New Media Marketing Strategies

Volume 24, Number 4 June/July 2009

New Media Marketing Strategies Leveraging Mobile Technology Tuning Up Internal Controls Managing Multiple IT Projects Outlook on Revenue Management Reinforce Decisions with Business Intelligence Control Bandwidth Traffic

Plus: Feature Profile — Scott Anderson, Regional Breakdown of Compensation for Club Professionals, HFTP Council Descriptions and Volunteer Opportunities

THE JOURNAL OF HOSPITALITY FINANCIAL AND TECHNOLOGY PROFESSIONALS ®

C o n t e n t s

The journal of hospitality FINANCIAL AND TECHNOLOGY PROFESSIONALS

Volume 24, Number 4

J U N E / J U L Y • 2 0 0 9

F e atur e s 12 Feature Profile: Scott Anderson HFTP® and HITEC® are registered ser- Developer entrepreneur, large-scale manager, luxuryotelier vice marks of Hospitality Financial and By Lou Cook Technology Professionals. ProLinks and GUESTROOM 20X are service marks of Hospitality Financial and Technology 14 Who’s Watching the Books? Professionals. Diagnosing and tuning up your internal control system By Jason R. Filippini, CPA Submissions and Inquiries Individuals interested in submitting an article 18 Social Media, Web 2.0 Strategy and the Hospitality Marketer for publication should contact the editor. The Perspective from three e-strategists and their new media toolkits Bottomline is a peer review journal. All ma- terials submitted for publication are reviewed By Cindy Estis Green by members of the editorial review board or recognized experts in the field. 22 Guide to Building a Mobile Technology Strategy The Bottomline (ISSN 0279-1889), the jour- Leverage its growth to empower the traveler, improve travel efficiency and nal of Hospitality Financial and Technology build ancillary revenue Professionals, Inc., is published bimonthly By Norman Rose with two special editions by HFTP®. Copy- right © by Hospitality Financial and Technol- ogy Professionals. All rights are reserved. 24 Project Portfolio Management All opinions expressed herein represent the How to handle concurrent IT projects using overlapping staff and technology resources views of the authors. The Bottomline and By Paul Manley, PMP HFTP disclaim any responsibility for views expressed or statements made in any articles published. HFTP disclaims any liability with 26 Outlook on Revenue Management respect to the use of or reliance on any such The challenges and opportunities in 2009 information. The information contained in By Paul Willie, B.Comm., MBA, CFM, CFSM, CHA, CHTP, CHAE, CMA this publication is in no way to be construed as a recommendation by HFTP or any industry standard, or as a recommendation 31 Reinforced Decision-making of any kind to be adopted or binding upon A look at business intelligence in the hospitality industry any member of the hospitality industry. By Kutay Kalkan and Fred J. DeMicco, Ph.D. Written consent must be obtained from HFTP before reprinting articles. Subscription fee of $30 for HFTP members is included in 36 Bandwidth Traffic Control the membership fee. HFTP is headquartered Understanding the evolving needs of both operations and guests at 11709 Boulder Lane, Suite 110, Austin, By JP Hebert Texas 78726. Periodicals Postage Paid at Austin, Texas. POSTMASTER: Send address changes to The Bottomline, 11709 Boulder Lane, Suite 110, Austin, Texas D e partm e nts 78726, (512) 249-5333. 5 Between the Lines Expanding Your Resources — HFTP conferences and publications offer you a variety of perspectives from experienced professionals 6 Q&A From The HFTP Research Institute Club Compensation by Region — A breakdown from the 2008 HFTP Compensation and Benefits Survey 10 HFTP News and Notes Wanted: Knowledge, Experience and Input — Councils help HFTP reach strategic goals 38 The Bottomline Resource Guide The Bottomline THE BOTTOMLINE STAFF Frank I. Wolfe, CAE Executive Vice President/CEO [email protected] Eliza R. Selig Editor/Director of Communications [email protected] Jennifer Lee Advertising Sales / Director of Marketing [email protected]

2008–2009 HFTP OFFICERS President Jules Sieburgh, CHTP O’Neal Consultants Bethesda, Maryland Vice President Terry Price, CHAE, CHTP, CPA The Grove Park Inn Resort & Spa Asheville, N.C. Treasurer Thomas G. Smith, CHAE Ozaukee Country Club Mequon, Wis. Secretary Lisa Funk, CHAE Lynwood, Wash. Immediate Past President Anna McFarland, CPA, CFE, CHAE, CHTP Sofitel Luxury Hotels, North America Carrollton, Texas

2008–2009 EDITORIAL ADVISORY COUNCIL Chair Arlene Ramirez, MBA Lecturer University of Houston Board Liaison Dipankar Mukherjee, CHAE, CIA, CMC Corp. Financial Consultant Hospitality Inns Ltd. Kaye Chon, Ph.D., CHE Chair Professor and Director Hong Kong Polytechnic University Cihan Cobanoglu, Ph.D., CHTP IT Director Courtyard Newark – University of Delaware Daniel J. Connolly, Ph.D. Associate Professor University of Denver Dennis DuBois, CHAE Director of Finance Carlson Hotels Americas Ab M. Echenberg, CHAE, CHTP Consultant AME Consulting David W. Eller President Finance Guy, Inc. Mehmet Erdem, Ph.D, CHTP Asst. Professor of Hotel Mgmt, UNLV Jason R. Filippini, CPA Manager LeMaster Daniels Melih Madanoglu, Ph.D., CHE Assistant Professor Florida Gulf Coast University Brian Miller, Ph.D. Assistant Professor University of Delaware Christina E. Miller, CAM, CHAE Assistant Controller, Ginn Reunion Resort & Club Raymond S. Schmidgall, Ph.D., CPA, CHAE Professor Michigan State University Franklin John P. Sikich, CPA, CHAE Owner Franklin John Patrick Sikich, CPA

Paul A. Willie, CHAE,CHTP,CHA,CMA Hotel & Restaurant Management Professor Niagara College

11709 Boulder Lane, Suite 110 • Austin, TX 78726–1832 +1 (512) 249-5333 • (800) 646-4387 • Fax +1 (512) 249-1533 www.hftp.org • www.hitec.org

June/July 2009 Between the Lines A Letter From the President

ExPanding your resources HFTP conferences and publications offer you a variety of perspectives from experienced professionals

ere it is, the annual hospital- aging modern media to your advan- ity technology issue of The tage. Using social networking sites and HBottomline, coinciding with mobile technology to capture potential HFTP’s annual event, HITEC. A lot of clientele. Also there are several articles planning is involved to put on HITEC, that guide you toward maintaining done by the HITEC Advisory Council, strong operations — enforcing internal HFTP Board of Directors, the HFTP controls, business intelligence analysis staff and dozens of volunteer speakers. and steps to successful project man- In the next paragraphs, I’d like to bring agement. Refer back to the table of into focus the industry experts who contents on page 3 for details. share their accumulated knowledge Before I wrap up, I’d like to con- as education session speakers. In the gratulate the 2009 HFTP International case of this issue, you will find several Hospitality Technology Hall of Fame articles written by HITEC speakers, as inductees — Cindy Estis Green and well as other industry practitioners. Tom Giannopoulos, who will be hon- One of the unique advantages to ored later this month at HITEC. Cindy educational conferences like HITEC, was selected for her innovative use of Jules Sieburgh, CHTP is the valuable information offered by technology for hospitality marketing seasoned experts presenting real-world (read her article on this topic on page scenarios and ideas. In our professional 18). Tom Giannopoulos was selected lives, we are involved day-to-day in for expanding MICROS into one of bringing success to the companies we the leading software companies in the “ While your operations work for. We are faced with attracting hospitality industry. They come from customers, offering a certain level of different spectrums of the industry, may run smooth (or as service and staying even with the com- but they both exhibited how technol- petition. While your operations may ogy integration is a progressive way near as is reasonable run smooth (or as near as is reason- to provide a better guest experience. to expect), the key to able to expect), the key to maintaining Kudos to both. progress is to pull from a variety of maintaining progress is resources to gain fresh perspectives. The articles you find on the follow- to pull from a variety of ing pages are an extension to what is resources to gain fresh offered at HFTP educational conferences. You’ll notice that the discussion perspectives.” is based on real instances, directly from hoteliers, as well as academ- ics and consultants who have studied industry practices. They don’t offer pie-in-the-sky theories, but techniques that you can employ. Of note, is lever-

Jules Sieburgh, CHTP, is a hospitality consultant with O’Neal Consultants and an inductee to the HFTP International Hospitality Technology Hall of Fame.

The Bottomline HFTP News and Notes Q&A from the Research Institute Club Compensation By Region A breakdown from the 2008 HFTP Compensation and Benefits Survey

Question: Can you provide detailed U.S. regional compensation information for club properties? I would like information specific to the accounting department, as well as other management positions.

Answer: In the summer of 2008, the HFTP First of all, HFTP members were asked to provide com- Research Institute sent out a compensation and benefits survey pensation and benefits data for their position. The chart below to the entire HFTP membership via e-mail. This survey provides projected 2008 annual salary and bonus information gathered specific information on salaries, bonuses, benefits for HFTP members with accounting and finance positions. and qualifying demographic data. The overall report can be Since the survey was conducted in the summer of 2008, mem- found in the September 2008 issue of The Bottomline. For this bers provided projected data for 2008 rather than actual fig- “HFTP Research Institute Q&A” we will focus specifically on ures. As shown below, the person in charge of the accounting regional salary and bonus data for club properties. function at clubs have various titles such as controller, CFO, The greatest number of responses was from the South director of finance and accounting manager. When comparing Atlantic Region due to a major concentration of clubs and the data, keep in mind that all of the clubs in each region have HFTP members in Florida. The East South Central, Mountain been averaged. Therefore, smaller clubs have been averaged and West North Central did not receive enough responses to with very large operations which may skew the averages. If provide a regional breakdown (refer to The Bottomline May you would like a complete breakdown of club profiles contact 2009, pg. 6, for region definitions). the HFTP Research Institute.

2008 HFTP Club Member Compensation — Accounting and Finance Positions Position Region n Annual Salary n Bonus Accounting Manager East North Central 3 $ 46,847 Assistant Controller South Atlantic 4 50,804 Business Manager East North Central 3 57,867 CFO Middle Atlantic 3 120,685 3 $ 16,500 South Atlantic 12 127,917 9 19,444 Controller East North Central 18 74,262 12 6,708 Middle Atlantic 17 93,601 15 7,850 New England 10 82,090 9 5,374 Pacific 24 94,445 21 7,362 South Atlantic 46 75,284 35 6,163 West South Central 7 102,792 5 13,300 Director of Finance South Atlantic 5 118,050 4 14,689 Gray shaded cells indicate less than three responses. Regional breakdown continued on page 8.

June/July 2009

Q&A from the Research Institute

In addition to reporting their own salaries, respondents were also asked to provide salary data for other positions at their properties. The chart below gives a breakdown on positions such as accounts payable clerk, accounts receivable clerk, assistant controller and staff accountant. Some respondents indicated that these positions are salaried while other respondents indicated it was an hourly position at their property. When available, both the annual salary and hourly rate are noted. Again, there is some variability in the salaries dependent upon the region. For example, the highest salary for the position of accountant/controller is in the Middle Atlantic region ($94,127) and the lowest is from the East North Central region ($70,298). The nearly $25,000 difference is most likely attributable to the size and complexity of the club operations. 

