant Management, University of Houston. She is also an HFTP Global Past President, chair of the HFTP Global Hospitality Accounting Common Practices
Advisory Council and a recipient of the HFTP Paragon Award. Cristian Morosan, Ph.D. (cmorosan@uh.edu) is an associate professor at the Conrad N. Hilton
College of Hotel & Restaurant Management, University of Houston. This article is partially supported by HFTP.

14 Winter 2017
Security

brand. The third article combined


the 2,300+ responses to compare
DEMOGRAPHICS
the results of these two groups, and
also to explore if their demographics
RESPONDENT PROFILE
(gender, age, income and education)
and their travel behavior (frequency GENDER
of travel, length of stay, type of
hotel and purpose of travel) would
make a difference in how guests Male, 57%
use their mobile devices in hotels.
If we as hoteliers can understand Female, 43%
our guests’ mobile device behavior
and preferences, we can work with
our guests and other related parties
(e.g., mobile device manufacturers,
Internet providers, phone carriers)
to mitigate cyber risks in the lodging
industry. AGE INCOME
How many devices do our guests
3.5% 14.6% 10.2% 36.7%
carry with them nowadays when
they travel? I was sitting at the air-
port, waiting for a flight to Las Vegas <24 25 –29 <$50K
$50,001
to attend the HFTP Annual Conven- – $100K
tion. The gentleman sitting next
to me had his two phones plugged
into the charging station and he 38.2% 13.8% 29.9% 15.1%
was working on his laptop. The lady
across from me was Facetiming on
$100,001 $150,001
her iPad Mini tablet and when that 30 –39 40 – 49
– $150K – $200K
conversation ended, she took out her
phone and placed a call. Her hus-
band, sitting next to her, pulled out
13.2% 16.7% 8.1%
his laptop after the “tablet” commu-
nication and did some work. A few
minutes later, his mobile phone rang. 50 – 59 60 or older >$200K
Between these three people and me,
there were 10 devices! Yes, I carried
three. I needed my laptop to do work,
my tablet to play some mindless
games on a three-hour flight, and
my phone, of course. On the flight,
people were using their laptops, EDUCATION
phones and tablets to view content 11.4% 40.4% 27%
over the Internet provided by the air-
line. Should they desire more band-
width, for a small fee, they can be High School Bachelors Masters
connected to the “real” Internet and
send e-mails, texts and download
other content. When I arrived to the
hotel, as soon as I entered the room, I 18.9% 2.3%
checked for the Wi-Fi connection.
This is 2017. Everyone, from a Doctoral/
Others
business person to a grandmother, Professional
has some sort of mobile device and
everyone seems to need the Wi-Fi

The Bottomline 15
Security

connection. As hoteliers, we under-


stand this need, and to manage our
STAY CHARACTERISTICS
operations, we also need reliable
Internet connectivity as well. Some
7–12 Times
hotels even provide guests with a 3–6 Times
a Year, 19%
a Year, 39% 4–7 Nights, 2–3 Nights,
variety of levels of Internet connec-
37% 42%
tivity services, from free access to
a nominal fee for premium service. >12 Times FREQUENCY LENGTH
However, with multiple devices, a Year, 12%
OF TRAVEL OF STAY
multiple guests in a room, guests
<Once a 8–14 Nights,
in our lobbies and meeting space, Year, 6% 12%
together with the need of the hotel
>14 Nights, 4%
itself and the staff, a reliable and 1–2 Times 1 Night, 5%
secure Internet connection is a must. a Year, 25%
The cost of information and telecom-
munication is not small, so much so
Mostly
that the 11th edition of the Uniform Upper Upscale, Leisure, Mixed,
System of Accounts for the Lodging Upscale, 22% 19% 29%
Industry (USALI) now has a sepa- 30%
rate schedule for that. In addition, TYPE OF PURPOSE
according to the CBRE Hotels’ Trends
(2016), the cost of system expenses
HOTEL OF STAY
Upper All Leisure,
totaled 33.1 percent and Internet Luxury, 10%
Midscale, 24% Mostly
alone costs 4.7 percent of the entire Others, 1% 23%
Business, 22%
schedule. To complicate the matter Midscale, 10% Economy, 4% All Business, 6%
more, on the one hand guests would
prefer the Internet connections to
be free of charge, and on the other
hand, unsavory parties are lurking in
the wings, ready to hack into our sys-
tems. So, how can we keep Internet DEVICES
connections secure? Remember, the
system is used by “people;” and in Other, 3% Other, 5%
Employer, 8% Employer, 8%
this case, many of the users are our
guests who come from all parts of
the world. How can we as hoteliers
keep everything secure in the cyber
world? Therefore, understanding our
LAPTOP TABLET
guests’ usage behavior may offer us
insight to help formulate our strate-
gies to continue to afford a secure Personal, 89% Personal, 87%
Internet environment for our guests
and hotel operations.

Our Guests and Their Devices Other, 3%


Employer, 5% Zero, 14%
A panel survey was carried out in
May 2016 and 1,301 hotel guests Four, One, 35%
who traveled and stayed in hotels 9%
within the United States responded. SMART NO. OF
These guests were asked to rate PHONE DEVICES
the risk of 24 mobile device usage Three,
behaviors (“1” being very risky to “5” 16%
being very safe) and the frequency Personal, 92% Two, 26%
of such behaviors (“1” being never to
“5” being always).

16 Winter 2017
Security

The profile of the respondents is


illustrated on page 15. Over half of
DEVICE USAGE Safety Ratings
our guests were male (57 percent), TABLETS
with the age groups of 30–39 (38.2 The panel was presented
percent) being the most prominent. Safest practices:
However, after this age group, the with three behavior lists for 1) Leaving the tablet in the room’s
respondents were fairly evenly safe deposit box when temporarily
laptop, tablet and smart- leaving the hotel room
distributed with 13.2 to 16.7 percent
across four other age groups. As for phone usage during hotel 2) Connecting to secure Wi-Fi
income, over 66.6 percent or roughly network of hotel
stays. Participants rated the 3) Using encryption
two-thirds were in the income
brackets of $50,000 – $150,000. behaviors from safe to risky. Riskiest practices:
Over 40 percent of our guests had 1) Bringing/storing sensitive personal
earned a Bachelors degree. information on device
As for their travel patterns or stay 2) Leaving tablet “sleeping”
characteristics (see Stay Character- LAPTOPS 3) Leaving tablet on/logged in
istics, page 16), 39 percent of guests
Safest practices:
traveled three to six times a year,
1) Leaving the computer in the room’s
SMARTPHONES
while another 25 percent traveled
one to two times a year. Seventy- safe deposit box when temporarily Safest practices:
nine percent of guests stayed with leaving the hotel room 1) Using antivirus protection
our hotels anywhere from two to 2) Using antivirus protection 2) Using traffic encryption (VPN)
seven nights (two–three nights at 3) Using encryption 3) Using encryption
42 percent, and four–seven nights at Riskiest practices: Riskiest practices:
37 percent). While only 10 percent 1) Following hyperlinks found online 1) Following hyperlinks found online
stayed at our luxury properties and 2) Leaving computer “sleeping” 2) Leaving smartphone “sleeping”
another 10 percent stayed at our 3) Leaving computer on/logged in 3) Leaving smartphone on/logged in
midscale properties. The class of
hotel that had most of our guests
Complete ratings and rankings are detailed on the following pages.
was the upper-upscale hotels at 30
percent. The upper-midscale came in
second at 23 percent followed very
closely in third place by the upscale Perception versus Reality: Do
hotels at 22 percent. It appeared Guest Practice What They Know? tablets and smartphones (each with
that although 6 percent of our guests The reality check came when the a separate table).
traveled strictly for business and panel was presented with three As illustrated in the Laptop
another 22 percent were mostly lists of behavior on their view on table (page 18), our guests ranked
for business, to balance one’s busy laptops, tablets and smartphone us- “Leaving the computer in the room’s
lifestyle on the road, 29 percent of age when they stayed at our hotels. safe deposit box when temporarily
our road warriors selected “mixed” Twenty-four behaviors were listed leaving the hotel room” as having
as their responses. In addition, 19 for each device. These behaviors can the safest ranking with a 3.85 rating.
percent of the respondents traveled be grouped into four major catego- This was followed very closely by
mostly for leisure and 24 percent ries: how guests safeguard their “Using antivirus protection” at 3.83.
traveled strictly for all leisure. devices (e.g., leaving the mobile The next two that received a 3.75
It seems that mobile devices are device in the room’s safe deposit and 3.71 rating were “Using encryp-
extensions of ourselves. As illus- box to shutting it down completely), tion” and “Using traffic encryption”
trated in the Device charts on page how guests protect their data (e.g., respectively, while “Connecting
16 the majority of the laptops (89 encryption, bring personal informa- to the secured Wi-Fi network of
percent), tablets (87 percent) and tion), guests’ connection preference the hotel to access the Internet”
smartphones (92 percent) were (e.g., hotel Wi-Fi, hotel wired, free was ranked fifth at a score of 3.63.
owned by the guests themselves, connections) and guests’ Internet Although these results might have
and 86 percent of our guests carried usage (e.g., accessing resources, been expected, what should also
at least one device while 9 percent websites, streaming services, social be expected then would be if one
carried four devices. Of those, the media and software). The results are rated a behavioral item as highly
majority of guests carried two smart- charted in three tables, each giving safe, one should also practice that
phones, a tablet and a laptop. the ratings and rankings for laptops, item and exhibit that behavior more

