Impact of IT infrastructure limitations on hospitality business
Impact of IT infrastructure limitations on hospitality business
Alexey Chizhikov, 21 February 2023

Use of the latest technology is a proven way of facilitating efficient hotel operation. While it is true that the hospitality industry makes a technology innovation leap now and then it still occurs that technology adoption is blocked by use of legacy infrastructure. This article is an overview of the impact of use of latest Information Technology on hotel operation and how infrastructure limitations may block using such technology which in turn may stall the industry growth or reduce profitability. This article also includes an overview of IT vendors’ leverage on limitations imposed by legacy IT infrastructure in hotels.

Keywords: hospitality industry, information technology, ICT development index.

ICT development index versus real-life technology adoption rate

IDI map by ITU as of 2017 shows discrepancy in ICT development Index across countries

5G roll-out can be a good benchmark for ICT development Index per country. And some countries are leaders in adopting latest communication standards. However, the same countries that are leaders in adopting newer generations of mobile communication technology are sometimes bound to older technologies in other parts of their infrastructures. Such discrepancy may look surprising, but this is a reality even in some of the most advanced countries. Sticking to previous generation or older technology may have its own benefits, but limits the capacity to adopt newest IT solutions that can’t operate on legacy infrastructure. One good example is how in 2022 there are a lot of hotels in the United States that are still using coaxial cable to deliver TV channels to rooms. The problem with coax cable is that it was never designed to be a full-duplex communication and cannot provide the same uplink bandwidth as Ethernet Cat5/6 cable. On top of that, coaxial cable is usually not a part of a computer network and instead is only distributing TV channels with little capacity to provide adequate client-to-server communication. As a result, hotels with such outdated infrastructure cannot use it to deploy the latest IT solutions designed to work in a full-duplex high-bandwidth computer network.

“...coaxial cabling... ...is a legacy in many homes today.” Says a quote by Simpson, W., Greenfield, H. as they refer to coaxial cabling as legacy technology in their book published in 2009. Thirteen years later some hotels are still using coaxial cable and have no immediate plans to replace it with Cat6 Ethernet cable or equivalent wireless network. Deployment of the latest software and hardware hospitality solutions may be impossible or have serious limitations which makes operation of such hotels less efficient.

Hospitality solutions nowadays are very interactive and are usually built on the web technology stack which requires full-duplex communication between client and server. Limited use of coaxial cable is still possible for such applications with the help of DOCSIS or similar OSI Layer 2 protocol, but with some downsides and limitations. Such an addition would require an upgrade of some part of the infrastructure that can get very close to the cost of laying Cat5/6 cables, installing Wi-Fi hotspots or using 5G mesh antennas. Even if implemented, the bandwidth of coaxial cable would still be incomparably narrower than that of fiber, Cat5/6 or latest generations of wireless comms.

Wi-Fi unfortunately cannot always replace the Cat6 Ethernet network and has more security flaws by design. The 6th generation of Wi-Fi offered some features that can further help with minimizing channel interference or improve bandwidth by using MIMO technique. However, a professional design of a computer network would imply use of fiber, Cat5/6 and enterprise routers/switches which can provide the security, performance and availability expected by a sensitive clientele of a decent lodging property.

As indicated above, an up-to-date IT infrastructure is a dependency to modern IT solutions, but not all hotels have such infrastructure available. As a result some part of the hospitality industry is bubbled in a technology era that is a couple decades behind today’s generation, when they could be driving their revenue up by using the latest hospitality IT solutions. This can be perceived as a partitioning of the businesses where some of them exist in a world where Industry 5.0 does its job and some of them don’t have access to the adequate means of making their operation transparent and digitized enough to be further optimized and improved according to Industry 5.0 goals. On a larger scale such discrepancy in ability to access latest IT solutions may block some hotels from being sustainable and reduce their profitability, which in turn will have its impact on Gross Domestic Product growth.