Accounting, Finance and IT Staff Salaries Position Region n Annual Salary n Hourly Rate n Bonus Accountant/Controller East North Central 20 $ 70,298 13 $10,173 Middle Atlantic 17 94,127 15 8,733 New England 11 81,816 8 5,219 Pacific 18 90,954 15 8,123 South Atlantic 57 75,927 39 6,854 West South Central 8 85,180 5 11,100 Accounts Payable Clerk East North Central 6 33,750 6 $ 17.36 6 1,453 Middle Atlantic 11 44,145 3 14.67 12 2,192 New England 4 38,120 3 717 Pacific 8 41,097 4 16.19 7 1,279 South Atlantic 23 34,861 24 14.66 15 1,409 West South Central 5 33,581 3 16.45 Accounts Receivable East North Central 6 35,767 5 17.03 6 1,363 Clerk Middle Atlantic 8 39,375 8 1,288 New England 4 43,782 Pacific 8 45,415 5 1,840 South Atlantic 20 35,278 24 16.25 14 1,268 West South Central 4 38,388 3 16.58 Assistant Controller East North Central 3 40,350 Middle Atlantic 5 58,223 5 3,100 New England 6 50,233 4 2,525 Pacific 6 55,500 3 4,229 South Atlantic 25 46,099 5 21.23 17 1,459 West South Central 4 45,195 3 3,083 Director of Information South Atlantic 6 79,117 3 8,000 Systems/Technology Staff Accountant South Atlantic 11 41,932 6 18.88 3 1,667 West South Central 3 32,667 Gray shaded cells indicate less than three responses.

For further information about the 2008 HFTP Compensation and Benefits Survey or for detailed analysis contact the HFTP Research Institute at [email protected].

June/July 2009

HFTP News & Notes Volunteer Opportunity

Wanted: knowledge, experience and input Councils help HFTP reach strategic goals By Katy Walterscheidt

FTP is only as good as its members. Without the volunteer hours put in by its members, HFTP wouldn’t Hbe the successful global association that it has grown to be over the past 57 years. To organize the efforts of the association, HFTP has created a variety of councils to perform tasks necessary for the association to expand. HFTP councils provide guidance and leadership to the association assuring that HFTP remains at the top of its league. But why are councils important? And what does it take to be a member of a council?

Ongoing Accomplishments Why Volunteer? Every year the councils organize conferences, provide edito- Every member has their own reason for joining a council. rial content for publications, offer insight into the industry Some join to expand their leadership skills; some join for and more. Each committee runs differently, and requires a more interaction among members; and some join to learn minimal amount of time commitment, but the results of the more about the association. Whatever the reason, it seems councils’ hard work are what allow HFTP to reach its long- one central theme for volunteering for a council is the rela- term strategic goals. tionships built with other members. “My favorite part of being on a council has been to watch “One of the main benefits of being part of a global coun- the evolution of an idea grow into something that our mem- cil is centered on the ‘global’ part,” said HFTP Global Vice bers can benefit from — using an extremely democratic, President Terry Price, CHAE, CHTP, CPA, executive IT respectful and effective process where each council member manager at The Grove Park Inn Resort & Spa. “Being able contributes valuable input,” said Elaine McPherson, presi- to work with professionals from around the world and learn dent and owner of E=MC² The Centre for Business Excel- from different opinions, views and experiences has expand- lence and member of the Education Advisory Council. ed my opinions, views and experiences.” One council that is the epitome of this evolution is the Today, more than ever, improving your communication HITEC Advisory Council and its creation of GUESTROOM and leadership skills and being able to network with others is 20X. Under the council’s supervision, GUESTROOM 20X important. According to Communications Editorial Advisory has grown into a project known around the world for show- Council Chair Arlene Ramirez, MBA, lecturer at Conrad N. casing the latest and near-future guestroom technologies. Hilton College — University of Houston, being a part of an The exhibit has been a major drawn on the HITEC trade HFTP council is a great conduit for this. show floor, as well as several other conferences, while the Not only do councils allow members to expand their traveling version of the project has educated professionals network, it also gives them the opportunity to develop their all over North America, Europe and Asia. organizational and leadership skills. “It is less intimidating The Certification Advisory Council is another council and easier to experiment with new approaches or techniques that has overseen important changes over the past several in a council, which you can then use in your professional years. Since its formation in 2006, the council has created a environment,” said Ramirez. Code of Ethics for the high standards established for CHAE Price — who currently serves on the HITEC Advisory and CHTP designees, updated exam questions and launched Council, Education Advisory Council and HFTP Global Ex- online versions of both exams. ecutive Committee — has advice to anyone thinking about Whether it’s becoming the voice of future guestroom joining a committee: “Don’t sell yourself short. You have technology or raising the bar on continuing education, these something to offer and contribute and HFTP needs you to councils are just two examples of why HFTP councils are make this organization everything it can be. Your knowl- important. They not only better the association, they also edge, your experience, your input may be the very thing that better the hospitality industry. takes HFTP to the next level.” 

10 June/July 2009 Volunteer Opportunity

HFTP COUNCILS Certification Advisory Council monitors industry standards HITEC Advisory Council creates a forum where hospitality and incorporates criteria into the certification designation professionals exchange ideas and information about the programs to assure its professional credibility. The latest technical products and services, while providing Certification Advisory Council constantly reviews the an educational conference that prepares hospitality programs, policies/procedures, exam questions along with professionals to apply this information. ruling on appeals from examination candidates. Leadership Academy Advisory Council assists HFTP Communications Editorial Advisory Council ensures Global with the planning and preparation of Leadership that HFTP publications, including The Bottomline, and Academy (co-located with HFTP’s Annual Convention & communication projects promote the goals and objectives Tradeshow) through program evaluation and suggestions of HFTP. for future programming.

Education Advisory Council makes recommendations for Membership Marketing Advisory Council assists and education topics and helps plan the education programs supports the staff as an advisory group to provide for the professional development seminars, the Annual information and feedback on new marketing pieces, Convention & Tradeshow and other educational endeavors. industry ideas and new member services.

EHTEC Advisory Council creates a forum where hospitality Paragon Award Selection Committee reviews, evaluates professionals exchange ideas and information about the and determines the recipients of the Paragon Award. latest technical products and services, while providing a European-based educational conference that prepares ProLinks Education Advisory Council makes hospitality professionals to apply this information. recommendations for topics suitable for ProLinks Online Educational Sessions that are specific to the membership.

2009 – 2010 Council Volunteer To volunteer please print and fill out the Committee/Council Volunteer Form Deadline: August 5, 2009 found on www.hftp.org and fax it back to the HFTP office at +1 (512) 249-1533.

The Bottomline 11 Feature Profile

Scott Anderson By Lou Cook

Developer Entrepreneur, Large-scale Manager, Luxuryotelier

n June 2008, Scott Anderson became president of the Hospitality and Real Estate Group for Kohler Co. He has said this new role is probably Ithe closest he will ever come to having the perfect job, and his 41-year career has been the foundation for his perfect job. Anderson started in hospitality from the sand up. At age 16 he began working as a lifeguard at San Diego’s venerable Hotel del Coronado. Like the “Del,” Anderson was also born in San Diego, and beach, sun and sand were part of his DNA. Hospitality turned out to be encoded as well. By the following year, he was working in the hotel’s food and beverage department. For college he chose to major in hospitality at Washington State University, receiving his bachelors in Hotel and Restaurant Administration in 1972. His ideal “first-after-college” job would have been to move into the “ The emotional income CEO’s office at the Del, but that would come later. First he headed to Chicago as a management trainee at the Westin Hotel. No lifeguarding hoteliers get is seeing here, but by 1979 Anderson had experience in every hotel job and various Westin properties including Orange County and Phoenix. He was prepared people have a good to head a world-class hotel and returned to the del Coronado, which has almost as many awards as it has rooms. He would remain 12 years. time, and it’s one of In 1990 Anderson made a big move and settled in Pine Mountain, Ga. to become president and CEO of Callaway Gardens. He ran a complex the reasons they go that included 770 rooms, 17 tennis courts, 63 holes of golf, seven din- ing outlets, nine lakes and 1,200 acres of hunting preserve. Also in his into the business.” job description, the Ida Cason Callaway Foundation with a 2,500 acre horticultural theme park. The park, open to the public, has 14 interpretive guides and two lepidopterists on staff to manage and explain the activities in the butterfly domes. Anderson notes that lepidopterists are rare in the hospitality field, but working with these experts was just part of what made Callaway a fascinating place and a great job for him. He left the resort in 1994 for an even more complex position, the Sum- mer Olympic Games in Atlanta. There he served as managing director of games services for the 1996 Olympics, with responsibility for 11,800 volunteers and 11 million in ticket sales, plus accommodations, spectator servicing, merchandise, food and beverage, sponsor hospitality, and marketing. It was a huge job and Anderson has said it taught him how to manage multiple projects under pressure. Now he evaluates job problems by Olympic standards and asks himself, “Is this harder than the Olympics?” SPEAKER He says, “The answer is always no.” When the Games ended in 1996, Anderson became an executive vice General Session: Useful Tech Weapons president at Cendant Corp. The Cendant Hotel Group is now the world’s for Economic Battles largest lodging franchiser with 6,467 open hotels on five continents. Ander- Tuesday, June 23 • 8:30 – 9:45 a.m. son arrived at a time of transition when technology was taking a greater role Anaheim Convention Center in the hospitality industry. Anderson says today at least 83 percent of people

12 June/July 2009 do research online before buying a room, and he helped shep- herd Cendant’s brands into the new era of web sites. Anderson says, “The emotional income hoteliers get is seeing people have a good time, and it’s one of the reasons they go into the business.” For him the next infusion of emotional income would come from destination clubs. An idea for a new hospitality company had been per- Anderson oversees Kohler’s colating for some time, and in 2004 after leaving Cendant, numerous luxury properties, Anderson founded Dream Catcher. It would be a destination including: Whistling Straights (top-left), The American Club club where members could spend 30 days at high-end prop- (top-right) and the Inn on erties in choice locations around the world. Each property Woodlake (bottom-left). would be elegantly decorated and supplied with housekeep- Images supplied by Kohler Co. ing services. No detail would be too small. One touch: the staff asks future guests for photos of themselves before arriving, with the excuse that it would be easier to put names and faces together when they arrived. Thus guests walk in to their lodgings to find a surprise, digital photos of themselves in place. It is an instant feel-at-home gesture. partial ownership of houses for 30 days out of the year. This Anderson and his wife Maggie bought office supplies feature would draw on Anderson’s background at Quintess at Costco and worked off a card table spinning a vision of and Dream Catcher. what they wanted. With that vision in place, Anderson raised “The company sees properties as showcases for Kohler the equity to buy homes and to develop the company. At products,” says Anderson, “and we would like to develop a the same time, he was president and CEO of High Country warm weather resort. The opportunities to develop here are Hospitality (HCH), a hospitality management and technol- wonderful, and the right thing for me.” ogy company. Golf is another right thing for Anderson, who considers In 2006 Anderson coordinated a merger of HCH and himself an avid, but terrible golfer. The latter is not keeping Dream Catcher with Quintess and became the vice chair- him from eagerly anticipating the 2010 PGA Championships man of the Boulder, Colo. company, one of the largest resort to be held at Kohler’s Whistling Straights and Blackwolf Run destination clubs in the industry. Two years later he joined courses where Anderson will serve as a general chairperson. Kohler Co. Hospitality and Real Estate Group as president These properties will also host the 2012 Women’s Open, the and charged with ensuring that service levels and physical 2016 PGA Championships and the 2020 Ryder Cup. properties reflect Kohler’s leadership in the world’s luxury Scott and Maggie Anderson have a daughter Lauren, who resort markets. At the time he was referred to as “a rec- works in advertising in New York, and a son Paul in his sec- ognized developer, entrepreneur, large-scale manager and ond year of law school. When he’s not working or playing luxury hotelier.” bad golf, Anderson loves to fish and to cook, useful hobbies Founded in 1873, Kohler began as producers of kitchen that work well together when he catches something. and bath fixtures, added furniture and backup power systems At this year’s HITEC, Anderson will lead a panel on how and moved into hospitality and world-class golf 20 years technology can aid businesses in a down economy. Years ago. The company is one of the oldest and largest privately- ago Anderson became very interested in convergence of held-companies in the U.S. hospitality and technology. He believes in precisely target- As one of his main responsibilities, Anderson’s charge is ing marketing efforts with the creation of resort customer continuing the growth of Kohler’s global operations in- profiles. “When you get a profile of someone who would be cluding Destination Kohler and the Old Course Hotel Golf predisposed to use your resort, you can specifically target a Resort & Spa in St. Andrews, Scotland. He will also oversee direct mail piece and get the right offer to the right person at The American Club, the Midwest’s only AAA five diamond the right time.” Anderson uses getaway weekend golfers as resort hotel, and the Inn on Woodlake, a select-service an example and searches for people who haven’t yet been to hotel overlooking an 11-acre, spring-fed lake with private Kohler and then creates an attractive package with a major beach. Both properties are located in Kohler, Wis. Also in credit card company as a partner. the Kohler family are three private clubs, three spas and a Several days before appearing at HITEC, Anderson will speciality chocolate shop. Anderson presides over a sizeable be up-front performing an especially significant role. On and elegant plate with a sweet touch. June 20 he will be father-of-the-bride when Lauren is mar- His foremost task is developing fractional real estate ried at Kohler’s American Club. Will escorting her down the properties in St. Andrews and around the world. Private res- aisle be harder than the Olympics? Easier to direct maybe, ident’s clubs are being planned for Kohler and St. Andrews but managing 11,800 volunteers is a snap compared to giv- destination resorts, which would allow up to 10 families ing away one daughter. 