The Bottomline 17
Security
LAPTOP USAGE
often than others. As there were 24
Safety and Practice Ratings and Ranks items, six items would represent 25
Safety Rating/Rank Practice/Rank percent. Therefore, any behavior
that had a ranking difference of at
Leaving computer least six ranks in its safety ranking
Using traffic and practice ranking are highlighted
in room’s safe Using antivirus Using encryption
encryption yellow in the table. There were
deposit box when protection (file level, full disk)
(VPN) three items that hotel guests did not
out of room
rank as safe as others and yet they
3.85 3.26 3.83 3.64 3.75 3.27 3.71 3.23 frequently practiced such behaviors
when staying in our hotels. “Access-
1 11-T 2 2 3 10 4 15 ing regular websites” was ranked
Connecting to 11-tie in safety and yet, it was
Connecting to Leaving computer ranked third in practice. “Accessing
wired network Accessing secure
secure Wi-Fi shut down social media websites” was ranked
connection resources
network of hotel in the room 14th in safety out of 24 items, and
of hotel
again, it was ranked high in practice
3.63 3.72 3.60 3.29 3.59 3.26 3.57 3.44 in seventh place. Finally, coming in
5 1 6 9 7 11-T 8-T 5 at 20th in safety was “Connecting to
the free/public Wi-Fi (wireless) net-
work of the hotel to access the Inter-
Accessing
Using bookmarks Using e-mail Accessing net” and when it came to practice, it
popular streaming
stored in device clients regular websites was ranked sixth, even one ranked
services
higher than assessing social media
websites. Since these behaviors are
3.57 3.34 3.57 3.46 3.56 3.49 3.56 3.24 ranked high in frequency, hotels
8-T 8 8-T 4 11-T 3 11-T 14 may want to work with their guests
to ensure when they are using their
Using cloud or laptop to access websites, social
Using
remote desktop Accessing social Accessing secure media and connecting to free/public
conferencing
services for media websites (https) websites Wi-Fi, that the guests are practicing
software
storage secure Internet usage.
On the contrary, there were three
3.56 3.16 3.55 3.35 3.51 3.14 3.50 3.25
items that were ranked high in their
11-T 16 14 7 15 17-T 16 13 safety rankings, but were not prac-
ticed as often. It was interesting to
Accepting Purchasing online Following Connecting to note the top safety-ranked behavior
updates from from various hyperlinks free/public Wi-Fi of "leaving the laptop in the room’s
common software vendors provided by hotels network of hotel safe" only had a practice ranking of
11-Tie. With 75 percent of our guests
3.39 3.12 3.39 3.14 3.34 3.06 3.24 3.37 staying in at least an upper midscale
17-T 19 17-T 17-T 19 20 20 6 hotel and 62 percent at least an up-
scale hotel, in-room safes are avail-
Bringing/storing able. It is possible that the inconve-
Following
sensitive personal Leaving computer Leaving computer nience factor requiring guests to lock
hyperlinks
information “sleeping” on/logged in and unlock the safe caused guests to
found online
on device not practice this behavior. Similarly,
our guests noted the safety in "using
3.20 3.02 3.17 3.05 3.12 2.98 3.05 2.84 encryption" and also "using a virtual
21 22 22 21 23 23 24 24 private network (VPN)," and ranked
these two behaviors third and fourth
Safety Ratings — Range from 1 to 5 with 1 being very risky to 5 being very safe. in safety. However, regarding actual
Practice — Range from 1 to 5 with 1 being never to 5 being always. practice, "using encryption" only
ranked 10th and "using VPN" was
T= Tie • ■ Highlighted cells have at least 6 ranking differences.
ranked 15th. These three pairs of

18 Winter 2017
Security
TABLET USAGE
rankings translated into areas of
opportunity for hotels. The table Safety and Practice Ratings and Ranks
on page 18 presents the safety and Safety Rating/Rank Practice/Rank
practice scores in pairs to provide a
visual illustration.
Leaving tablet Connecting to
Using Using traffic
Tablet Usage in room’s safe secure Wi-Fi
encryption encryption (VPN)
A similar list of 24 behaviors were deposit box network of hotel
also ranked by hotel guests on their
tablet usage with the exception that 3.74 3.28 3.67 3.56 3.64 3.10 3.63 3.27
“Connecting to the wired network 1 5-T 2 1 3 16-T 4 8
connection of the hotel to access the
Internet” was replaced by “Using a Using cloud or
Using a phone Leaving tablet
phone carrier network (if available) Accessing remote desktop
carrier network to shut down
(e.g. AT&T, Verizon) to access the regular websites services for
access Internet in the room
Internet.” The top five safest rank- storage
ings were as follow: “Leaving the
computer in the room’s safe deposit 3.61 3.19 3.57 3.33 3.57 3.13 3.54 3.28
box when temporarily leaving the 5 11 6-T 3-T 6-T 14 8-T 5-T
hotel room,” “Connecting to the
secure Wi-Fi (wireless) network of Accessing
the hotel to access the Internet,” “Us- Using bookmarks Using e-mail Accessing secure
popular streaming
ing encryption (file level, full-disk),” stored in device clients resources
services
“Using traffic encryption (VPN) when
connecting to private resources,” 3.54 3.28 3.54 3.33 3.52 3.14 3.49 3.12
and “Using a phone carrier network
(if available) (e.g. AT&T, Verizon) to
8-T 5-T 8-T 3-T 11 13 12 15
access the Internet.” Thus, four of
Using Accepting
the top five rankings for tablets were Accessing social Accessing secure
conferencing updates from
identical with those of laptop usage. media websites (https) websites
software common software
The procedure used to analyze
laptop usage was also employed to
analyze tablet use. As illustrated
3.48 3.09 3.47 3.22 3.47 3.15 3.40 3.10
in the Tablet table, five items had a 13 18 14-T 10 14-T 12 16 16-T
difference in ranking of at least six
ranks and thus were highlighted in Purchasing online Following Connecting to
Using antivirus
yellow. Of the five items, three had from various hyperlinks free/public Wi-Fi
protection
a higher safety ranking than their vendors provided by hotels network of hotel
practice ranking. Although hotel
guests rated "encryption at the file 3.38 3.06 3.38 3.06 3.37 3.41 3.34 3.23
level" as third for safety, the practice 17-T 19-T 17-T 19-T 19 2 20 9
rank was low at 16-Tie. And while
"using a phone carrier network" was Bringing/storing
Following
ranked fifth for safety, the usage rank sensitive personal Leaving tablet Leaving tablet on/
hyperlinks
was at 11th. Similarly, "using cloud or information “sleeping” logged in
found online
remote desktop services for storage" on device
has a safety ranking tied at sixth, the
usage ranking was 14th. Although 3.29 3.03 3.25 2.99 3.19 2.96 3.15 2.90
ranked as safe, these behaviors were 21 21 22 22 23 23 24 24
not practiced as frequently, possibly
due to cloud services being relatively Safety Ratings — Range from 1 to 5 with 1 being very risky to 5 being very safe.
new modes of storage, or encryp- Practice — Range from 1 to 5 with 1 being never to 5 being always.
tion being seen as a cumbersome T= Tie • ■ Highlighted cells have at least 6 ranking differences.
process that requires users to take
extra steps. Most importantly, the two

