The biggest fear for any hotel when they embrace new technology is whether the investment will be worth their while or not. Naturally, as an investment, the technology is supposed to increase income for the hotel- not only by bringing back the money that was spent but also by getting in much more than would have come in without the technology.Return on Investment (ROI) is the lifeblood of every company- be it in the hotel industry or any other. That is why every investment is followed by a careful analysis of how much more the company is profiting from the investment when compared with how much revenue it would have earned without having made the investment. Today, with Artificial Intelligence making waves of advances, companies, especially hotels, cannot afford to stand back and stick on to traditional forms of business. It is essential to take risky decisions and implement more and better technology.
In general, there are two steps to effectively analyze whether or not there is greater ROI on technology that you implemented:
Step 1: Analyze baseline performance
To know how much more your revenue has increased, you must first objectively note down how well the hotel has been doing before the technology was implemented. Target specific areas where the technology is going to be used, and study the baseline behavior. Also, analyze the baseline performance of the hotel in these areas in the past couple of years. You will observe a pattern of performance by this analysis. It is this pattern that your investment must disrupt, making a drastic change for the better.
Step 2: Analyze post-implementation results
Once you have implemented the technology into the hotel operations, it is time to see how it has made a difference. Now that you know what improvements in your hotel your investments have to make, you can compare the changes that the technology has created- both directly and indirectly. Is your company showing a positive trend? Or is there no difference at all? If there is, then you can safely conclude that your investment decision was the right one. If not, you will have to rethink the decisions your hotel has taken.
What to focus on for effective measurement
These are some of the key areas that you must focus on to determine whether or not the returns on your are investment are rewarding:
- Revenues: This is the most obvious, most basic of determinants. Almost all businesses run for profit. The hotel industry today is facing a huge challenge of making big profits. As such, the single biggest reason for hotels to adopt technology is to enhance their profits. Naturally, then the effect of your investment in technology should directly reflect in your profits, which must increase. However, remember that profits don’t mean a one-time gain, but a continuous flow of income because of the technological changes and upgrades.
- Time-efficiency: Another important area where a hotel must improve is its time-management. In a hotel, it is all about time. A reputed hotel cannot afford to waste time, and there is no excuse or cover up for delays. As such, the technology you bring into your premises must help in saving a significant amount of time. Workflow should become smooth because there can be no pending tasks in a hotel. If the time you take for various functions, for example, laundry, is reduced without compromise on quality, be assured that your hotel will have plenty of healthy ROI.
- Cost of operations: One of the reasons that hotels find it hard to make profits is because the cost of operations often outweighs the revenues generated. If your investment was a wise one, the operating costs of the hotel will significantly reduce. For example, replacing existing lighting with those that save a lot of power may prove to be an expensive affair at the beginning, but the reduction in power bills will eventually override the costs you incur and actually help you save more on electricity than before.
- Workforce: The happiness of your hotel’s workforce is directly linked to the profits your hotel makes. Technological upgrades or investments must be such that it makes things easy for your workforce in the long run. Of course, there may be some resistance initially to accept these changes, but no change has ever been implemented without some party being unhappy about it. Effective communication and leadership play an important role in helping the workforce understanding the need for the new technology so that they can accommodate the changes in the operation better.
- Integrated operations: The entire corporate world is moving towards a new kind of culture- one where operations are no more separated by their functions, but function as one whole, together. Departments will have to communicate and operate more freely with each other, and the lines separating them will become more fluid. The technology that you introduce into the hotel should help promote inter-departmental communication and cooperation.
- Recurring business: Customer loyalty is the cornerstone of a hotel’s success. Often, the share of guests who are recurring customers is very slim. Increasing this share is at the core of every business decision that a hotel takes. If your investments in technology have fallen at the right place, then your hotel will see the number of recurring guests increase promisingly.
- Quality of data: Never make the mistake of thinking that data is simply information about guests who have checked in at your hotel. This is just one part of data. Effective, valuable data is that information that you obtain of even potential clients, even without them having actually stayed at your hotel. This is crucial information for hotels that want to expand and increase their business by getting in new customers, even as they focus on retaining the existing customers. Such data can, however, be exhaustive. However, with technology such as cloud, it is easy to store and even retain such information. Besides, Artificial Intelligence has made it easier to obtain data that you would have otherwise thought was impossible to get.