The Bottomline 13 Accounting Fraud Prevention WHO’S watching THE BOOKS?

s a result of a family illness, a tenured and trusted payroll manager suddenly Diagnosing and finds himself faced with a severe personal economic hardship. He knows Athe company’s general manager and assistant general manager have neither tuning up your the time or interest to review payroll records, especially during the payroll period. He also knows the company’s employee list is not monitored and due to consistent internal control turnover, the controller is not familiar with many current employees. Most importantly, the payroll manager knows the following: system • The company’s internal control system has not been evaluated in years due to a lack of time and money; By Jason R. Filippini, CPA • There is a small accounting staff with limited monitoring; • Once time is submitted by the department heads, there is no further monitoring of the process; and • While most employees receive direct deposit, for those that do not, their checks arrive at the accounting office and are delivered by the payroll manager.

As a result, the payroll manager decides to set up a new “ghost” employee. He determines he won’t be caught and quickly starts to receive small payroll checks each period. With no monitoring of the process and the payroll manager always in the office during payroll periods, the company never becomes aware of the “ghost” employee or monetary discrepancies through their performance ratios. This example showcases many circumstances that companies face every day; HFTP Club and Hotel Controllers from a lack of monitoring and maintenance, to a payroll manager actually engag- Conference Speaker ing in fraud due to the weaknesses in the company’s internal control structure. It’s easy to see how the lack of an adequate internal control system can lead to errors Internal Control System Diagnostic and fraud. and Tune Up Wednesday, June 24 • 8:00 – 9:30 a.m. Jason R. Filippini, CPA, is a manager with the accounting firm LeMaster Daniels in their Bellevue, Wash. office. He has presented sessions on internal controls and fraud for HFTP throughout the United States. Anaheim Convention Center Filippini can be reached at [email protected].

14 June/July 2009

Fraud Prevention

Integral Internal Control Components • The company’s board of directors, commitment to competence and A diagnosis of deficiencies, with subsequent tune-ups, is critical to organizational structure; and the successful operation of the internal control system. The goal is to • And as the example showed, a implement a structure that is efficient and operating effectively. tempted employee facing hardship and a willingness to commit fraud. Control Environment — The control environment is at the center of the attributes affecting your internal control system. It is comprised of the Risk Assessment people in place along with their integrity, ethical values and capabilities. Every organization faces risks at various levels. Risk assessment is not only Risk Assessment — Risk assessment is not only critical to controlling critical to controlling general operating general operating efficiency, but is another component of the internal efficiency, but is another component of control system. Risk areas could include regulatory, economic, information the internal control system. Risk areas technology, financing, human resources or labor relations. could include regulatory, economic, in- Control Activities — Control activities are traceable to policies and formation technology, financing, human procedures, relate to an objective and address “what could go wrong.” resources or labor relations. However, A company might accomplish these through reviews, processing checks, prior to assessing the risks associated physical controls, performance indicators or segregation of duties. with any activity, objectives must first They come in different shapes and sizes, and might include manual and be defined. Identifying the objectives at computer controls, or managerial and supervisory controls. various levels, from the overall entity to individual activities, will help to ensure Information and Communication — Information and communication an alignment with the company’s stra- refers to the system that is in place to facilitate the transition of important tegic vision. It will also determine those information, which is both financial and non-financial. The information items that must function correctly in or- must be timely, current, accurate and accessible. der to reach specified goals. Objectives Monitoring — The internal control system must also have appropriate are interrelated and may overlap. An monitoring in place over each control activity. The concept of monitoring, objective may encompass end-of-day in the context of meeting the objectives, can be inherent or achieved reporting, month-end-close, or payroll through a process of diagnosing each activity as to its effectiveness. processing such as that payroll should be paid in accordance with appropriate payroll rates. Once identified, the com- Be Aware, Involved and successful operation of the internal con- pany can look at the risks surrounding Know the Components trol system. The goal is to implement a each of the objectives, whether internal A company can never assume that structure that is efficient and effective. or external. Risk identification must anyone, from the new to the long-term, Before the internal control system continually be diagnosed for potential trusted employee, won’t be tempted can be diagnosed, it is first important to pitfalls. There is a direct relationship to overstep their bounds. This is why break down the concept into its inter- between the internal control compo- it’s important to be aware of what is related components. The components nents and the objectives. Objectives are happening with your internal control are integrated with the management what we are trying to achieve, while the system and perform regular evaluations. process and include the control environ- components represent what is needed to Internal control is a process, not an ment, risk assessment, control activi- achieve the objectives. event. It is affected by people, not just ties, information and communication, policy and procedure manuals. While and monitoring. Control Activities procedure manuals are important to A good way to start documenting your the flow of information, the effective- Control Environment information is to develop a matrix with ness of the internal control is based on The control environment is at the columns for each objective that you the people who influence the process. center of the attributes affecting your are trying to achieve and the associ- These controls provide only reason- internal control system. It is comprised ated risks. Then, identify the control able assurance. You cannot be abso- of the people in place along with their activity associated with each objective. lutely certain that there are no errors or integrity, ethical values and capabilities. This will be another column in your fraudulent activity, which is why it’s This includes such factors as: matrix. Control activities are traceable important to consistently evaluate and • Management’s attitude toward to policies and procedures, relate to an monitor the control process. the accounting functions in place, objective, and address “what could go A diagnosis of deficiencies, with financial reporting and operating wrong.” The company might accom- subsequent tune-ups, is critical to the philosophy; plish these control activities through

16 June/July 2009 Fraud Prevention

reviews, processing checks, physical controls, performance indicators, or segregation of duties. They come in “ While the idea of determining whether an internal different shapes and sizes, and might include manual and computer controls, control system is operating effectively may be or managerial and supervisory controls. Consider whether your identified daunting, there are solutions. A qualified CPA firm can control activity prevents or detects be hired to initiate and help a company complete their an exception to the related objective. Preventing the exception happens diagnostic. Ongoing, firm staff can help a company before the transaction is initiated, while detecting might occur during or after with maintenance and support, and institute regular the event takes place. Once the control checks and balances, as well as updates to the system.” activities have been identified, determine whether they actually address the concept of “what could go wrong.” general manager could hand out checks as he has never committed this kind of The Payroll Manager’s Fraud and direct deposit pay stubs directly. crime before, never bragged to fellow Revisiting the fraudulent payroll man- To finalize their procedures, the employees, there is no whistleblower ager situation from the earlier example company will want to now look at their system in place, and management has can help to illustrate the three control information and communication, as not spent the resources to diagnose and concepts identified above: well as their monitoring process. tune-up their internal control system for • There is a deficiency in the control its operating effectiveness. Now that the environment due to a lack of interest Information and Communication payroll manager knows the scheme can from upper management in taking Information and communication refers be completed successfully, there is a the time or having interest to review to the system that is in place to facilitate probability that it will be done again. payroll information; the transition of important information, While the idea of determining • The controller is overworked and which is both financial and non-finan- whether an internal control system is disengaged from the other depart- cial. The information must be timely, operating effectively may be daunting, ments and not aware of all existing current, accurate and accessible. If there are solutions. A qualified CPA personnel; information cannot be captured and firm can be hired to initiate and help • While the company has a payroll communicated in a way that individuals a company complete their diagnostic. manual, there has been no identi- can fulfill their responsibilities, there Ongoing, firm staff can help a company fication of the objectives and risks will inherently be a deficiency in the with maintenance and support, and surrounding this accounting func- internal control structure. institute regular checks and balances tion; and as well as updates to the system. Steps • The lack of a diagnostic of the Monitoring prescribed throughout this article can payroll cycle has allowed the risk of The internal control system must also also be done internally. Regardless of the “ghost” employee to exist and have appropriate monitoring in place which direction a company decides to financially impact the company. over each control activity. The concept take, it is important that all key employ- of monitoring, in the context of meet- ees are involved in the process, so they Identification of the risks over the ing the objectives, can be inherent or are integrated into the effective work- payroll cycle would have allowed the achieved through a process of diagnos- ings of the system. By understanding company to determine whether there ing each activity as to its effective- internal controls, company employees were effective control procedures ness. Taking a pulse, or performing a may not find themselves as tempted to addressing the objectives. To avoid diagnostic of the control activities about consider breaching the system, and they this type of fraudulent situation in whether they are meeting the objectives can also serve as additional monitors the future, the company should create is critical to mitigating risks. against errors and fraud. It is important an objective to ensure that all pay- to remember that along with all the roll disbursements represent existing Are You In Control? protections a company may establish, staff members. The risk of “ghost” As time went by, our trusted payroll it is vital to commit adequate time and employees could be addressed with manager embezzled enough funds resources to a comprehensive internal any number of activities. The general through the “ghost” employee scheme control system, as the cost in the short manager might review employee lists to cover the family illness costs. Was term may be far less than if this practice with department heads or the assistant he ever caught? We may never know is ignored. 

The Bottomline 17 Marketing Strategies Online Media

here is more to life than Facebook and YouTube. In fact, many hospitality Perspective from marketers place the largest proportion of their marketing budget into more three e-strategists Troutine forms of online marketing like e-mail and pay-per-click advertising. Excerpts from an interview with the panelists on the HITEC 2009 Web 2.0 and their new media session provides some insights into how these hospitality organizations are using social media and Web 2.0 tools, along with the tried-and-true electronic marketing toolkits techniques. Tim Peter is managing director of Leading Interactive Reservations, Isaac Gerstenzang is the corporate director of e-commerce for Destination Hotels & Resorts and Jeff Senior is the executive vice president of marketing and sales for By Cindy Estis Green Fairmont Raffles Hotels International.

Is online marketing more important to your hotels’ revenue generating efforts or less so? What is working best during the recession? Tim Peter (Leading): Online marketing continues to be important. In a tough economy, we focus our energies on vehicles achieving the greatest return. While we continual to balance our marketing spend to ensure the best returns, our online marketing activities represent our most measurable channel and we continue to leverage it. Isaac Gerstenzang (Destination): Online marketing is a large part of our revenue generating efforts and has been successful in generating traffic and bookings from our leisure guests. Our properties are doing a nice job with their web site search engine optimization efforts, especially with driving search from “value” terms like special offers. They are also working with the OTAs to drive additional leisure traffic. Jeff Senior (Fairmont): The [electronic channels are] far and away the fastest growing channels. Complexity and transparency are the norm today. A major reason for SPEAKERS our success, and incremental gain, has been due to a focus on parity across channels. Social Media-Web 2.0 Strategies: Cindy Estis Green is managing partner of the hospitality consultancy The Estis Group and recently A New Direction For Online Marketing launched a new web site showcasing innovation and best practices in sales and marketing www. drivingrevenue.travel. She is the author of the recently published Demystifying Distribution 2.0 and The Wednesday, June 24 • 2:45 – 4:00 p.m. Travel Marketer’s Guide to Social Media and Social Networks. She is also the 2009 inductee to the HFTP Anaheim Convention Center International Hospitality Technology Hall of Fame.