The Bottomline 19
Security
SMARTPHONE USAGE
items that were rated lower in safety:
Safety and Practice Ratings and Ranks "using antivirus protection" (19th)
Safety Rating/Rank Practice/Rank and "connecting to free/public Wi-Fi"
(20th) had higher usage ranking of
second and ninth respectively.
Using a phone
Using antivirus Using traffic Using
carrier network to Smartphones Usage
protection encryption (VPN) encryption
access Internet Finally, the list of 24 behaviors relat-
ed to smartphone use was presented
3.75 3.43 3.67 3.16 3.66 3.22 3.65 3.55 to guests. The top five behaviors
1 2 2 14-T 3 8 4 1 that were ranked safest were: “Using
antivirus protection,” “Using traffic
Connecting to Leaving smart- Using cloud or encryption (VPN) when connecting
secure Wi-Fi phone in the remote desktop Accessing regular to private resources,” “Using encryp-
(wireless) net- room's safe services websites tion (file level, full-disk),” “Using a
work of the hotel deposit box for storage phone carrier network (if available)
(e.g. AT&T, Verizon) to access the
3.64 3.27 3.64 3.17 3.59 3.19 3.55 3.40 Internet,” and “Connecting to the
5-T 7 5-T 13 7 11 8 4 secure Wi-Fi (wireless) network of
the hotel to access the Internet.”
Using As with tablets, five items were
Using e-mail Accessing social Using bookmarks found to have ranking differences of
conferencing
clients media websites stored in Device at least six ranks and were highlight-
software
ed in yellow in the Smartphone table.
3.54 3.41 3.51 3.36 3.50 3.20 3.50 3.13 Three items had a higher safety
ranking than their practice ranking.
9 3 10 5 11-T 10 11-T 18 "Traffic encryption using VPN" was
rated second on safety and was not
Accessing Leaving smart-
Accessing secure Accessing secure used as frequently and received a
popular streaming phone shut down
resources (HTTPS) websites 14-tied practice rank. "Leaving the
services in the room
smartphone in the room’s safe" was
ranked fifth in safety, but guests
3.48 3.16 3.48 3.18 3.47 3.21 3.42 3.11 also did not practice this as often
13-T 14-T 13-T 12 15 9 16 20 and ranked this 13th. This is more
understandable as we all carry our
Accepting Purchasing online Following Connecting to smartphones with us anywhere
updates from from various hyperlinks free/public Wi-Fi we go. Finally, "using conference
common software vendors provided by hotel network of hotel software" was ranked as 11-tied in
safety, but only had a practice rank
3.41 3.15 3.37 3.10 3.34 3.12 3.32 3.28 of 18th. On the other hand, "using
17 16 18 21 19 19 20 6 e-mail clients such as Outlook or
Apple Mail client with smartphones"
Bringing/storing had a safety ranking of ninth, but
Following Leaving smart-
sensitive personal Leaving smart- was used so often that it received a
hyperlinks found phone on/
information on phone “sleeping“ ranking of third; and "connecting to
online logged in
device the free/public Wi-Fi" had a safety
ranking of 20 and the practice or us-
3.27 3.14 3.24 3.03 3.24 3.04 3.16 2.99 age ranking was sixth.
21 17 22-T 23 22-T 22 24 24
A Game Plan for our Hotels:
Safety Ratings — Range from 1 to 5 with 1 being very risky to 5 being very safe. What’s Next?
Practice — Range from 1 to 5 with 1 being never to 5 being always. What do all these behavioral rank-
T= Tie • ■ Highlighted cells have at least 6 ranking differences. ings of security and practice mean
for our daily hotel operations? They
surely offer us some detail of how

20 Winter 2017
Security

guests used their mobile devices. The resources, which can be done more bundles for guests. To make these
items that had at least a six-ranked seamlessly using the paid connectiv- services valuable to guests, hotels
difference in safety and practice ity services of the hotel. In addition, could ensure that their guest-facing
rankings are potential areas of guests are tempted to use in-room infrastructure is reliable and secure
improvement. The insight provided technologies to access remote re- and that consumers can connect
by guests’ responses allowed us sources (e.g., using smart TVs to log- easily using a variety of devices. In
to formulate several directions for in and watch content from streaming addition, hotels can design hotel
hotels, which should improve the services such as Neflix). Promoting infrastructures that provide sufficient
overall hotel practice, while enhanc- such services could result in use bandwidth and allow guests to enjoy
ing guests’ understanding of risk, that would enhance the value of the securely all the behaviors that involve
and the actions that guests might entire hotel stay for guests. their mobile devices in hotels.
take to reduce risk and have better 3. Educate guests to use protec- 5. Educate consumers to use secure
hotel stay experiences. In this first tion software and encryption for their Internet practices after they have con-
part of the trilogy, five suggestions devices and data. As storage becomes nected to the Internet. The IT com-
are offered for hoteliers. increasingly cheap, users’ tend to munity recognizes the critical role
1. Provide a reliable network con- accumulate increasing amounts of of the users in facilitating security
nectivity service with sufficient band- data. Whether personal or business- breaches. Moreover, guests are likely
width. Guests viewed connecting to related, this data becomes attractive to continue their Internet behaviors
the secure Wi-Fi network of the hotel to some individuals. Such data is that they established as habits from
to access the Internet as one of the especially attractive as it can store their daily lives, especially given the
top five most secure behaviors for all credentials for a multitude of guests’ familiarity of their devices and the
three mobile devices. It is also in the accounts. Hotels have opportuni- bookmarked (or history-based) web
top five practice ranking for laptops ties to encourage guests to use data content that they regularly access.
and tablets. Thus, hotels need to live protection steps to minimize the risk Thus, it is important to recognize
up to that expectation. If the connec- of loss. the role of education in guest’ online
tion is dropped, guests will view it as 4. Persuade consumers to connect practices. Basically, by emphasizing
a bad stay experience. For example, to secure networks. While hotels secure computing once connected,
many rooms at the end of the Wi-Fi have provided network connectivity guests can reduce the likelihood of
range do not receive a strong enough options ranging from free (typically risky behaviors online, and thus re-
signal, and may need to rely only on unsecure, available in the more “pub- duce the likelihood of opening back-
the wired connection infrastructure. lic” areas of properties) to paid (typi- doors for people with bad intent. We
Therefore, hotels need to ensure all cally secure, sometimes offered in can even take a step further to share
the Wi-Fi hot spots are working and tiers), opportunities exist to educate Internet safety tips with guests via e-
that security is ensured. In addition consumers to use secure connections mails, videos, in-room hotel channels,
to maintaining network security, we to mitigate network connectivity brochures in rooms, or even pop-up
also need to regularly check the se- risk and have a better connectivity messages on our hotels’ websites.
curity of the entire IT infrastructure experience leading to a better overall Cyber security is a serious matter.
of our hotels including routers and stay. In addition, hotels can tie the In our second article, we will explore
firewalls. Although these are more of secure connectivity services to other these ratings for guests staying in our
the back-of-the-house and not guest- benefits that can represent attractive hotels outside the United States. ■
facing items, a secure IT infrastruc-
ture help fend off threats. References
2. Educate consumers to engage • Trends in the Hotel Industry USA Edition 2016 (2016). CBRE Hotels’
in safe computing and access prac- Americas Research. Georgia: Atlanta.
tices. This is especially important • McMillian, R. (July 8, 2016). Omni hotels warns of data breach. The Wall
when guests use remote services. As Street Journal. Retrieved at http://www.wsj.com/articles/omni-hotels-
many consumers bring with them warns-of-data-breach-1468010853
devices mostly for the content stored • Osborne, C. (August 15, 2016). 20 top US hotels hit by fresh malware at-
on them or that they can access tacks. Retrieved from http://www.zdnet.com/article/20-top-us-hotels-hit-
with them, educating consumers by-fresh-malware-attacks/
about using remote services (e.g., • Pagliery, J. (April 5, 2016). Trump hotels attacked by hackers – again.
storage, computing, social commu- Retrieved from http://money.cnn.com/2016/04/05/technology/trump-
nication) while staying in hotels is hotels-hacked/
critical. Hotels have opportunities • Scott, A. (August 14, 2016). Starwood, Marriott, Hyatt, IHG hit by malware:
to educate their guests to use secure HEI. Technology News. Retrieved from http://www.reuters.com/article/
connections to access cloud-based us-hotels-cyber-idUSKCN10P0ZM