Next-gen comms enabling more IoT devices

Projection of IoT vs Non-IoT devices ratio change by 2025. Statista

Internet-of-Things is the answer to an increased demand for transparency, interactivity and automation. Data-driven transparency allows to track items in stock, monitor space occupancy status, see certain metrics and understand some processes that are otherwise not trackable. Interfaces became so intuitive that users are willing to interact with almost anything that has a button, a touchscreen or a voice control. Beyond that, devices become so intelligent that they can now interact with users or even provide comprehensive automation of some routines. All that changes the environment of hotels and logic of interactions with it, but requires connectivity beyond typical network capability. 5G mobile service with mesh design can accommodate more devices than a typical Wi-Fi hotspot which provides the capacity demanded by today’s variety of IoT devices that can be used in hotels. More affordable satellite communications are also helping to adopt more IT solutions in locations where fiber is not available, connecting more properties to the Internet. However, current implementation of these technologies is still far from its full capabilities which again limits connectivity and reverts hotels to using Cat6 cable or Wi-Fi to deploy their IT solutions.

Data and AI driven hotel operation improvement

“The development of digital services requires the identification of the user, information on their individual preferences and a decision-based calibration by Artificial Intelligence. In AI-based decision making solutions, the former decisive factors are replaced by a virtual personal assistant, which is able to map the consumer’s preferences based on their digital footprint, and create an optimal personalized offer from the available big data systems.” Martin Zsarnoczky, Boston University

Digitization in hospitality can affect both customer relation and internal operation efficiency. By knowing its guests better, a hotel can understand what the ideal offer looks like. At the same time, the property management can learn a lot about how they can further improve their business processes, better dispatch available human resources or optimize purchasing routines. Data mining totally depends on how advanced the IT infrastructure of a hotel is and using legacy technology here will render the hotel out of the business of knowing itself good enough to be competitive.

“Since the signals offer two-way communication, they can also be utilized to acquire information on the habits of guests.” Buhalis & Leung, 2018

“Beacons allow hotels to gather information about where visitors are spending most of their time within the hotel or the peak usage times for different facilities such as the wellness room, pool, and bar.” Rajath, 2017

Tracking habits of guests, knowing how human resources are managed or understanding the flow of various supplies are the kind of data needed for the process of eliminating inefficiencies in hotel operation. Latest IT solutions allow us to collect more data than ever before and export them for further analysis.

New interactivity scenarios with IoT devices

What does IoT look like in contemporary hotels? As IoT generally defines any device connected to the Internet, any device that is connected to the computer network of a hotel contributes to its IoT ecosystem. These devices can be occupancy sensors, motion sensors, smart thermostats, smart locks, room control units for light and curtains, surveillance cameras, interactive screens, TVs, in-room tablets, point-of-sale and even guest own devices. When all these devices are connected and are integrated with a centralized smart hotel software like property management system, guest entertainment, mobile app, payment gateway, building management system, access control, the guests and hotel staff can reveal way more convenient ways of interacting with the hotel, while the hotel management can get an insight on how the property operates, where most inefficiencies are and how to further improve the guest experience or optimize staff management.

Practical scenarios of using IoT devices in hotel may include saving energy by turning off the lights in spaces where occupancy sensors detect no presence of people, managing thermostats building-wise to further improve eco-friendliness, making certain transactions between guests and the hotel less demanding for assistance of a live person by automating, making wireless or digitizing them, going paperless with restaurant menus and hotel information booklets, allowing instant messaging with the property and extending customer reach beyond their stay period by using hotel-branded app. Our contribution as a vendor to helping hotels get the full benefits of IoT is mostly found in how we integrate the software that is connected to many devices in the hotel with our guest-facing apps, making all these IoT devices accessible to guests and opening a gate for the hotel to collect valuable data that can be further analyzed and discover new ways of managing the property with the help of all the variety of sensors, buttons, actuators, switches, screens and controllers.