18 June/July 2009

Online Media

What do you find is best to drive traffic and conversion? sure our social media sites always link back to our web sites Peter (Leading): There is no “silver bullet” to driving to help build SEO and increase traffic. conversion or traffic to web sites, particularly in a down We are also encouraging our properties to launch blogs economy. We look instead to continual to optimize our me- on their own sites to help with SEO. The Carolina Inn has dia channels, messaging, presentation and calls-to-action to recently launched their blog on their property site. They have improve both traffic and conversion. By repeatedly measur- done a great job with not only adding hotel-specific informa- ing what works and building on past successes, we’ve been tion, but community info as well, which helps in the optimi- able to see positive trends in both traffic and conversion. zation efforts. Gerstenzang (Destination): Search engine optimization Senior (Fairmont): A wildly successful campaign was our (SEO) is a critical element for each of our property web “Travel, Earn & Win” offer. It worked because all stakehold- sites, and making sure the sites are optimized with relevant ers enjoyed benefits. In essence, it was an offer communi- terms, as well as for the current economic conditions toward cated through our large colleague base that represented a value luxury terms. The more relevant the site content is, the great value to the traveler and had incentives for productivity higher the conversion percentage you receive. (cash and prizes) for the colleague. Jeff Senior (Fairmont): Positioning ourselves at every moment of the purchase cycle as a solution — be it early Is there anything related to e-mail campaigns that your “dreaming,” considered alternative, planning or purchase. hotels have found most effective? No one size fits all; e.g. SEO and search engine marketing Gerstenzang (Destination): The short term promotions are more meaningful at the planning stage, whereas social such as 72 hour sales have been very successful at some media is important during dreaming. As for techniques to properties. improve conversion, the customer is in the driver’s seat. Senior (Fairmont): The more specific we can make the Treat them with the respect they’ve earned. We quote rates message, be it tone, text or offer, the better the likelihood of in a menu, i.e. providing different, rationally fenced, alterna- higher open rates and bookings. tives. The customer chooses the alternative most suited to their personal goals. What direction do you see for the future (next two to five years) of online marketing and/or social media in terms of Have there have been success stories with social media in their application to hospitality marketing? your hotel groups? Can you share some examples and tell Peter (Leading): I think we’re going to see a continued in- me why they were successful? crease in customers use of social media, moving their “broad Gerstenzang (Destination): We have recently launched match” terms to their social network — or to a trusted set Destination Delivers (www.destinationdelivers.com) a cus- of members within their social network — and relying less tomer acquisition and retention program. The new e-CRM on traditional search engines like Google for early stage dis- program provides a customized and personalized URL for covery. Word of mouth is already a buzzword within online each participating guest, with access to targeted offers and marketing, but its value to hospitality marketers will only special promotions, original content and videos, and oppor- increase. As such, hospitality marketers would do well to tunities to participate in the Destination Hotels & Resorts encourage true loyalty among their guests and reward those travel writer contest. In addition, an ongoing series of cor- guests not just for stays, but also for recommendations and porate campaigns have been designed to continually sell and referrals of new customers. Time and cash-strapped custom- cross sell the portfolio throughout the year. ers will increasingly look to ensure a positive experience be- In an effort to ensure each property maintains a positive fore they take their trip, so their reliance on trusted advisors brand image, we have implemented a reputation manage- can only be expected to increase. ment program to help properties proactively manage and Separately, customers will come to expect more targeted increase their online presence. This includes the implemen- messaging that displays real relevance to their needs. For tation of the Avalon Buzz Report so we can easily monitor years guests have parted with all kinds of information about what is being said about us and measure ourselves against their preferences and their priorities. Hospitality companies our competition. We also have developed a comprehensive that most effectively put that information to use can expect document with guidelines for the properties to keep in mind their guests to stay more often — and share more informa- while developing their strategy in managing online reviews tion. Those that fail to do so, will likely lose share. by focusing on three main topics: Gerstenzang (Destination): Making sure we add social me- • Monitoring and sharing reviews, dia elements to our web sites. The most important thing for us • Acting on reviews, and is to drive traffic to our web sites. We will use social media to • Generating new — and more positive — reviews help optimize our sites and to drive traffic from other social media sites with the use of share tags, RSS feeds and blogs. Our property Sunriver Resort has had great success with Senior (Fairmont): In addition to an ongoing focus on Facebook, conducting ongoing contests and accumulating segmenting to the individual level, I envision continued over 6,000 fans. Additionally, one of our strategies is to en- progress in understanding, and making actionable, how

20 June/July 2009 Online Media

Uses of Social Media to Market Hotel Properties Screen shot examples: Destination Delivers e-CRM site (left); The Carolina Inn hotel blog (center); and the Sunriver Resort’s Facebook page (right).

individuals interact within their various online social com- marketing effort demonstrates to hotels the value of each munities. In other words, successfully creating a relationship component, and how those components support one another with an individual, creates a relationship with a group, and in a truly integrated campaign. vice versa. Of course, there will be heightened expectations Senior (Fairmont): The areas we hope to expand in our to perform. Any disappointing experience with an individual hotels relate to engagement and relationship-oriented initia- could impact an entire group. tives. Historically, recommendations from friends, family and trusted resources have been important and cost effec- What aren’t your hotels doing at all, (or doing enough of) tive means of influence. Social media is the logical, online that you wish they would start doing (or do more of) to extension of traditional recommendations and information improve their online marketing? gathering across all online resources — transparency rules. Gerstenzang (Destination): I believe social media and Third party sites, both comment consolidators and social blogging on your own web site can help with your web sites with user generated content (UGC) are now relied upon sites’ SEO efforts. The challenge with social media is that when considering travel alternatives. Viral campaigns are while it is very inexpensive to implement in the long term, “mainstream.” Fairmont has engaged on multiple levels, some properties see the startup costs (both monetary and including tracking and evaluating comments, hosting their time commitment) as a road block in getting started, thus not own UGC sites (e.g. Facebook), launching a community site as many properties have started the process. Additionally, (Everyone’s An Original), and engaging in ongoing proac- before a property gets started, they need to have a social tive communication (RSS and Twitter) and viral marketing. media strategy developed. This includes reputation management, how to respond to reviews and blog comments, how to Expanding Online Marketing Toolkit engage in social media, and what image and message does The three HITEC Web 2.0 panelists provide a good perspec- the property wants to communicate online to ensure an ef- tive on the direction many hospitality organizations are tak- fective program. ing. They are sticking to the basics with initiatives that are Peter (Leading): The two most critical things that hotels ROI-based to ensure they can generate quality traffic. While can do better are: the ultimate goal of most Web 2.0 initiatives is to establish 1. Integrate their marketing efforts more fully, and dialogue and build relationships, social media tools can be 2. Make better use of tools that exist to track those efforts. deployed at appropriate times to move the consumer along in the purchase process. Although many Web 2.0 techniques Most hotels are making better use of things like search, e- are still being tested, they usually play a role in customer mail marketing, display media, loyalty and social programs engagement and facilitating the search process. Engaged to connect with guests. However, too many of those activi- customers spend more money and come back more often; ties are isolated from one another. Turning from channel-fo- Web 2.0 is an ideal supplement to the traffic-building basics cused marketing, to more integrated marketing across those such as SEO, e-mail and online advertising. The expanding channels improves the connection with guests. online marketing toolkit, used in various combinations to At the same time, putting the right measurements in address each audience, enhances the hospitality marketer’s place to track the value of each component in an integrated ability to increase transactions. 

The Bottomline 21 Customer Relations Mobile Technology

obile technology represents a dramatic new platform that will impact the travel industry as much Guide To Mas the introduction of the Internet itself. Many in the hospitality industry may question this statement. How can cell phones really impact my marketing and distribution strategy? The answer requires a look at how devices and Building a networks have evolved over the last few years and the new opportunities these devices enable. Though there has been a great deal of hype around mobile Mobile technology and the travel industry for many years, key components of a solution were missing. One only has to compare an iPhone with a traditional cell phone from the early part of this decade to realize how the device level platform has technology evolved. Also changed is the availability of so called “3G” (third generation) networks. It is the combination of these two elements that makes the need for a comprehensive mo- Strategy bile strategy an essential part of a hotel’s marketing, operations and distribution plans.

Leverage its growth to Subhead Much has been written about the Apple iPhone. This is more empower the traveler, improve than simple marketing spin as the iPhone represents the first travel efficiency and build truly integrated portable computing device. Yes, it’s a phone, but interacting with it feels more like a computer. Today’s ancillary revenue smartphones combine the phone with a digital camera, PDA functionality, a MP3 player and elements of gaming devices. Convergence will continue with personal navigation, mobile By Norman Rose wallets, electronic entry capabilities and even mini laptop functionality coming soon to next generation smartphones. In addition, Apple’s iPhone has permanently changed the relationship between the device manufacturer and the wireless carrier, both economically and in respect to distribution through the introduction of the iTunes’ App Store. Prior to the iTunes App Store, wireless carriers controlled the access of applications offered within a concept called the “walled garden.” Software vendors had to compete with each other for limited space on the wireless carriers’ “deck”, a term which refers to the area on traditional phones where applications can be downloaded. The iPhone App Store changed this closed environment allowing thousands of small apps to be created and distributed directly to the consumer. Over 1 billion applications have been downloaded through the iTunes store. In addition, the app store concept has caught the attention of the mobile industry as RIM Blackberry, Nokia, T- Mobile, Microsoft and Google Android have all either announced plans or have already launched an app store of their own. Downloading applications provides some unique and essential capabilities that cannot be accessed when using a browser on the phone. Most important is the ability to use location, enabled by the GPS chip in most smartphones, as a way to deliver products and services. It is because of this ability hoteliers need to consider their own downloadable applications for the iPhone and other devices used by the frequent guest.

Norman Rose is president of Travel Tech Consulting Inc.