The Bottomline 21
Financial Management

MANAGING ASSETS IN THE LODGING INDUSTRY


THE ROLE OF THE ASSET MANAGER
By Tanya Venegas, MBA, MHM, CHIA; Agnes L. DeFranco, Ed.D., CHAE and Arlene Ramirez, MBA, CHAE, CHE, CHIA

A report on the skills


W
hen thinking of asset management, there are two primary thoughts
which come to mind: managing assets in a financial portfolio; or,
required of asset managers more specifically, managing real estate assets. In the case of asset
managers in the lodging industry, this definition becomes a bit more complex.
and the type of services These asset managers must not only understand financial investments, man-
aging the assigned assets in a financial portfolio, they also need to be skillful
that they offer to lodging in real estate valuations to ensure the value of the real estate is preserved
or better yet, increased. The asset manager also needs to know the mechan-
establishments. ics of running a hotel. In order to determine what skills are required of asset
managers and the type of services that they offer to lodging establishments,
the HFTP Americas Research Center developed a survey, based on previous

Tanya Venegas, MBA, MHM, CHIA (TVenegas@Central.UH.EDU) is executive director and HFTP fellow at the HFTP Americas Research Center. Agnes De-
Franco, Ed.D., CHAE (ALDeFranco@Central.UH.EDU) is a distinguished chair and professor at the Conrad N. Hilton College of Hotel & Restaurant Management,
University of Houston. She is also an HFTP Global Past President, chair of the HFTP Global Hospitality Accounting Common Practices Advisory Council and a
recipient of the HFTP Paragon Award. Arlene Ramirez, MBA, CHAE, CHE, CHIA (ADR@arlenedramirez.com) is principal with ADR Hospitality Consulting and
faculty at the Conrad N. Hilton College of Hotel & Restaurant Management, University of Houston. She is also the HFTP Global immediate past president.

22 Winter 2017
Financial Management

research conducted on lodging asset managers. The and hotels or hotel management companies (7.7 percent).
survey was distributed by HFTP in October 2016 to both Table 2: Hotel Class and Location (page 25), presents the
financial executives and asset managers. As financial ex- hotel class and location for respondents in order from the
ecutives are oftentimes the ones who work more closely greatest to the least number of responses
with the asset managers, they are then able to provide an It is also important to determine the types of lodging
objective view of the skills required. properties at which the respondents work as the skills
required to manage one class of property is very different
Profile of the Respondents from another. First, the respondents were asked to indicate
Overall, there were 47 responses to the survey and the the hotel market class, based on STR classifications, for
majority (44 responses, 93.6 percent) were from indi- all of their properties. Three classes of hotels appeared at
viduals in accounting and/or finance related positions. the top of the list beginning with the upper upscale, luxury
Responses to the survey also included two from asset and then upper midscale. Other hotel classes represented
managers and one response from an IT professional. by respondents include: midscale, upscale, economy and
In total, individuals responding to this survey oversaw extended stay. A follow up question was then presented to
3,190 properties which consisted of 34,990 rooms. Of determine which hotel class made up the majority of the
the two asset managers that responded to the survey, company’s portfolio, and luxury took the top spot, followed
one indicated they were an internal resource asset man- by upscale and upper midscale came in third. Respondents
ager while the other was a third-party asset manager.
When asked to state the type of ownership groups for
which they currently work, one asset manager worked Profile of Respondents
for a private ownership group and the other worked for
an independent advisor.
Since the majority of responses were from individu-
als in the accounting and finance arena, a more detailed Table 1. Typical Respondent Profile
analysis can be done for this group. Most responses Controller or
came from individuals with the title of director of finance Title
Director of Finance
(33.3 percent), followed by chief financial officer (20.5
No. of Properties
percent) and controller (20.5 percent). According to 10 properties
Managed
the 2016 HFTP Compensation and Benefits Survey, the
positions of controller and director of finance often have No. of Rooms
1,590 rooms
similar levels of responsibility and either supervise an Managed
individual property or a geographic cluster of properties.
When added together, individuals with these two titles Ownership Type Private Ownership
make up over half (53.8 percent) of the responses for
Luxury or
those in the accounting and finance area. Besides these Hotel Class
Upper Upscale
three titles, the assistant controllers/assistant direc-
tors of finance contributed an additional 7.7 percent, Location Urban or Resort
with 17.9 percent from “other” rounding up the total.
The titles from the “other” respondents include: auditor,
corporate controller, director of compliance and treasury
management, director of internal audit, staff accoun- Chart 1. Job Titles
tant, vice president of accounting and vice president
of finance (see Chart 1). In addition, Table 1: Typical
Respondent Profile, provides a glimpse at the profile of
Director of Asst. Controllers/Asst
the typical respondent to the survey. Finance Directors of Finance ,
Respondents were also asked to provide information 33.3% 7.7%
on the ownership of the company for which they work.
Most respondents indicated that they currently work for Other,
17.9%
a private ownership group (84.6 percent) which would
include private equity investors, opportunity funds, Controller,
sovereign funds, wealthy individuals, property develop- 20.5% CFO,
ment firms, and companies whose ownership of hotels 20.5%
is incidental to their primary business functions. Other
ownership types included: real estate investment trusts
(10.3 percent), institutional ownership (7.7 percent),

24 Winter 2017
Financial Management

were also asked to provide information on the location of on the type of asset management services provided by
the properties which they oversee. Most respondents in- the asset managers and also the knowledge and skill set
dicated that their properties were in urban (70.8 percent) preferred of the asset managers were examined.
or resort (50 percent) locations.
Before progressing in the survey, respondents were Asset Management Services
asked to indicate whether they are currently working In terms of the type of services that asset managers or
with or had ever worked with an asset manager in the asset management companies provide, these services can
past. Forty-one percent of responses from accounting be segmented into three types of asset management ser-
and finance professionals came from individuals who vices: monthly monitoring service, project management
had worked with an internal resource asset manager. and special projects. To further understand the detail
Thirteen percent were from individuals who had worked regarding the length of service, frequency of scheduled
with a third-party asset manager, while forty-six percent meetings, and how the compensation is arranged, the
where from managers who had never worked with an results are summarized in Table 3 (page 26). Typically,
asset manager (Chart 2, below). For the purpose of this asset managers offering monthly monitoring services had
study, the remaining analysis focuses on the individuals ongoing contracts with the ownership or client. They met
who have worked with an asset manager at some point on a monthly or quarterly basis, and the asset managers
in their career. In particular, their knowledge and opinion were compensated by a percentage of revenue earned.
If the asset managers were engaged on a project basis,
the typical contract lasted six months to one year and
monthly meetings would be held. The compensation for
this type of arrangement was normally billed hourly de-
pending on the time worked. Finally, for special projects,
the length of the contracts were ongoing, with the asset
Table 2: Hotel Class and Location managers meeting with the client as needed, and com-
Listed in order from greatest to least pensated in a similar manner as to a project management
number of responses. arrangement. This information assists organizations in
Hotel Class Location benchmarking the asset management services they are
being provided and the appropriate structure of compen-
Upper Upscale Urban sation for these services.
Luxury Resort
Monthly Monitoring Services
Upper Midscale Suburban When respondents were asked if they have used or are
Midscale Airport currently using an asset manager in a monthly monitor-
ing service arrangement, 40 percent stated they were.
Upscale Interstate The typical monthly monitoring services contract was
Economy Small Metro/Town ongoing and did not have a set length. This is reasonable
since monthly monitoring is an ongoing process which
Extended Stay works best if the asset manager is there on a consistent
basis. These financial professionals indicated that some-
one at the property, whether themselves or the general
manager, typically met with the asset manager on either
Chart 2. Worked with
a monthly or quarterly basis. Some stated that meetings
Asset Manager
happened as often as twice a week or phone calls were
No, conducted throughout the month with the general man-
46% ager to address any issues or questions that came up.
As for the rate of compensation at which the asset
manager was compensated, since many responses came
Yes, Internal from individuals working with internal resource asset
Resource managers, as expected, they are compensated on a sala-
Asset Mgr ried basis. Compensation of third-party asset managers
41% Yes, Third-party
was split. These third-party resources where either paid
Asset Mgr
13% on a percentage of the value of the property, percentage
of the properties revenue or by amount of time spent on
the project billed at a daily rate. Table 4: Monthly Moni-
toring Services and Reports (page 26), provides a listing