How failure to upgrade IT infrastructure affects profitability of businesses

“Investment in IT had a greater impact on a company’s profits than comparable spending on either advertising or R&D. ...In fact, IT investments had a marked positive effect on revenue growth; for example, a $1 increase in IT expenditures per employee was associated in our study with a $12.22 increase in sales per employee.” Research by Sunil Mithas, Ali Tafti, Indranil Bardhan and Jie Mein Goh, MIT, based on data from more than 400 global companies

Keeping the IT infrastructure up-to-date pursues several goals, such as keeping personal and commercial data secure, gaining access to latest methods of data analysis, cutting costs and eliminating risks caused by using legacy technology, maintaining the operation efficiency at industry-wide level and sustainability. For example, automation and computerization of certain business processes may reduce or eliminate use of office paper which is great for the planet and reduce cost on office supplies. Automated energy and HVAC management can reduce load on the electrical grid, thus minimizing the emission footprint of the property. Such systems would require Cat5/6 and other modern connectivity for occupancy sensors or smart room and building control systems, which confirms how important it is to eliminate bottlenecks in IT infrastructure that could prevent a property from adopting newest IT solutions.

Hoteliers recognize the importance of IT upgrades

Independent survey by Duetto shows that hotels are looking forward to increasing their investment in IT upgrades over the next 3 years

It’s great to see an increase in interest of hoteliers to invest into technology upgrades. It proves that hotel revenue is positively affected by automation, digitization and comprehensive use of technology and that hotel owners recognize that impact. However, a property can’t always control the availability of external infrastructure like High-Speed Internet or latest generation of TV broadcast. Sometimes internal infrastructure can’t be upgraded either because of lack of budget allocation or if upgrading it will require closing the hotel for a renovation. We at Hoteza believe in cloud-based solutions that minimize on-site hardware requirements and we hope that further deployment of 5G and satellite-based communications that become more affordable will allow more properties to adopt the latest Information Technology and positively change their operation efficiency and revenue generation dynamics.

Ways to overcome the infrastructure limitations

Vendors have little control over the existing infrastructure of a hotel. A typical installation either happens because the proposed solution is compatible with the existing infrastructure or never happens if it is not. Such incompatibilities can be an absence of broadband Internet and Cat6 Ethernet or use of old or non-commercial TV models, which is a common issue in properties that lacked a renovation in the last decade. Upgrading TVs or installing Ethernet cable requires a serious investment or a renovation that would close the property for some time. All that keeps hotels in hesitation to adopt the latest IT solutions whenever their infrastructure is too old.

However, there are a few things that Hoteza as a vendor can do to deliver its solution to a hotel even with an incompatible infrastructure. One technique that we use is to host an instance of the software dedicated to a property in a centralized cloud. This way the infrastructure requirements narrows down to on-premises Internet access or even have no such requirement. Another technique is how Hoteza can enable its mobile app with rich functionality available from guest own devices, typically a smartphone. Such an app can allow the property to stay in touch with their guests before, during and after stay while guests can interact with the hotel, rooms and amenities, get information about the hotel, book tables, order foods and drinks, request a service or an extra item, perform an express check-out, view bill summary and more. When integrated with a Property management System and Point of Sale, the app can provide a certain level of automation, while the cloud may provide an insight into guest activities.

We believe that such a delegation of infrastructure where servers move to the cloud and client devices are guest-owned smartphones empowered with a feature-rich hotel app may help hotels with older infrastructure to enjoy the positive impact from using the latest technology without investing in costly infrastructure upgrades.

References

  • Simpson, W., Greenfield, H., 2009, IPTV and Internet Video: Expanding the Reach of Television Broadcasting 2nd edition, Focal Press: Elsevier
  • Sintala S., K., 2019, INFORMATION AND COMMUNICATION TECHNOLOGY IN THE HOTEL INDUSTRY, Kent State University College & SRM University, https://etd.ohiolink.edu
  • 2021, Specifications of 802.11 standard for wireless communications, Institute of Electrical and Electronics Engineers, https://ieee.org

About author

Alexey Chizhikov, Technical Director, Hoteza.

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