22 May 2009 Mobile Technology

So what should be the major focus Improving Efficiency Like any product development, hotel of hoteliers in respect to this new mo- Improving the efficiency of the hotel’s executives needs to clearly identify bile platform? The opportunity can be operations may be a byproduct of the the target market or markets they want grouped into three broad areas: empow- guest empowerment initiative, but to reach with the mobile applica- ering the mobile traveler, improving specially targeting basic hotel functions tion. Depending on the target market travel efficiency and building ancillary for the mobile platform should be an selection, the development platform revenue. Even though these three areas additional focus. This includes mobile of choice should become clear. For do share some common focus, organiz- check-in and check-out as well as a example, for frequent business traveling development priorities into these whole range of guest service options. ers the RIM Blackberry is the dominant categories can help hotel management In addition, technology called near field smartphone device used by this seg- better relate the cost of development to communications, which is short-range ment. Like other device manufactur- the value of the mobile initiative. high frequency wireless communica- ers, RIM has launched their own app tion capability, will enable greater effi- store and software development kit Empowering the Mobile Traveler ciencies in the near future. This requires (SDK), which is a package that enables Empowering the mobile traveler is all an additional chip in the mobile phone. a programmer to develop applications about bringing hotel services to the In Japan, where near field communica- for a specific platform. There are many mobile device. A common mistake tion technology is a common, electronic companies who can be contracted to made by many in our industry is simply payment can be made through the build the downloadable application for bringing to mobile phones the function- mobile devices and on the near horizon; specific platforms, but it is the hotel’s ality that exists on the hotel’s web site. room entry can also be possible using management that needs to clearly This actually is a good start, but real a mobile phone. Obviously this would define the requirements for the software innovation comes from developing new require some additional hardware to be before embarking upon a development services that are location-centric and in place so this is a few years off. NTT effort. Hotel management needs to based on the context of the user. For ex- DoCoMo in Japan is even testing a mo- define the goals of the application and ample, when thinking about reservation bile application that provides in-room develop a cost/benefit analysis. If guest capabilities it may be more appropriate controls that manages all room func- empowerment is the ultimate goal, to empower the mobile guest with the tions including temperature and audio specific metrics need to be developed ability to change or cancel bookings visual choices to name just a few. that measure mobile activity and equate rather than making a new booking. that to customer satisfaction. Looking An obvious service to bring to the Build Ancillary Revenue at incremental revenue through ancil- mobile platform is a mobile concierge An important topic today for all suppli- lary services and specific promotions is application. With an e-concierge appli- ers in the travel and hospitality industries another way to measure the effective- cation, the mobile phone not only can is the ability to build ancillary revenue. ness of a mobile initiative. reduce concierge resource constraints, This can be done in a number of ways Despite today’s poor economic con- particularly at peak times; but automati- including offering upgrades, distributing ditions, investing in mobile application cally provides navigation assistance for electronic coupons for onsite services development should be a key focus for recommended restaurants or activities. and discounts for local merchants. The all hoteliers. Without this focus, new in- Social networking is one of the fast- mobile device is also perfect for last termediaries will likely emerge that may est growing areas online. Social based minute or limited time offers. add additional layers and costs between applications can have an important the hotel guest and the property or chain. role in the mobile world as well. For Steps to a Mobile Initiative The mobile platform provides a new op- example, a social networking applica- So given these opportunities, what are portunity to communicate directly with tion that brings together conference the steps hotel management needs to a hotel’s best customers. It is therefore attendees with common interests benefit take in order to launch a mobile initia- essential for all hoteliers to start work hotel guests attending a convention or tive? Many of the large hotel chains today on defining goals and allocating trade show. On the leisure side, using have already taken the first step by budget for mobile initiatives.  a mobile application to find another providing a slimmed down version of family with small children can be a life their web site that can work on a variety saver for a family vacation. of Web-enabled phones. This is a good Probably the greatest guest empow- initial strategy, but this browser-based erment a mobile application provides approach lacks the ability to use the SPEAKER is delivery of hotel services. Reserving guest’s location to deliver services and Mobile: The Next Platform for a spa session, golf tee time or dinner therefore does not take advantage of Hotel Distribution reservation at an on-site restaurant can the smartphone’s true capabilities. One be enabled by mobile applications. Dis- main challenge in developing down- Thursday, June 25 • 2:15 – 3:30 p.m. counts also can be offered to promote loadable applications is the fragmenta- Anaheim Convention Center on-property or local merchants. tion of the mobile device platforms.

The Bottomline 23 IT Operations Planning and Implementation

Project Portfolio Management

ow often do we hear technology managers complain that they don’t have How to handle enough time, money and staff to do all the things they need to do and do Hthem right? Conversely, executives often complain that IT projects are multiple, concurrent always late, over budget or IT doesn’t understand what the business wants. And these complaints occur when the industry is prospering. One can only imagine the IT projects using comments now. Whether the economy is going up or going down, there are several techniques overlapping staff and companies can use to manage their pipeline of projects in a manner that optimizes IT investment and performance. By using the budget process, prioritizing proj- technology resources ects based on agreed to criteria, and implementing or strengthening a disciplined project portfolio management process, companies can confidently apply the right By Paul Manley, PMP amount of financial and labor resources to the challenge of IT investment. Lack of clear direction is a key contributor to almost one-third of IT project cancellations, and just over half stumble to completion, having failed to meet either the budget, scope or timeline requirements. A good way to keep on track is to follow project portfolio management (PPM), a process for managing multiple, concurrent IT projects using overlapping staff and technology resources. The goal of PPM is to get all the horses pulling together in the same direction at the same time.

Budget Process During the annual budget process, most organizations identify the projects they plan to do for the year. Life would be great if that list didn’t change. However, we know that often some projects from last year’s budget run over and may incur expenses in the following fiscal year. There are numerous reasons for this. New de- SPEAKER mands on cash arise during the year and consequently projects are cancelled, post- Project Management Fundamentals: IT Paul Manley, PMP, is a project consultant and certified project manager. He has established project Portfolio Management and Investments offices in IT and marketing departments and has helped companies in several industries develop project portfolios and deliver successful projects. Paul is a hospitality veteran and held senior IT and business Tuesday, June 23 • 3:45 – 5:00 p.m. positions for recognized brands and system vendors. He is active in several industry associations and is Anaheim Convention Center an adjunct instructor at the University Of Delaware. Paul can be reached at [email protected].

24 June/July 2009 IT Operations

poned or reduced in scope and budget. project, like the collective knowledge Continuous learning is one step in add- Economic or competitive environment and experience of the management ing discipline to the project process. changes often necessitate a change to team, they should weight the impor- Identifying the project sponsor and an existing project’s scope or add a tance of each part. This, or any unbi- associating them with the project is new project to the list. IT resources get ased process, is really important, and a key success factor. The sponsor’s re-assigned to unexpected operational complicated, when different brands, role is to be the project champion and efforts, limiting their availability to groups or departments each want their provide fiscal resources, help clear and meet project deadlines. Or lastly, the IT needs met first to meet objectives avoid political hurdles and support the original budget estimate was too low or they’ve been given or committed to in project. They also provide justification its scope was insufficient, requiring a the annual plan. used in the prioritization process. request for more funds. To mitigate an undue influence on The flow of projects into and out of Listing a project on the annual the project portfolio, some companies the portfolio can easily be visualized as budget requires an ROI. So if you need have the CIO report to the CEO so that a funnel. At the top of the funnel’s wide to stop a project, be sure to calculate a more balanced strategy of IT invest- mouth are all the project ideas. As you the cost of properly stopping a project ment can be made. If the CIO reports to move down the funnel it gets narrower — especially if you plan to start it back one of the department heads, there is an and only some of the project ideas are up again in the near future. If a proj- expected bias towards that department’s prioritized. Still further down are the ect needs to be stopped, meet with the priorities. projects in process and coming out of the project manager, sponsor and key team To make the overall prioritization funnel are delivered projects. members to identify all the activities effort a bit easier, a company can break Deciding which projects to invest that need to be closed, documented and projects into those that are business in given limited resources is a problem archived. This includes: communication driven (using the above process of cri- common to all industries. For large with stakeholders, addressing system teria selection and valuation) and those organizations there is often a program and services contracts to limit financial that are technology refresh driven. management or project office director liability, documenting project status, Technology refresh covers projects that to track the status of projects, provide documenting the software developed, impact maintenance, replacing aged standards for project management, and archiving the software so it can be technology, upgrading infrastructure manage resources and communicate leveraged when the project is restarted. to handle volume, etc. The benefits for with the executive team. For a single Don’t expect that the unspent balance these projects are not always easily unit or small group, it is a task usually of your project is all it will take to quantified. For example, if Internet given to the CIO or CFO. complete it. Later on, you may need to access demand quadruples and you Finally, another important aspect of rework the software or business process don’t upgrade network capacity, can the PPM process is the development, to bring it up-to-date with the latest soft- you accurately forecast reduced room maintenance and governance of the ware version or business operation. nights? If you have a PBX past its end- PPM process itself. This discipline al- Further, as part of the budget pro- of-life, how do you quantify the risk lows companies to focus on the process cess, an assessment of existing systems’ that it may have a catastrophic failure and corporate value, and minimize the maintenance and replacement costs in the next 12 months. So many of the by-the-sea-of-the-pants approach that should be made. Especially in an envi- technology refresh project valuations results in lost profits. ronment where staffing and often system use risk as a criteria. use is reduced. Companies may be able Looking Ahead to retire or sunset some systems, reduce Project Portfolio Management According to a CIO Decisions Maga- maintenance service levels in order to Key objectives of PPM are to: deter- zine survey, 96 percent of the 250 reduce costs and reduce seat licenses. mine which projects to work on, post- companies surveyed involve an execu- pone or delete based on some value (be tive steering committee in the portfolio Prioritization it quantitative or qualitative); track the management process. However, only 66 Some companies use ROI as the only status of all the projects at each stage of percent are using very basic portfolio factor in determining the relative value the project life cycle from proposal to management processes. As PPM skills of projects and therefore their priority. close; and coordinate and help manage and tools continue to mature and the However, Kaplan and Norton’s balanced schedules and resources. Projects can results of successful projects are attrib- scorecard approach to strategy suggests be funded as a capital investment or as uted to the project management process, adding the perspectives of customers, an operational expense. It is important then more effort will be applied to other operations and staff to the criteria. to track how fast projects move through aspects of PPM such as risk manage- If a company selects a variety of the cycle. This helps companies learn ment, value creation, cost control and criteria to determine the value of a from the process and improve upon it. resource management. 

The Bottomline 25 Tech Tools Customer Relations Outlook on Revenue Management

t was two years ago that I wrote “Outlook On Revenue Management, The Chal- Challenges lenges and Opportunities in 2007” which was published in the April/May 2007 Iissue of The Bottomline. So it is with great pleasure that I have this privilege to reflect, as well as project, both the hope and potential anguish that revenue man- and agement brings to us today and in the year ahead. First, perhaps the provision of a quick primer on revenue management (RM) opportunities would be helpful. RM is both a science and an art that collectively harnesses the disciplines of micro and macro economics, consumer behavior, marketing and in 2009 sales, as well as operations management. The practice of RM includes the impera- tive recognition that all customers are not created equal. Each and every customer has his/her own expectations, needs, wants, demands and willingness to pay (WTP) values. Therefore the practice of RM must be a sophisticated approach embraced by the hospitality operation to effectively employ capacity, pricing and inventory By Paul Willie, B.Comm., controls, marketing strategies and/or bundling tactics with the pure objective of MBA, CFM, CFSM, CHA, maximizing the overall revenue potential of the firm. Succinctly, it is the hospitality enterprise understanding the customer psyche, market conditions and other CHTP, CHAE, CMA variables of the external environment to the point of lucratively providing the targeted customer with the right product at the right time in the right location and at the right price. RM was first used by the airline industry as a survival tool after deregulation took place in 1978. Since then RM has become well entrenched within the airline, hotel, retail, cruise ship and car rental industries. Experimentation and relatively good success has been enjoyed by health spas, fitness clubs, golf clubs/resorts and restaurant operations. The basic five qualifiers that can be used to determine if RM is an appropriate fit for an operation are as follows: 1) Do you have perishable inventory, 2) Do you have high fixed costs, 3) Do you have fixed capacity, 4) Do your customers usu-

Paul Willie, B.Comm., MBA, CFM, CFSM, CHA, CHTP, CHAE, CMA, is a Hotel and Restaurant Management Professor at Niagara College in Niagara on-the Lake, Ont. and a doctorate candidate (ABD) at Nova South- eastern University in Florida. Willie is also a member of the HFTP Editorial Advisory Council.