The Bottomline 25
Financial Management

of the various services and reports Asset Management Services


they were provided as part of a
monthly monitoring service by asset Table 3. Asset Management Sercices
managers.
Types of Asset
Project Management Management
Owners of lodging establishments of- Services Contract Length Meetings Compensation
ten engage asset managers as project Monthly
managers to handle renovations, ad- Monthly/ Percentage of
Monitoring Ongoing
ditions to existing properties or new Quarterly Revenue
Services
builds. A slightly higher number of
individuals reported to have worked Project Time, Billed
6 to 12 months Monthly
with asset managers to monitor proj- Management Hourly
ect management (58.8 percent) than
using a monthly monitoring service Time, Billed
Special Projects Ongoing As Needed
(40 percent). It is to be expected that Hourly
during these types of major projects
owners would engage the expertise
of an asset manager. Projects such as Monthly Monitoring Services
a renovation or addition are major
capital expenditures and it is help- Table 4: Monthly Monitoring Services and Reports
ful to have a second set of eyes and SERVICES PROVIDED REPORTS PROVIDED
input when managing these projects,
especially since the goal is to add Analyzing and reviewing operations Appraisal reports
value to the asset. Market and financial feasibility
Analyzing and selecting site
Given the nature of the engage- studies
ment, the typical length of the con- Analyzing property repositioning Accountability review
tract with an asset manager for proj-
ect management ranged between Assessing and negotiating
Benchmarking report
six and 12 months. Some organiza- management contracts
tions also indicated that they hired Budgeting and managing
Best practice analysis
an asset manager as a permanent capital expenditures
staff member who was dedicated Developing appraisal reports Property tax review
to overseeing project management
within their organization. When it Managing acquisition and due diligence
Operations review & summary
comes to meetings, most indicated procedures
that they had a set monthly meeting, Managing hotel investment life cycle Financial overview
but would meet when needed via Managing revenues Sales & marketing activity review
phone call or face-to-face meet-
ing. Asset managers working as a Managing risk, loss and
Rooms operations review
project manager were most often business interruptions
compensated on the amount of time Monitoring and evaluating
F&B operations review
they spent on the project, which brand compliance
was billed at an hourly rate. Other Monitoring and evaluating
respondents indicated that asset Human resources review
loan compliance
managers were either compensated
on the amount of time spent which Monitoring and evaluating
Pre-lending review
was billed at a daily rate or were property improvement plans
salaried employees. Table 5: Project Monitoring financial performance
Management Services and Report Planning and developing properties
(page 27), provides a listing of the
various services and reports respon- Planning and recommending facilities
dents were provided as part of a Reviewing franchise agreements and affiliations
project management service by asset Selecting and managing brand
managers.

26 Winter 2017
Financial Management

speakers discussed the skills asset


Project Management Services managers must possess to be suc-
Table 5. Project Management Services and Reports cessful. One of the most important
aspects of an asset manager’s job is
SERVICES PROVIDED REPORTS PROVIDED developing a good working relation-
Analyzing and reviewing operations Appraisal reports ship with operational managers
Analyzing and selecting site Market and financial feasibility studies such as the general manager and
director of finance. For this reason,
Analyzing property repositioning Accountability review it is vital that asset managers have
Assessing and negotiating excellent communication skills and
Benchmarking report
management contracts can discuss and understand not only
Budgeting and managing capital how to create value for an asset, but
Best practice analysis be able to balance the entire process
expenditures
and business relationship by in-
Developing appraisal reports Property tax review corporating an analysis of business
Managing acquisition and processes as well.
Operations review and summary
due diligence procedures Clashes can occur with opera-
Managing hotel investment life cycle Financial overview tional leaders when an asset man-
ager focuses strictly on the numbers
Managing revenues Sales and marketing activity review without developing a strategy and
Managing risk, loss, and business making sure everyone has a proper
Rooms operations review
interruptions understanding of the investor’s
Monitoring and evaluating brand goals. This ensures that all parties
F&B operations review are on the same page and can devel-
compliance
op a unified strategy to meet these
Monitoring and evaluating loan goals. In order to support a positive
Human resources review
compliance relationship, it is recommended that
Monitoring and evaluating property the asset manager should schedule
Pre-lending review
improvement plans monthly meetings with all depart-
Monitoring financial performance ment heads.
Asset managers tend to have
Planning and developing properties diverse backgrounds with great
Planning and recommending facilities variation in experiences. Some
Reviewing franchise agreements and affiliations asset managers were previously
general managers and therefore
Selecting and managing brand have extensive knowledge of the
inner workings of lodging proper-
ties. Other asset managers worked
Special Projects meetings with their asset manager in in the finance industry and garnered
The final type of asset management respect to special projects. Com- less operational knowledge. It all
service which was investigated in pensation for these asset managers depends on the preferences of the
this survey involved special projects was determined by the amount of owners and the type of asset man-
such as insurance claims, litigation time spent on the project, which was ager they would like to employ.
support or refinancing. Thirty-one billed at either an hourly or daily Oftentimes, the goal of the asset
percent of respondents indicated rate. Table 6: Special Project Services manager and the goal of the general
they have worked with an asset man- and Reports (page 28), provides a manager differ. Asset managers are
ager on special projects. Those re- listing of the various services and there to look out for the best interest
sponding positive to this question all reports respondents were provided of the property owner, this involves
indicated that they have worked with as part of a special project service by creating value outside of operations.
internal asset managers who are asset managers. The success of property manag-
permanent employees of the organi- ers is often based on operational
zation for which they work. Due to Asset Manager Skills profits and creating value through
the unique nature of these projects, and Performance the operation of the asset. As part of
meetings occurred on an ongoing During a session at the 2016 HFTP the 2016 HFTP Asset Management
or as-needed basis. One individual Annual Convention, Optimizing Your Survey, respondents were asked
stated that they have set quarterly Asset Management Relationship, the to provide information on how the

The Bottomline 27
Financial Management

performance of asset managers was measured. In other Special Project


words, how do the respondents determine the success
of an asset manager? Revenue and EBITDA tied for the Table 6. Special Project Services and Reports
top performance measures (52.6 percent), while three
measures: GOP, net profit and RevPAR index/RevPAR SERVICES PROVIDED REPORTS PROVIDED
growth index tied for second place (42.1 percent). Other Budgeting and managing
measurements which rounded out the top 10 included: Financial overview
capital expenditures
market value of asset; capital expenditures; forecast vari-
Monitoring and evaluating
ance analysis; occupancy, RevPAR and ADR; operating ef- Pre-lending review
loan compliance
ficiency; comparison with budget; and comparison with
competitive set. In Table 7: Ranking of Asset Management Monitoring financial performance
Performance Measures, the performance measures used
by respondents are listed in order from the greatest to
the least number of responses. Asset Manager Skills
Most importantly, remember that asset managers and
operational managers are meant to be allies and work Table 7. Ranking of Asset Mgmt. Performance Measures
as a team to meet the goals of the owner. Therefore, In order from greatest to least number of responses.
keeping the lines of communication open between these 1 Revenue
two parties is crucial. Operational managers should use
1 EBITDA
the skills of the asset manager and invite them into the
decision-making process. Asset managers should also be 2 GOP
open when analyzing situations and bring in their unique 2 Net profit
outside perspective. Asset managers typically have
2 RevPAR index or RevPAR growth index
experience working with multiple properties and brands
and thus can offer assistance with all of this knowledge 3 Market value of asset / increased value of asset
factored into the mix. Capital expenditures, capital plan implementation,
3
and capital expenditure budget
A Better Working Relationship
3 Forecast variance analysis
Asset management in the lodging industry has evolved
through the years. It is important to know the current 4 Occupancy, RevPAR and ADR
status and role asset managers play within an organiza- 4 Operating efficiency
tion. They are a key asset not only to the owner, but also
4 Comparison with budget
the operators by providing support through benchmark-
ing and operational and financial analysis. This study was 4 Comparison with competitive set
developed to determine current practices in hotel asset Comparison with investment objectives set at
management in terms of services, reporting, contracts 5
acquisition
length and compensation. The results of this report assist
5 IRR
financial managers in assessing their relationships with
asset management professionals in order to better the Financial metrics (same measures as management
5
working relationships to benefit all parties. ■ agreement for the management company)
5 Long-term relationship with owners
References
6 Market share
A full list of references is available by request.
• Feldman, D. S. (1995). Asset Management: Here To 6 Consistent ability to meet loan compliance tests
Stay. Cornell Hotel and Restaurant Administration 7 Operating efficiency improvement
Quarterly, 36(5), 36 – 51.
7 Year over year growth benchmarks
• Jackson, L. A. (2012). Towards an Understanding of
Lodging Asset Management and Its Components. FIU 7 Franchise relationships
Review, 30(1), 92 – 110. 7 Property condition scores
• Singh, A. J., Kline, R. D., Qingzhong, M., & Beals, P.
8 ROI based on asset management fee
(2012). Evolution of Hotel Asset Management: The
Historical Context and Current Profile of the Profes- 8 Ability to find investment opportunities
sion. Cornell Hospitality Quarterly, 53(4), 326–338. 8 Incremental market share
• Venegas, Tanya. (2016). 2016 HFTP Compensation and
8 Guest satisfaction or quality scores
Benefits Survey. The Bottomline, 31(3), 18 – 45.