26 June/July 2009

Customer Relations

Five Key Points to Achieving Effective Revenue Management benefits of RM. For RM has become a core component of strategic management 1. Review relationships with advocates and suppliers of your product. Improve for hospitality operations in an attempt and strengthen your relationships with existing advocates and suppliers of your to sustain revenue generation, as well as product. Your objective is to gain traction and positive propulsion for your product optimize revenue potential. Furthermore, within your market distribution channels. from the perspectives of competitive 2. Create a Significant WOW Factor. Satisfy and exceed guest expectations to advantage and resource management provide customers with greater value and henceforth a WOW factor. Once in play, hospitality enterprises cannot afford to collateral guest expenditures start to take place. ignore or discount the importance of strategic revenue management. 3. Don’t discount. Research shows that in a tough economic climate discounts only offer a short term remedy for financially challenged hospitality operations. A much The Top Five wiser approach would be to “add value” while holding prices constant. Herein are what I consider to be the 4. Project value if you are charging a premium. The consumer of today has moved top five key points, the challenges and away from a carefree willingness to spend money on luxury items. Instead he/she opportunities, for hospitality enterprises must be convinced that extra value is given in return for the higher price that has to recognize in achieving effective and been charged on a particular good or service. rewarding RM in 2009. 1. Review relationships with advo- 5. Embrace social networking technologies. This potential instantaneous flow cates and suppliers of your product. of two-way dialogue provides important market research and superior customer Move towards improving and strength- service. ening your relationships with existing advocates and suppliers of your product. If you make use of a third party ally make a purchase commitment in weak levels of consumer confidence vendor, such as Expedia, Hotwire, etc., advance, and 5) Are both demand and many industries will struggle just to make sure that the line of communica- price highly variable. If the answer to at survive in the year ahead. This includes tion is current, strong and productive. least four of these questions is yes then commercial airlines, food service estab- Ensure that you have taken the time to perhaps RM is an appropriate strategic lishments, pubs and taverns, as well as emphasize the unique characteristics of fit for the business unit in question. hotel operations. All of which will be your hospitality enterprise. Push and As you know and probably have ex- greatly challenged during these tumul- promote the strengths of your product perienced firsthand, throughout the last tuous times given a loss of consumer and best selling features, in compari- half of 2008, as well as the first quarter wealth, little or no discretionary income son to the other entities found within of 2009, Canada, the United States, and very weak consumer confidence. your competitive set. It is important to and other industrialized nations around Recent examples include many com- consistently and constantly carve out the world have been challenged by the mercial airlines that are on the cusp of and highlight your product’s benefits worst international financial crisis since bankruptcy such as Air Canada, and to effectively reinforce the consumer’s the great market crash of 1929. Many the failure of tour operators such as need for your product in comparison to authors and journalists are now referring Conquest Vacations. Further, sev- the competition. Your objective is to to our current economic woes as the eral upscale restaurants have already gain significant traction and ultimately “Great Recession.” Concisely, some of foreclosed due to the very harsh eco- positive propulsion for your product the more notable economic challenges nomic conditions and a sharp decline within your market distribution chan- contributing to this financial storm in- in customer patronage. Additionally, nels. Remember, anything in motion clude the subprime credit crisis, domes- many multinational hotel companies stays in motion. tic, as well as international equity mar- are reporting a significant decrease in 2. Create a Significant WOW Fac- kets in peril and highly volatile, a severe occupancy values, average daily rates, tor. In a 2005 research paper by Dr. credit crunch, increased and significant and of course RevPAR since Septem- Gu of the University of Nevada Las unemployment rates, and historically ber, 2008. Vegas, he stresses the importance of low levels of consumer confidence. All As such, concerned hospitality casinos, located in Macau, to differenti- of these facts are worth mentioning as enterprises need to operate in a most ate themselves from the international they are substantial contributors to the sensible, efficient and effective manner competition, other gaming locations stress load hospitality enterprises are in the coming months to help shore up around the world, by providing superior already attempting to sustain in this very their ability to survive through this cur- VIP services. It appears that casino difficult economic climate. rent financial storm. operators in Las Vegas have now Accordingly, as a result of deterio- One of the best means to navigate to- embraced the same game plan. Ac- rating market conditions and extremely day’s turbulent waters is to leverage the cording to Nevada’s Gaming Control

28 June/July 2009 Customer Relations

Board, gambling revenues have fallen 3. Don’t discount. Research shows Therefore, you now have less total by almost 10 percent in comparison that in a tough economic climate dis- revenue generation, reducing your abil- to last year, many hotel rooms are counts only offer a short term remedy ity to pay your operating expenses, and vacant, and visitor counts have declined for financially challenged hospitality henceforth you are now more finan- significantly. To this end, in May of this operations. Accordingly, a hospitality cially challenged than before. year Wynn Resorts reported a quarterly enterprise that offers discounts might Second, discounting can be misun- loss of $33.8 million and the Las Vegas generate extra sales for a while, but the derstood or perceived by the consumer Sands $34.6 million. As such, the more total revenue generated must be greater as “something is wrong,” the product is prudent casino operators in Las Vegas than what the potential total revenue no good, inferior or it is flawed with an are now doing whatever they can to would have been without the discount; extremely short shelf life, etc. This in ensure their guests are treated like otherwise no economic advantage has turn becomes self perpetuating caus- royalty. Smart VIP moves include guest been gained. Herein are a couple of rea- ing momentum to build with respect recognition, anticipating guest needs, sons why discounting is not a prudent to a continued decline in demand for meal value propositions and guest af- strategic move. your products and services and perhaps firmation, as well as getting back to the First, discounting is easy, simple deeper discounting. basics of simply pampering guests with and quick. It will only be a matter of A much wiser approach would be unexpected extras. By satisfying and time before your competitors recognize to “add value” while holding prices exceeding guest expectations you are that your price cuts have taken their constant. Remember that “value” is providing your customers with greater customers away. What can follow is a conceptual and subject to the criteria value and henceforth a WOW factor has price war with competitor discounts of held by the prospective consumer. been successfully created and delivered. equal or greater value and henceforth a Value points are positioned in a linear Once that WOW factor is in play, col- level playing field from your competi- fashion and are dependent upon the lateral guest expenditures start to take tors’ perspective has ensued. Once that currency amount of raw quality that place, including possible overstays, and happens, both you and your competitors the consumer believes he or she will total revenue generation will ultimately are right back where you started from be able to secure from the purchased drift upward. at square one. There are no winners. product or service at a given price.

The Bottomline 29 Many examples exist within our declining demand for premium priced the application of technology with industry, but here is one I encountered coffee. Furthermore, Starbucks has respect to both distribution channels recently with the Niagara College teach- been under attack by persistent and in- and marketing efforts will continue to ing winery. A few days ago I bought six creased “value” competition from such gain momentum in the years ahead. As bottles of wine from the Niagara Col- competitive stalwarts as Dunkin Donuts identified by global hospitality consul- lege teaching winery for a friend who and McDonalds in the specialty-coffee tants Ernst & Young in their Top 10 was visiting from the Cayman Islands. sector of the hospitality industry. Hospitality Thoughts report; “hotels As a result of purchasing six bottles of 5. Embrace social networking will be utilizing the most up-to-date wine, I received a free multicolored, technologies. International hotels are technology to capture reservations very attractive, canvas wine tote bag increasing their use of blogs and social directly through their own distribution whose configuration offers six separate networking web sites such as Facebook channels.” Further, many hotel proper- sleeves. A perfect fit for the six bottles and Twitter. This makes perfect sense ties are now sending e-mails and text of wine and a great advertising vehicle as Twitter is reportedly the fastest messages to registered guests. This for Niagara regional wines. My immedi- growing online community at this time. strategy helps to keep registered hotel ate perception was that I received excel- Accordingly, it saw an almost 1,000 guests electronically connected with lent value with and from my purchase, percent increase in usage rate dur- activities and events taking place within and my friend was absolutely delighted ing 2008. Consequently, this effort to the community and the hotel property. with this “added value” tangible element embrace social networking technologies Additionally, the hotel guest is also be- to compliment the great wine. is another strategy being employed by ing apprised of in-house daily specials 4. Project value if you are charging prudent hotels to improve their market and value proposition information. For a premium. In The Economist (April position and revenue potential in this example, within an hour of checking 2, 2009) an article entitled “Consumer difficult global economic climate. in, the hotel guest could receive a text Psychology: From Buy, Buy to Bye- Moreover, the importance of social message that says something along the Bye” speaks to the new and emerging networks as a means of brand equity lines of “Welcome Mr. Smith! Thank challenge you now have in charging a reinforcement and customer purchase you for choosing Hotel HFTP. Please premium price to your customers. The reassurance has increased significantly dine with us tonight in one of our lovely consumer of today has moved away as consumer trust of big businesses food and beverage outlets and receive a from a carefree willingness to spend has weakened dramatically within the free appetizer.” money on luxury items. The quest for last year. As such, the use of social As identified by the guru of RM, more stuff and the importance of image networks provides a low cost vehicle Robert Cross, in his February, 2009 projection by the average consumer for guests and hotel companies to have article “Revenue Management’s Renais- has apparently come to a conclusion, almost instantaneous communication. sance: A Rebirth of the Art and Science at least for now. The want or need of Succinctly, electronic social networks of Profitable Revenue Generation” yesterday’s consumer to project an can be a great tool to help repair and today’s hospitality enterprise managers image of affluence is now being re- build strong customer relationships. need to embrace technology if they want placed with a genuine desire to become Along this tangent, corporate or prop- to succeed in revenue optimization. recognized as an economically smart, erty specific bulletins and/or specials In closing, I recognize that govern- financially savvy steward. Materialism can be selectively broadcast to target ments around the world are providing is out and frugal arty is very much the markets. Equally important, customers unprecedented economic stimulus pack- fashion of the day. As a result of this can voice their concerns, opinions and ages, consumers are carefully opening seismic shift in consumer behavior, the valuable feedback prior to, during and/ up their wallets once again and store hospitality enterprise cannot success- or post guest occupancy. This potential inventories are declining. These are fully employ premium pricing without instantaneous flow of two-way dialogue all encouraging signs. Ones in which justification and effective value projec- provides important market research and economists like to refer to as “green tion. The consumer must be convinced superior customer service. Henceforth shoots” towards an economic recovery. that he/she is receiving extra value in a great opportunity for hotel companies However, there is a strong camp of return for the higher price that has been to improve their product and service economists that believe that the remain- charged on a particular good or service. in a predominately buyers’ market is der of 2009 and the first half of 2010 Take for example Starbucks Coffee available now and best of all, it is not will be a very challenging period for Company, which has really struggled in cost prohibitive. businesses and hospitality operations the last two years. Specifically, Star- in particular around the world. Accord- bucks closed over 600 U.S. stores last A Look Ahead ingly, perhaps there has never been a year and will close another 300 so far This upward trend of hotel proper- more appropriate time for hospitality this year. These store closures come as ties becoming more dependent upon enterprises to use the potential benefits a result of market saturation, as well as and placing greater confidence in of RM strategies and tactics. 

30 June/July 2009 Tech Tools Performance Analysis ReinForced Decision-making

he development of information systems that support decision-making, to- A look at business gether with the use of business intelligence, provides assistance and support Tto managers in the decision process, thereby impacting the quality of business intelligence in the and productivity (Galilic, Vlado, 2007). Being better informed and having greater intelligence for decision-making can help to create new value and gain a competi- hospitality industry tive advantage. In addition, placing business intelligence as a strategic initiative can enable enterprises to gain prominence in customer service. This reasoning is that BI generally enables an organization to capture, categorize and present By Kutay Kalkan and customer information in an integrated customer information repository, and then Fred J. DeMicco, Ph.D. efficiently provides knowledge support to related employees who are responsible for delivering service to customer. Advanced business intelligence and analytics capabilities even support the kinds of root-cause analysis that can gather large vol- umes of customer data from multiple cases so that companies can identify what’s happening and then develop careful, cost-based plans for taking corrective action to answer customer inquiries or increase customer satisfaction (Meister, 2005). As to the hospitality industry; BI (Business Intelligence), executive dashboards, scorecards and reports have been called the ultimate C-level tool for hospitality executives (Ray, 2006). For example, corporate managers at top companies like Starwood, Ashford Hospitality, Merritt Hospitality, Peabody Hotel Group, Inter- state Hotels and most Marriotts rely on BI applications to provide accurate real- time data on the health of their properties and enterprise.

Kutay Kalkan is a recent graduate of Hospitality Information Management program at the University of Delaware. He is currently working in PellaNet Technologies as a software developer. Fred J. DeMicco, Ph. D. is ARAMARK chair and professor for the department of Hotel, Restaurant and Institutional Management at the University of Delaware.

The Bottomline 31 Performance Analysis

BUSINESS INTELLIGENCE SPENDING applications; or across multiple hotels or brands. EBI looks at data about guests, Amounts Spent employees, room rates, availability, yield, food costs and suppliers, revenues, $159.12 million — Data warehouse implementation suites accounting and reservations. EBI enables $63.57 million — Customer relationship management decision makers to find trends, evaluate $57.01 million — Data warehouse design and administration tools performance and create new patterns according to the data analyzed. It enables $43.44 million — Analytical applications them to look at extensive data with either $25.64 million — Data mining tools top-down or bottom-up approach. $20.57 million — Inventory optimization The two major components to EBI are data integration management and $18.88 million — Executive scorecard information analysis. $14.31 million — Database administration and management Data integration management is the $18.44 million — Other art and science of pulling all the stored data together into a usable format in Breakdown of expenditures made by hospitality firms across North America, Europe and Asia. one repository (Blass, 2006). A good Source: “What’s Really Important?”; Andrews, S., Spring 2007, Hospitality Upgrade, p. 32. data integration management frame- work must be based on an organiza- Percentage Breakdown tion’s business goals and strategies. The purpose is to provide the right informa- G. tion to the right decision makers. Data A. Data warehouse implementation integration also spans ensuring data F. suites, 38% B. Customer relationship integrity through validation and cleans- management, 15% C. Data warehouse ing processes as data is loaded into a E. design and administration, 14% D. central data warehouse. A. Analytical applications, 10% As an example, consider a Web D. E. Data mining tools, 6% F. Inventory application where a user can query a optimization, 5% G. Other, 12% variety of information about cities such as crime statistics, weather, hotels, Source: Percentage of BI Spend by Area. From demographics, etc. Traditionally, the C. Microsoft Corp. “Hospitality Industry 2006 B. Technology Spend Analysis,” February 2007 information must exist in a single database with a single schema. Information of this breadth, however, is difficult and expensive for a single enterprise to BI has been around for more than of business decision-making, based on collect. Even if the resources exist to 10 years, and IDC (International Data the implementation of modern software gather the data, it would likely dupli- Corporation) reports it to be a more and IT solutions. BI is a systematic cate data in existing crime databases, than $13 billion market, forecasted to and ethical way of capturing, gather- weather web sites and census data. grow more than 8 percent annually for ing, sorting and analyzing publicly A data integration solution may ad- the next three to five years Andrews,( available information on the activities dress this problem by considering these 2007). Across North America, Europe of competitors, based on which future external resources as materialized views and Asia, hospitality firms spend $420 business trends can be predicted to help over a virtual mediated schema, result- billion on line-of-business BI, break- establish and ensure one’s competi- ing in “virtual data integration.” This ing down into several specific areas as tive ability in the marketplace (Pavia, means application developers construct illustrated in the charts above. Analyz- Stipanovic, 2007). a schema to best model the kinds of ing the information shown, we can infer Enterprise business intelligence (EBI) answers their users want. This virtual that BI plays an important role in the is the ability to make smart, insight- schema is called the mediated schema. hospitality industry; therefore, money ful and fact-based decisions about any Next, they design “wrappers” or adapt- spent on BI is considerably high. part of the business in a timely manner ers for each data source, such as the (Blass, 2006). EBI generally deals with crime database and weather web site. What are BI and EBI? the reports that are packaged with the These adapters simply transform the lo- Business intelligence is a strategy that hotel applications (POS/PMS/S&C). It cal query results (those returned by the focuses on gathering and analyzing ex- helps managers make decisions accord- respective web sites or databases) into ternal information, as the starting point ing to the information from disparate an easily processed form for the data

32 June/July 2009 Performance Analysis

BI On the Job integration solution. When an application user queries the mediated schema, Warren Winslow, experienced BI administrator and corporate controller for the data integration solution transforms Peabody Hotel Group: this query into appropriate queries over “ Peabody uses business intelligence to create more accurate the respective data sources. Finally, the results of these queries are combined forecasts based on performance facts that result in greater into the answer to the user’s query. efficiency and profitability. The BI tool provides us the The second component of EBI is ability to access all historical and current month data on an information assessment. After gathering the data in the data warehouse; managers immediate basis. The tool has tremendously improved the can look at the information, trends and efficiencies associated with the overall access, comparability anomalies. By doing so, they increase and analysis of our data, and more importantly, the quality the accuracy of their forecasts about the company and make better decisions. of our data. The improved quality allows management to For example, if a data warehouse has make the necessary decisions with a much greater degree of already been implemented, an assess- confidence. We are able to forecast energy costs and other ment would be a great way to determine its ROI and discover potential areas for expenses by bringing in metrics from our general ledger while expansion — how are people currently taking room revenue, occupancy and other data from our using the data warehouse, and are there property management systems and using it all to build the other business opportunities that could be exploited? (Robinson, 2008) performance reports from our dashboards. The information from Peabody’s BI system enables managers to make better EBI Roadmap business decisions for staffing, purchasing and at many other There are many factors to consider when implementing EBI. EBI is not operating levels.” (Winslow, as cited in Ray, 2006) an application; it is a way of thinking, a paradigm shift in how decisions are made, and an overall integrated envi- There is a culture shift that will Hardee’s Restaurants had come up ronment to support the new decision happen with the adaptation of an EBI with the “Hardee’s Monster Thickburg- process (Blass, 2006). EBI is strategic. solution. Key decision makers will be er” which has 107 grams of fat in it. Al- First, you must have the complete able to rely on integrated, insightful though the amount of fat in the burger support of corporate senior manage- information to help them find new ways was a major health issue, the corporate ment. They must understand the poten- to solve old problems and to highlight executives were very self-confident in tial power of EBI in the organization new opportunities. Forward thinking making this bold move because they and be prepared to be leaders in the use hoteliers will generate strategic initia- used their EBI system to understand of the information. tives that make their organizations how this new burger would impact store Second, rely on experience. Building more competitive and profitable; they sales, menu mixes and production costs. the technical infrastructure for collect- will use the EBI paradigm to support They anticipated that Americans would ing, cleansing, storing and accessing their ideas and programs with facts welcome this new burger according to data is not for the faint of heart, nor is it and trusted data. Briefly, preparing to their study and they turned out to be realistic to leave this to the new really propose a project overrun with EBI is right. Stores that included this burger in smart guy in IT. Anyone experienced undoubtedly beneficial in terms of cost, their menus saw immediate increases in in EBI implementations knows that the time and efficiency. sales (Blass, 2006). process of understanding current busi- Another example of successful BI ness challenges, strategies and decision BI Uses in the Hospitality Industry implementation in the restaurant indus- making processes is the same as ensur- The restaurant industry, just like all try is Dunkin’ Donuts. Dunkin’ Donuts ing the data is organized in the most other industries, pays great attention is using a system that helps it more logical way for the organization. to integrate BI solutions into their IT quickly close deals with their franchi- Third, be ready for the unknown. systems for better decision making sees (Weier, 2007). Dunkin’ Donuts Define and design a flexible data ware- capabilities. For example, Hardee’s managers use the dashboard-type soft- house for storing all the integrated data Restaurants introduced their highest ware application of BI to identify the that can meet the needs you know about calorie and highest fat content menu problems, so that they can keep fran- today and be agile enough to handle item directly in the face of America’s chisee deals on track. They can get a those you haven’t yet identified. health obsession. geographic view of regions where deals Performance Analysis

BI On the Job January 31, 2008, Cognos was officially Catherine Cooper, CIO, Ozburn-Hessey Logistics, a Brentwood, Tenn.-based acquired by IBM. provider of global supply chain management: Cognos brings together technology, analytical applications, best practices “ Among the most exciting technological developments at and a broad network of partners to give Ozburn-Hessey Logistics we saw in 2007 where these two: their customers a complete performance business intelligence and virtualization. BI permits us to solution. They provide an open and adaptive solution that leverages an improve our decision-making processes because we now organization’s ERP, packaged applica- have the ability to work off fact-based data, rather than tions, and database investments. having to rely on the insight of our individuals. BI measures Cognos 8 BI, which was launched in September 2005, combines the features all our activities against financial information. For example, of several previous products: Report- like many 3PLs, we utilize multiple warehouse management Net, PowerPlay, Metrics Manager, systems. Now data from all those systems is collected and Noticecast, and Decision Stream. During the past five years, BI has consolidated. That consolidated data then enters our BI gained steady acceptance among big system where it is reconciled against our financials. So now players in the hospitality industry like our financial information is the measure of truth, both Hilton Hotels that have their own IT staffs, and among small and medium internally and with our clients and serves as a common sized companies such as Concord Ho- reporting tool. Based on the data available from BI, we are tels and Dolce International (Troutman, able to make swift changes in our operations and create 2006). Companies like FedEx, Toshiba, efficiencies and service improvements for our clients. BMW and Boeing are served by the (Cooper as cited in Karolefski, 2007) broader BI industry’s three dominant vendors: Business Objects, Cognos Incorporated and Hyperion Solutions are put off, and then drill down into a data can be combined with externally Corp. Among these, Cognos has the specific account to determine what’s purchased demographic and lifestyle greatest penetration in the hospitality slowing down the process. They can information. By doing so, a hotel industry. In our market, third-party identify potential deals in locales that room can be prepared according to the providers have added their software to are too close in geographic proximity. customer’s previous preferences such as Cognos’ BI and corporate performance They also can identify high-perform- room temperature, television, telephone management solutions. Known users ing areas, and congregate best practices and lighting settings. of Cognos licenses include Blackstone, from those regions’ salespeople to share Using business intelligence on Concord Hotels, Strand Development, with other areas. The most important recording customer preferences and InnKeepers Hospitality Management, key metrics are the average cycle time supporting loyalty programs can give Sandals Resorts, HI Development, for getting a franchise deal done, the one hotel company a tangible competi- Highpointe Hotel Corp, ZMC Hotels, size of deals, and average cycle time by tive advantage. Likewise, BI has an Sage Hospitality and CHIP Hospitality. what type of deal gets done. This is par- important role on anticipating customer As an industry, we are also ben- ticularly important in the competition eating habits and service level expecta- efiting from recent enhancements to against, Starbucks for example, which tions. Therefore, BI is an important tool Cognos’ product line that includes a doesn’t franchise, so its growth isn’t to cut costs and increase revenues. breakthrough in pricing structure. The undermined by the difficulty of finding new version allows BI decision report- suitable and willing franchise operators Contribution of Cognos ing to be accessed by a larger number and getting them signed up quickly. Cognos (formerly Cognos Incorporat- of managers more economically so Within the hotel side of the industry, ed) is an Ottawa, Ont. based company operators can utilize 20 ‘audience’ seats marketers have been collecting data which makes BI and performance man- for the price of five seats under the pre- on guests, their booking habits and agement software. Founded in 1969, vious plan. This means one power user their activities on site, so that they can Cognos employed almost 3,500 people can cost effectively distribute critical offer a highly personalized service to and served more than 23,000 custom- information throughout an entire com- the customers. These data can be col- ers in over 135 countries. Cognos pany, giving more general managers ac- lected from the PMS, POS, banqueting was originally known as Quasar and cess to information for better decisions. and TV systems. Then the collected adopted its current name in 1982. On Additionally, BI tools now combine all

34 June/July 2009 Performance Analysis

modules of a fully integrated product suite into a single version that enables a Business users need to forecast and see the big picture and, greater depth of data analysis, reporting “ and e-mail functionality. New com- when necessary, the detail… They do not want to drown in munication usefulness automatically irrelevant information. links and distributes BI reports and dashboards via e-mails or on a web IT’s ability to control costs and deliver value should not be site, which can be used in sending daily performance and comp-set reporting to undermined by maintaining multiple BI systems. IT does not hundreds of property managers. want BI that only covers some of the data. They need software Promise of BI that has room to grow to meet tomorrow’s demands.” The full promise of BI means that neither IT nor business users feel limited by their BI systems. Business financial analysts, line of business man- increasing competency level between users need to scan the environment agers, executives and casual BI users the hospitality providers. Nowadays, and see relevant information about can all find value through these multiple most of the hotels are trying to engage their business in ways that are the most windows. IT can deliver the best avail- in competitive methods such as custom- meaningful to them and the easiest to able value to all users with one busi- er loyalty programs and personalized understand. Business users need to fore- ness intelligence product — making it service. They should always align their cast and see the big picture and, when simpler, faster, and easier to manage. core competencies to their competitive necessary, the detail (Cetron, DeMicco, IBM Cognos 8 Business Intelligence methods because threat of new entrants & Davies, 2006). They do not want to breaks through these limits and more. is the most important issue for the drown in irrelevant information. IT’s The full promise of business intelli- hotels. As to restaurants, they are in a ability to control costs and deliver value gence is that all users be able to access more competitive environment because should not be undermined by maintain- all data, through all capabilities, across of the threat of substitute products and ing multiple BI systems. IT does not the Cognos 8 platform. They should un- new entrants. In this kind of situation, want BI that only covers some of the derstand what happened and why, and restaurants should focus on increasing data. They need software that has room determine what action they should take their knowledge of customer needs and to grow to meet tomorrow’s demands. to help the organization succeed. then take the precautions accordingly. IBM Cognos 8 Business Intelli- To conclude, IBM Cognos 8 Busi- As a result, BI is the right tool for both gence opens windows into all corporate ness Intelligence, the leader of the BI hotels and restaurants to provide better systems and data. BI system manag- industry, plays a crucial role for the hos- customer service while cutting down ers, professional authors, business and pitality industry. The reason being is the costs and increasing revenues. 