28 Winter 2017
Technology

Do Self-service Technologies 2016


BEST PAPER
Matter In Improving WINNER

Consumer Commitment?
The integration of an increasingly popular service
delivery mode — SSTs — has the potential of
iHITA Annual Convention
delivering a transcendent experience to the
Sponsored by HFTP
consumers and further influences their commitment

By Wei Wei, Ph.D.; Edwin Torres, Ph.D.


and Nan Hua, Ph.D.

Note: The following text is summa-


rized from the original submission.

T
echnology changes our daily
lives. In particular, self-service
technologies (SSTs) have been
used in various service industries
such as airlines, retail and bank-
ing, as companies seek to promote
consumers’ delivery of service
themselves via a technological
interface (Kim, Christodoulidou, &
Brewer, 2012). More recently, hotel
chains such as Hilton, Fairmont and
Marriott have added self-service
kiosks to their conventional front
desk (Kasavana & Connolly, 2005).
In a similar vein, restaurants have
adopted SSTs, mainly in the form of
tablet computers, to their service en- A growing number of researchers have questioned the traditional approach
counters in order to empower their to study the customer experience and have begun to focus on consumers’
guests to place orders and pay bills pleasure, enjoyment and emotional responses to technology use. Seeking to
from the comfort of their own table gain a more thorough understanding of consumers’ experience of using SSTs,
(Konrad, 2013). Given the increased the present research proposed that consumers use SSTs for benefits that go
importance of SSTs in the hospitality beyond convenience and efficiency; consumers’ use of SSTs per se is an experi-
industry, researchers felt an urgent ence that embodies hedonic benefits, which potentially affect their evaluation
need to investigate its effects on of that service encounter. Consequently, the experience of using SSTs will entail
customer experience. both extrinsic (i.e., convenience, saved time and efficiency) and intrinsic (i.e.,

Wei Wei, Ph.D. (Wei.Wei@ucf.edu) is an assistant professor at the Rosen College of Hospitality Management at the University of Central Florida in Orlando,
Fla. Edwin Torres, Ph.D. (Edwin.Torres@ucf.edu) is an assistant professor at the Rosen College of Hospitality Management at the University of Central Florida
in Orlando, Fla. Nan Hua, Ph.D. (Nan.Hua@ucf.edu) is an associate professor at the Rosen College of Hospitality Management at the University of Central
Florida in Orlando, Fla.

The Bottomline 29
Technology
Key Takeaways — Human Touch vs. Tech Touch
Respondents were asked to: "Think of your most memorable experience of using self-
service technologies in hotels or restaurants in the past 12 months."

Findings included:
The integration of SSTs has the potential of deliver- Hospitality businesses should take advantage of SSTs
ing a transcendent experience to the consumers and for facilitating the customized, co-creation process in
further influences their commitment. order to create a memorable consumer experience.
The increasing use of SSTs as a service delivery ve- Customer feedback can be obtained immediately with
hicle lessens the uniqueness of the experience, thus SSTs and can, if used properly, lead to a more custom-
becoming less of a transcendent experience. ized experience.
The more independent, accomplished, engaged, em-
powered, happy, confident and novel that SSTs make
a consumer feel in a service setting, the more likely
such SSTs can stage a transcendent experience.

feelings of accomplishment, independence, confidence, The present research proposed that the intrinsic attri-
novelty and enjoyment) attributes of SSTs. Verhoef et al. butes associated with SSTs can also be of great relevance
(2009) suggested that technology-based systems, such as to creating consumer commitment, as these attributes
a self-service check-in/check-out kiosk, involve consum- are more related to a guest’s emotional and psychological
ers’ active engagement. SSTs along with similar technolo- experience by improving a sense of empowerment and
gies also have the capacity to empower consumers and control, enhancing the felt playfulness and exploration,
add a fun element in customer experience (Kasavana et and further engaging consumers more actively in the ser-
al., 2010). In light of these findings, the researchers added vice encounter. Consequently, the authors posit that the
that the consumers’ felt engagement and empowerment extrinsic and intrinsic benefits consumers obtain by us-
as additional intrinsic attributes of SSTs. ing SSTs can reinforce consumers’ emotional attachment
to the company, tendency to maintain a relationship with
Consumer Commitment the company over time, and the perceived opportunity
As executives and IT professionals make important costs of leaving the company.
technology decisions, often many factors such as cost, Another aspect studied was the potential of SSTs to
functionality and acceptance are considered. How- explain the impacts of SSTs experience on consumer
ever, in order to be truly strategic with the use of these commitment. The notion of “transcendent customer
resources, the impact on customer commitment needs experiences” (TCE) had been often used to feature one’s
to be considered. Consumer commitment is important felt self-development, emotional intensity, peak enjoy-
for organizational survival (Anderson et al., 1994). In ment and novelty of experience (Schouten et al., 2007).
this study, the researchers considered three aspects of Given the importance of TCE, the present research used
commitment: attitudinal (i.e. affective commitment), this concept in order to capture a consumer’s’ memo-
temporal (i.e. temporal commitment) and instrumental rable experience. Researchers have discovered that a
(i.e. instrumental commitment). Allen and Meyer (1996) truly memorable and transcendent experience, rather
defined affective commitment as “identification with, than just a satisfying one, greatly influences a consumer’s
involvement in, and emotional attachment to the orga- desire to purchase similar products (Wirtz et al., 2003) or
nization” (p. 253). Temporal commitment refers to the revisit similar destinations (Kim et al., 2010). Therefore,
longevity of customers’ commitment to an organization the present research proposed that a positive SST experi-
(Garbarino & Johnson, 1999). Finally, instrumental com- ence can generate a transcendent customer experience,
mitment describes customers’ intention to stay with an which in turn influences consumer commitment.
organization based on their perceived opportunity costs
of leaving it, including both economic and psychological Study
costs (Morgan & Hunt, 1994). As a data gathering tool, Amazon Mechanical Turk
Some early indications of the impact of SSTs on cus- (MTurk) was employed to recruit participants. A ques-
tomer commitment came from Meuter et al. (2000), who tionnaire was designed and used to ask respondents to
suggested that these technologies can improve loyalty via recall their most memorable experience of using SSTs in
increasing efficiency, convenience and perceived control. hotels or restaurants in the past 12 months and to refer

30 Winter 2017
Technology

to this recalled experience as they filled out the remaining ity of their commitment to the firm can be enhanced via
questions concerning their commitment to the company. using SSTs under the condition that the SSTs experience
The respondents’ demographic information was also ob- has generated a memorable experience.
tained. The Statistical Package for Social Sciences (SPSS) Several practical implications emerge from this study.
was used to perform statistical analysis. Having received When choosing to integrate new SSTs and/or improv-
the responses, participants revealed the following demo- ing the effectiveness of current SSTs, it is critical for
graphics: 63.23 percent of male and 36.77 percent female; hospitality firms to strategize their decisions for turning
53.81 percent were between the ages of 25 and 34; 59.64 consumers’ interactions with SSTs into an engaging and
percent had earned a four-year college degree or higher; enjoyable experience, not just for accomplishing tasks
45.46 percent had a household income of $50,000 or associated with service delivery. By emphasizing the
above; and 68.61 percent were White/Caucasian. importance of fun, enjoyment and empowerment, the
While debate exists over the importance and degree developers of SSTs can ensure they make a product that
of human-touch versus tech-touch in hospitality service is more effective or beneficial for the consumers. Beyond
settings, this research suggests that the integration of an generating transactions, SSTs can help customers become
increasingly popular service delivery mode — SSTs — more informed and better educated on how to use the
has the potential of delivering a transcendent experience firm’s services. Additionally, SSTs can help customers in-
teract with one another, thus enhancing the experience’s
to the consumers and further influences their commit-
social dimension. Innovation in SSTs can further spark
ment. The present study highlighted that the ability to
customer’s interests and engagement with the firm. A
stage a transcendent customer experience using SSTs
firm can add pictures, videos and demonstrations featur-
will depend on the type of benefits such technologies
ing their products and staff, and the processes that lead
can offer consumers. Consumers’ repeated exposure to
to the execution of their services.
SSTs delivering conventional, functional benefits, such
The traditional view of services marketing and man-
as the convenience and the saved time, in fact lessens
agement is being challenged by new technologies, yet
the uniqueness and the memorability of the experience.
the benefits of adopting SSTs are not clear (Panda et al.,
This could be a potential drawback of integrating SSTs
2011). The findings of this study are informative to the
with similar and expected utilitarian benefits as provided
hospitality practitioners by fostering a deeper under-
by other service firms. It seems that consumers tend to
standing as to how the extrinsic and intrinsic attributes
migrate from using SSTs for only the mundane utilitarian of SSTs play different roles in affecting consumers’ rela-
benefits to using SSTs for experiential benefits serving tionship with a firm. Specific findings would assist hos-
their needs for independence, empowerment, pleasure, pitality practitioners in formulating effective strategies
confidence, engagement, accomplishment and novelty. and effectively allocating their resources when designing
Put differently, in a pleasure-driven context like hotels different attributes of SSTs for consumers, in order to
and restaurants, once consumers’ utilitarian needs are better match consumers’ needs, deliver more customized
met, it is of utmost importance to ensure that consumers’ self-service, and eventually, increase consumer commit-
intrinsic needs can be satisfied. The realization of con- ment. Additionally, in considering any kind of investment,
sumers’ intrinsic needs by using SSTs has the potential to the impact of SSTs on consumer commitment as found in
facilitate a memorable, transcendent experience. this study help justify investments in new technologies in
Regarding customer commitment, the present re- hotels and restaurants.
search discovered that the intrinsic benefits of SSTs can The researchers further posit that SSTs can facilitate
lead to instrumental commitment and temporal commit- the co-creation of consumer experiences. Although many
ment only these intrinsic benefits can create. The more researchers and managers advocate for moving from
independent, accomplished, engaged, empowered, happy, products and services to experiences, sometimes the
confident and novel that SSTs make a consumer feel in specific mechanisms to arrive at that desired outcome
a service setting, the more likely such SSTs can stage a become ambiguous. The present research sheds light on
transcendent experience. As a result, the consumer will that enigmatic process, by suggesting that hospitality
perceive the opportunity cost (psychological costs in businesses should take advantage of SSTs for facilitating
the form of intrinsic benefits as found in this study) of the customized, co-creation process in order to create a
switching to another service firm to be higher and more memorable consumer experience. For instance, as Panera
likely maintain his or her relationship with this service is rolling out self-service ordering kiosk centers, such
firm over a longer term. Furthermore, a transcendent ex- practices are perceived to increase personalized ordering
perience was found to partially explain the impacts of the experience (Johnson, 2015). Customer feedback can be
extrinsic and intrinsic attributes of SSTs on the affective obtained immediately with SSTs and can, if used properly,
commitment, as well as the impacts of the extrinsic attri- lead to a more customized experience. Specific questions
butes of SSTs on the temporal commitment. Consumers’ or comments can help re-design both the physical attri-
emotional attachment to the service firm and the longev- butes and intangible aspects of hospitality experiences. ■

The Bottomline 31
YEARS
®

HOSPITALITY FINANCIAL AND


TECHNOLOGY PROFESSIONALS

A TRIBUTE TO:

Bottomline
T H E

PAST, PRESENT AND FUTURE


By Agnes DeFranco, Ed.D., CHAE and Tanya Venegas, MBA, MHM, CHIA

W
hen you think of the
definition of the term:
bottom line, probably your
first thought is the bottom line of an
income statement. Bottom line is a
reference to the last line of a finan-
cial report which details an organiza-
tion’s net profit or loss. This defini-
tion was most certainly on the minds
of HFTP members when they named
The Bottomline decades ago, but a
more all-encompassing definition
was most likely the reasoning behind
the name. If you look up “bottom
line” on Dictionary.com you will also
find the following definitions:

Bottom Line
• The deciding or crucial factor.
• The ultimate result; outcome.
• The final outcome of a process,
discussion, etc.
• The most important or fundamen-
tal aspect of a situation.
Source: Dictionary.com

Agnes DeFranco, Ed.D., CHAE (ALDeFranco@Central.UH.EDU) is a distinguished chair and professor at the Conrad N. Hilton College of Hotel & Restaurant
Management, University of Houston. She is also an HFTP Global Past President, chair of the HFTP Global Hospitality Accounting Common Practices Advisory
Council and a recipient of the HFTP Paragon Award. Tanya Venegas, MBA, MHM, CHIA (TVenegas@Central.UH.EDU) is executive director and HFTP fellow at
the HFTP Americas Research Center.

32 Winter 2017
HFTP History

Table 1: tions, our HITECs, our regionals, our publication contained 15 pages and
chapter meetings. And, we should, the content provided a review of the
The Bottomline Articles because our association is all about 1980 Computer Users Conference
and Their Contributors our members and the network- (now HITEC0, IAHA chapter news,
ing and sharing of knowledge. The financial challenges facing business-
Bottomline is an HFTP staple and has es in the new decade, and updated
always been there for us. When we OSHA rulings. Since The Bottomline
visit with other members in their of- was the primary source of informa-
fices, we often find The Bottomline on tion for association members, pre-In-
their bookshelves or on their coffee ternet, the magazine was published
No. of Articles tables, ready to be read by all. bimonthly to disseminate important
1,364 The Bottomline is like a silent part information to the IAHA membership
of HFTP, chronicling financial and in a timely manner.
technology issues for the hospitality Fast forward to late 2015 and
industry throughout the years. As HFTP published the last issue of
technology progresses and we are all the print version of The Bottomline.
accessing information digitally more Arlene Ramirez, CHAE, CHE, CHIA,
than print, The Bottomline is now MBA was the president and Lyle
No. of Contributors published digitally, available via the Worthington, CHTP was the vice
773 HFTP.org website. All of the articles president of our well-respected
have also been uploaded into Pine- association, HFTP. The average The
appleSearch.com, the world’s only Bottomline now contains approxi-

CHAE
hospitality-curated search engine mately 30 pages and covers a range
developed by HFTP. Thus, with the of accounting, finance, technology,
Designees help of two graduate students at the human resources and other topics.
University of Houston, Gloria Wei The first digital The Bottomline was
225 (16.4%) and Sunny Xueqing Wang, and Evita the Winter 2016 issue which covered
Ma, executive director of the HFTP topics such as hotel security, data

CHTP
Asia Research Center, we embarked security, accounting skills, shared
on a project to categorize all the is- service and mobile payments.
Designees sues of The Bottomline HFTP global
has on file back to 1980. Celebrating Topical Transformation
118 (8.6%) our unsung hero, The Bottomline, As many of you know, Eliza Selig is
paying tribute to it and also looking the director of communications for

CHAE/CHTP
ahead at what is in store for us in the HFTP. She is also the staff liaison
future. to the HFTP Editorial Peer Review
Designees Advisory Council and works with this
The Evolution member-led committee to decide the
48 (3.5%) The Bottomline started in the late content of The Bottomline, ensuring
1970s as a newsletter, journalizing that the content is what we as mem-
These definitions are the the activities of the organization bers would find useful. In the last 30
ones that truly characterize The which was called the International years, the topics that The Bottomline
Bottomline magazine, the official Association of Hospitality Accoun- published mirror the progress and
publication of Hospitality Finan- tants (IAHA) at that time. The first evolution of our industry as well.
cial and Technology Professionals issue in print which resembles When all the articles were analyzed,
(HFTP). Stepping outside of the The Bottomline in magazine or the following characteristics were
financially-focused definition, The journal form, to which all of us are tallied: the year, volume and number
Bottomline emphasizes the crucial, accustomed, was the November/ of the publication; the title and short
important and fundamental factors December issue in 1980. Longtime description of the article; the author,
facing financial and technology pro- members may recognize a few of their CHAE or CHTP designations
fessionals in the hospitality industry. the names of the executive officers if applicable; the industry segment
As our association celebrates at that time such as Sal V. Spano, (e.g. hotel, clubs, cruise, restaurant,
milestones — including HFTP's 65th president; Franklin J. Sikich, first vice tourism, etc.); the primary opera-
and HITEC's 45th anniversaries in president; and Alice H. Banks, second tions area (e.g. general accounting,
2017, we always take a look back vice president. In the first issue of finance, technology, tax, food and
and think about our annual conven- the revamped The Bottomline, the beverage, etc.); and topics (e.g. ac-