References

• Advanced Intelligence. (2007). Ca- • Inge, J. (2008). Demystifying Busi- • Pavia, N., & Stipanovic, C. (2007). terer & Hotelkeeper, 197(4487), ness Intelligence. Hospitality Up- Managing Information and Intel- p. 2–2. grade, p. 10–24. lectual Capital In the Development • Andrews, S. (2007). What’s Really • Karolefski, J. (2007). Technology Concept of Tourism Destinations. Important? Hospitality Upgrade, p. Leaders Share Bright Ideas. Food Tourism & Hospitality Management, 32–34. Logistics, (100), p. 22–24. 13(3), p. 643 – 650. • Blass, A. (2006). Enterprise Business • Meister, J. (September, 2005). Busi- • Robinson, M. The BI Assessment Intelligence: Bringing It All Together. ness Intelligence and Learning: Im- Process. Retrieved November 12, Hospitality Upgrade, p. 138. proving Customer Service and Sales. 2008, from: http://technologyexecuti- • Cetron, M., DeMicco, F. and Danes, Retrieved November 12, 2008, from: vesclub.com/Articles/businessintel- O. (2006). Hospitality 2010. Pearon http://newlearningplaybook.com/ ligence/artBIAsssessmentProcess. Press. N.J., U.S.A. blog/business-intelligence-learning- php • Galicic, V., and Pilepic, L. (2007). The improving-customer service-sales/ • Troutman, J. (2006). Hospitality Busi- Role of Logistics Information System • Ostrowski, C. (2007). Sage Able To ness Intelligence: Almost Main- In the Business-decision Process. Better Measure Performance With Tourism & Hospitality Management, Business Intelligence. Hotel Busi- 13(3), p. 571–582. ness, 16(18), p. 46–48.

The Bottomline 35 IT Management Online Connectivity bandwidth traffic control

andwidth has become a key component for every organization as connected Understanding the devices and services have invaded our daily lives. From accessing key infra- Bstructure resources to online social media marketing, connectivity is the key. evolving needs of In the hospitality sector, bandwidth is equally omnipresent at all levels of the organization, and more innovative services and technologies which result in cost both operations savings, improved efficiency and higher profitability all depend on the ability and guests to connect one system to another, beyond addressing the ever growing needs of guests. The reality of many properties is that bandwidth is now so critical that a By JP Hebert loss of service can result in anything from mild financial losses to complete paraly- sis of operations.

Bandwidth: A Look at Today’s Situation Many of a property’s systems and services can be positively or negatively affected by bandwidth. Here is an overview of today’s situation: Central Office. The first part of a property’s requirements gravitate around the fact that all systems are connected back to a central office, which is in charge of managing systems in most cases as properties do not have IT personnel on staff at the property level. At this level, key applications such as PMS, call accounting and business intelligence are commonly connected through a T1 circuit, which is satisfactory for this requirement, but a common point of failure is to not have a backup circuit to compensate for downtime. Another common point of failure is to use two T1s or ISP circuits provided through the same local loop. Should this point of presence fail, no circuits of any type will be available. IP Links. A growing number of systems, which not so long ago were manu- ally managed by property staff, are migrating to the IP world, for cost and effi-

JP Hebert is vice president of business development for Elfiq Networks.

36 June/July 2009 Online Connectivity

ciency reasons. They include room minibars, room keycard “true high speed access,” which is based on customer expec- systems, beverage management systems (hotel bar-based tations of performance based on home or work experiences. for drink content control), digital signage, SMS messag- The vast majority of business guests already have high speed ing to guests and much more. A new trend is to use SMS to Internet access at home and expect a similar experience at distribute information to guests before or when they are on the hotel. In this context, multiplying low-cost ISP links will the property to generate revenue or loyalty. An outage of a prove to be a wise investment, and the costs are usually a few hours can be acceptable, but when outages last days it fraction of T1 circuits. As an example, a cable modem can becomes a management concern and costs may be generated deliver 15Mbps of downstream throughput and 1 or 2 Mbps in both this context and in the supply chain. of upstream throughput, which greatly enhances the experi- VoIP. Voice systems used by properties are evolving, ence while keeping costs under control because reaching along with the ability to use IP links to replace traditional 10+Mbps of downstream throughput through conventional analog systems. These VoIP implementations bring en- circuits can easily cost in the thousands, while a cable mo- hanced functions, reduced costs and the ability to integrate dem will be in the low hundreds. systems with voice more easily. The drawback with VoIP is availability, where planning redundancy is key in offer- Combining Access ing this service to the location, and becomes more critical When both network requirements are defined and growth is when reservations and guests are dependent on it. SIP trunk accounted for, a fairly new common practice is to combine failover requires planning, and using multiple carriers with ISP circuits for both front desk and guest access, and this different technology platforms is the key to ensuring service has some worthwhile benefits. The first is the provision of availability. incremental bandwidth to the other network. If the front desk Entertainment Systems. IP-based entertainment systems only requires 50 percent of its allocated bandwidth, the other are becoming more prevalent on properties, especially full 50 percent can be used on the guest network or vice-versa. service properties. These services include IP-based tele- Similarly, multiple carriers using multiple technologies envision services, digital movie services, gaming, Internet hance uptime. Should one carrier be unavailable, a failover access on TVs/LCDs and much more. All these services will opportunity ensures continuity of the bandwidth offered to require their own allocation of bandwidth, and for the most both networks until things return to normal. part, they will be downstream-centric so circuits such as To further enhance uptime, mobile carriers can be con- DSL and cable modems can prove to be a valid, cost-effec- sidered for front desk operations and vital IT systems. While tive way of handling the extra load. Diversifying providers the speed of mobile links is improving dramatically, they are and technologies, as with VoIP discussed above, will ensure not yet ready for common use on properties. They are usu- that real-time services are available at all times. ally expensive and latency can prove to be challenging, but Guest Internet Access. In today’s economy, properties when all connections to the Internet are severed, they can be are between the proverbial rock and hard place. Guests are an unexpectedly efficient lifeline. always demanding more bandwidth in the room because of The trick afterwards is to have these networks seamlessly the changing nature of the Internet, and content is migrating use the desired bandwidth without human interaction to au- from static text pages to rich media-based applications such tomate bandwidth allocation and the failover process. Link as Slingbox and Hulu. Traditional circuits such as T1s offer balancers are well-suited for this task and can be viewed as reliable access, but are costly to upgrade since their incre- “router switches.” They handle multiple ISPs concurrently ments are not significant for guest usage. In this scenario, the and allow for incremental bandwidth to be installed to meet use of low-cost ISP links such as DSL, cable modems and and exceed the property’s requirements. With these devices, the new fiber-based services are a key to success since they many properties have significantly raised their guest scores offer significant download throughput for guests. and customer loyalty, and the investment is in line with budgetary plans as low-cost links are used and T1 circuits Planning Connectivity are reduced. Also, the conversion of MPLS circuits to VPNs Many aspects need to be taken into consideration when has proven a worthwhile investment to reduce monthly planning connectivity to meet and exceed guest and corpo- bandwidth access costs for certain businesses, and will add rate expectations. First, how much bandwidth is required by redundancy as well. operations is a vital metric to base decisions on, to guarantee Internet bandwidth in the past few years has gone from that operations run normally and to ensure that key services being a useful tool to a key business delivery mechanism not such as reservations are not delayed. only to ensure that guests have a satisfactory stay, but also to Second, guest Internet access bandwidth needs to be ensure normal operations while promoting services, activi- forecasted accurately, with at least 128Kbps of throughput ties or other items the property wishes to promote to gener- per occupied room to deliver minimum satisfactory access. ate incremental revenue, and planning bandwidth should be On this note, there is a growing need for properties to deliver the key to success. 

The Bottomline 37 The Bottomline Resource Guide Abacus Business Services Gatekeeper Business Solutions Interim DOF/Controller for Hire www. gatekeepersolutions.com [email protected] Control your labor costs, Specializing in interim DOF/Controller work with over 20 improve administrative years experience for resorts and hotels in the US and productivity and increase Caribbean. profits with our signature Experience with preparation of budgets, cashflows, Labor Management System designed for the hospitality forecasting; preparation of month end statements; daily industry. LMS with time & attendance and scheduling are operation of resort accounting. part of our proprietary suite of software, and work with all third party payroll services, and with our integrated Short and long term assignments accepted in US or modules for in-house payroll and human resources. Caribbean. References available. Please call L Roser at 602-317-7997 or email [email protected]. IDeaS DataWorks, Inc. www.ideas.com www.dataworksinc.com IDeaS Revenue Optimization, a SAS Company, is the premier pro- DataWorks offers pur- vider of revenue management and optimization solutions chasing, inventory, sales and services. IDeaS provides critical decision solutions analysis and bar-cod- and services that enable global organizations to under- ing systems for Retail and F&B management. Resorts, stand, anticipate and react to hotel consumer behavior in casinos, museums, stadiums, amusement parks and order to maximize revenue. zoos use DataWorks’ flagship software NeXT™. NeXT has multi-company, multi-language, and multi-currency Please visit www.ideas.com for more information. capabilities and can run on a local property or span the needs of an entire enterprise. Megasys www.megasys.com Easy (Ez) Revenue Management Megasys is celebrating 20 years Solutions Limited of providing flexible and cost-effective enterprise level www.easyrms.com hospitality software solutions. All modules are integrat- For almost 10 years EasyRMS ed into a single open-structure database which allows has been the leading provider us to address and deliver the best solution for any size of Internet Revenue & Yield Management Solutions and property or unique business style. Our knowledgeable independent Consultancy Services worldwide. With and dedicated staff provides 24/7/365 live-support. more than 30 years of combined industry knowledge EasyRMS is dedicated to the introduction of new gener- MSI ation technology and procedures within the hospitality www.msisolutions.com industry and aims to deliver these services to its Clients MSI Products: WinPM, WinSAM, in an ‘Ez and professional’ manner. WEB-Booking, EPM, Helm, and PlacePoint empower properties within the lodging industry. Elfiq Networks MSI offers leading-edge integrated hospitality solutions www.elfiq.com allowing you to focus on your guests. Whether looking Elfiq Networks is a leading manu- for property management, sales & catering, CRM, busi- facturer of link balancers, enabling hospitality organiza- ness intelligence, web-booking, or point-of-sale MSI’s tions to provide fast and dependable Internet access solutions provide an integrated platform to help you ex- and significantly raise guest satisfaction scores while ceed guest’s expectations. Outstanding service delivery, keeping costs under control. Elfiq’s products combined brand-centric support, dedicated account management with the right ISP selection will also provide significant and highly experienced training, installation and project telecom expense reductions. management teams define MSI.

To advertise here contact Jennifer Lee, HFTP Director of Marketing, at +1 (512) 249-5333 x25 or [email protected]. 38 June/July 2009 The Bottomline 39