34 Winter 2017
HFTP History

Table 2. Industry Segments 2011–2015 2006–2010 2001–2005 1996–2000 1991–1995 1986–1990 pre-1986
N 0 1 8 25 15 1 4
Casino
% 0.0% 0.4% 3.7% 12.0% 8.2% 0.5% 3.4%
N 21 32 37 33 18 13 7
Club
% 11.2% 12.7% 17.1% 15.9% 9.8% 6.5% 6.0%
N 133 145 125 98 120 111 56
General
% 70.7% 57.8% 57.6% 47.1% 65.2% 55.5% 48.3%
N 34 68 37 41 21 62 79
Hotel
% 18.1% 27.1% 17.1% 19.7% 11.4% 31.0% 68.1%
N 0 4 8 6 7 12 6
Restaurant
% 0.0% 1.6% 3.7% 2.9% 3.8% 6.0% 5.2%
Other: Airline, Amusement Park, N 0 0 0 3 1 0 0
and Cruise % 0.0% 0.0% 0.0% 1.4% 0.5% 0.0% 0.0%

Table 3.
2011–2015 2006–2010 2001–2005 1996–2000 1991–1995 1986–1990 pre-1986
Primary Operations Areas
N 45 73 61 91 75 65 42
Accounting and Finance
% 23.9% 29.1% 28.1% 43.8% 40.8% 32.5% 36.2%
N 3 7 2 6 1 6 2
Food and Beverage
% 1.6% 2.8% 0.9% 2.9% 0.5% 3.0% 1.7%
N 27 36 40 25 35 44 4
General
% 14.4% 14.3% 18.4% 12.0% 19.0% 22.0% 3.4%
N 25 47 39 29 20 23 13
Human Resources
% 13.3% 18.7% 18.0% 13.9% 10.9% 11.5% 11.2%
N 65 55 56 43 44 53 45
Information Technology
% 34.6% 21.9% 25.8% 20.7% 23.9% 26.5% 38.8%
N 21 24 11 9 8 3 2
Sales and Marketing
% 11.2% 9.6% 5.1% 4.3% 4.3% 1.5% 1.7%
Other: Guest Service, Lodging, N 2 9 8 5 1 6 8
and Market Segment % 1.1% 3.6% 3.7% 2.4% 0.5% 3.0% 6.9%

counting standards, asset manage- Bottomline since 1980 were written When trying to ascertain the
ment, bandwidth, ethics, labor law, by contributors with both the CHAE evolution of topics over the years, we
POS, etc.). and the CHTP designations. All of the decided to look at periods of every
As seen in Table 1, 1,364 articles contributors to The Bottomline are five years, so the changes could be
were published by 773 contributors the individuals that make the maga- detected more easily. Since Decem-
in The Bottomline issues cataloged zine such a success. The Bottomline ber 2015 was the last printed The
from 1980 to 2015. Articles written has won multiple awards throughout Bottomline, we divided the time-
by contributors with the CHAE des- the years and this would not be pos- line into: 2011–2015, 2006–2010,
ignation totaled 225 (16.4 percent) sible without all of the members and 2001–2005, 1996–2000, 1991–1995,
and articles written by those with industry professionals who have tak- 1986–1990, and finally, pre-1986.
the CHTP designation totaled 118 en the time to provide content to the Table 2 details the industry segments
(8.6 percent). Forty-eight (3.5 per- outstanding communications team at reflected in these decades. When
cent) of the articles published in The HFTP who design the magazine. compiled for all years, over half (58

The Bottomline 35
Most Covered Topics
Table 4. Topics with the Most Articles Table 5. Topics by Year (Covered the Most Years)

2. Information 1. Information
1. Accounting Technology 2. Accounting
Technology

3. Property 4. Human 3. Property


Technology Resources Technology 4. Finance

5. Finance 6. Tax
5. Tax 6. PCI Compliance

7. Legal 8. Internal Controls


7. Budgeting 8. Compensation

9. Food and 10. Strategic


Planning / Revenue 9. Environment and
Beverage Sustainability 10. Ethics
Management
percent) of the articles had a general focus and could be The articles were also categorized by primary opera-
applied to multiple segments of the hospitality industry. tions areas such as information technology, accounting
Other segments tracked included lodging (310 articles, and finance, and human resources. When analyzed over
22.7 percent), clubs (161 articles, 11.8 percent), casinos time (see Table 3), the area of accounting and finance
(54 articles, 4 percent) and restaurants (43 articles, 3.2 garnered the most articles (453 articles, 33.3 percent),
percent). It appears the casino segment was important followed by information technology (362 articles, 26.6
in the 1990s as all the mega hotels lined up Las Vegas percent). This coincides with the mission of our associa-
Boulevard. The club segment has been a steady segment tion and our membership. And, since many accounting
for the past two decades, while a surge of hotel articles departments, especially in clubs and smaller hotels, are
were published in 2006–2010. also responsible for human resources, 197 articles or

36 Winter 2017
Table 6. Topics by Year Broken Down
2011–2015 2006–2010 2001–2005 1996–2000 1991–1995 1986–1990 pre-1986
Information Human Information Property
1 Finance Accounting Tax
Technology Resources Technology Technology
PCI Information Information
2 Accounting Finance Accounting Tax
Compliance Technology Technology
Human Property
3 Accounting Finance Accounting Tax Accounting
Resources Technology
Data / Data Human Information Human
4 Tax Finance Legal
Security Resources Technology Resources
Revenue Property Internal
5 Legal Legal Budgeting Compensation
Management Technology Controls
Mobile / Education and
Property Strategic Human
6 Mobile Professional Leadership Finance
Technology Planning Resources
Payments Development
Food and Property Revenue Markets and Food and
7 Social Media Finance
Beverage Technology Management Performance Beverage
Compensation
Fraud Markets and Food and
8 Tax / Revenue Finance Accounting
Prevention Performance Beverage
Management
Internal Markets and
Guestroom Controls / Performance Internal
9 Compensation Tax Data Security
Technology Strategic / Food and Controls
Planning Beverage /
Property Human Food &
Technology / Data / Data Food and Resources / Beverage / Events and Sales and
10
Information Security Beverage Guestroom Sales and Conferences Marketing
Technology Technology Marketing
14.5 percent of the articles are in the human resources finance (3 years) and tax (3 years). This is not surprising
area. Sales and marketing has trended upwards through- as technology has become such an integral part of our
out the years starting at less than two percent of all daily life — both at work and also our personal lives. Just
articles between 1980 and 1985 up to 11.2 percent in the think — the Apollo Guidance Computer (AGC) that en-
last five years. abled astronauts to enter simple commands for the moon
The last step in the indexing process involved breaking landing only had approximately 64 Kb of memory!
the articles down by topic in each operations area. For
example, in the operations area of information technol- The Future
ogy, the following topics were included: budgeting, data/ Now that The Bottomline has gone digital, what can we
data security, guestroom technology, general information expect? Yes, we may miss the pages that we can thumb
technology, mobile/mobile payments, PCI compliance, through; but, we now have the ability to search all of The
property technology and virtual reality. When analyzed Bottomline content on PineappleSearch.com. The solid
by topic over time (see Table 4), the most articles were and relevant content will remain the hallmark of our The
on general accounting and accounting practices (137 ar- Bottomline. ■
ticles), followed closely by information technology (136
articles), and property technology (109 articles). Human Sources
resources, finance, tax, legal, internal controls, food and • bottom line. (n.d.). Collins English Dictionary - Com-
beverage, and finally strategic planning and revenue plete & Unabridged 10th Edition. Retrieved November
management tied to round out the top 10 spots. 30, 2016 from Dictionary.com website http://www.
When analyzed by year (see Tables 5 and 6), the dictionary.com/browse/bottom-line
topic that appeared in the number one spot for the most
years was information technology (10 years), followed • http://www.computerweekly.com/feature/Apollo-
by accounting (7 years), property technology (7 years), 11-The-computers-that-put-man-on-the-moon

The Bottomline 37