Description
Welcome to the 2024 Lodging Technology Study: Digital Transformation & ROI. As technology continues to reshape guest expectations and operational efficiency, our goal is to evaluate the potential of the latest trends and innovations and identify the strategies that are most effective in enhancing the guest experience and delivering measurable returns to hotel operators.
The hotel professionals surveyed this year represent more than 10,000 properties worldwide, including luxury, upscale, midscale, and economy brands.
This year 60% of survey respondents identified themselves as IT decision makers, 38% have input into decisions, and 2% approve purchases. We are confident our survey results reflect the points of view of the people who are truly imagining and implementing the future of hotel technology.
Our data comes from IT leaders and decision-makers representing a broadly distributed range of lodging sectors, reflecting 20 percent luxury, 36% upscale, 34% percent midscale, and 10 percent economy.
Hoteliers’ Attitudes Toward Lodging Technology
Being mindful of the lodging industry’s tremendous wave of innovation in recent years, we asked survey respondents a new, rather blunt question: Is lodging technology empowering to guests and staff? Or is it a point of friction? (See Fig. 1, below.)
Not surprisingly, hoteliers’ responses suggest it’s a bit of both.
Of course guest-facing technology is intended to promote convenience, personalization, and efficiency, with options that include mobile check-in and check-out, digital key, digital concierge services, in-room tablets, and more. Overall, 71% of hotel operators agree that guests perceive guest-facing technologies as empowering. But, significantly, 21% of hotel operators view guest-facing technology as a potential source of friction for guests. This suggests that hoteliers and their tech vendors must continue to address challenges such as seamless app usage, connectivity issues, and a perceived lack of human interaction. (Note: We intentionally posed these questions about empowerment vs friction in such a way that there can be overlap — we recognize that respondents may feel their guest-facing and employee-facing tech can be both empowering and a point of friction.)
Similarly, hotel employee-facing technology is intended to streamline daily operations and boost staff productivity. A majority of hoteliers, 62%, report that employees perceive employee-facing technologies — which can include property management systems, scheduling software, communication platforms, task management apps, and more — as empowering. But 42% of hoteliers surveyed believe their employees perceive employee-facing technologies as a source of friction. This underscores the need for hoteliers and their tech vendors to address potential issues such as lack of proper training, complex user interfaces, and decreased employee morale.
2024 IT Budget Outlook
The 2024 IT budget outlook reflects a positive and proactive approach to technology adoption. By allocating resources to both the maintenance of existing systems and innovative new implementations, hotels are positioning themselves to remain competitive in a rapidly changing landscape. A strong commitment to increasing technology budgets in 2024 underscores the industry’s belief in digital transformation. Our data suggests that more than 4.2% of overall revenue went to IT budgets in 2023, up from 4% a year ago. (See Fig. 3, below.) This important benchmark reinforces our belief that lodging technology is perceived as much more than a cost center.
Fig. 4: Allocation of IT budgets
Chart
Maintaining existing systems 63.00%
New implementations 30.00%
Research & development 7.00%
One striking and encouraging finding from our survey is that every respondent reported an intent to increase their technology budgets in 2024 or to hold steady. (See Fig. 5, below.) This optimism reflects a collective belief in the value and potential of technology in the hospitality sector. 2024 technology investments will include: upgrading property management systems with a current supplier (37% of respondents) or changing to a new supplier (33%); upgrading business intelligence reporting with a current supplier (29%) or changing to a new supplier (25%); and upgrading revenue management systems with a current supplier (20%) or changing to a new supplier (20%).
Fig. 5: IT budgets are increasing
100%
Every survey respondent reports IT budgets will either increase or hold steady in 2024
Top Lodging Technology Initiatives
Here, we highlight the lodging technology initiatives considered very or extremely important by survey respondents. (See Fig. 6, below.) Driving guest loyalty ranks at the top of the technology priority list. With 80% of respondents emphasizing its importance, it’s evident that hotels are making significant efforts to engage and retain their guests. Technology-driven loyalty programs, personalized guest experiences, and seamless service delivery all contribute to building strong and lasting relationships with guests. Closely following guest loyalty, increasing employee productivity is a priority, with 76% of respondents acknowledging its importance. Investing in technology to streamline daily operations, improve communication, and empower staff not only results in more efficient service delivery but also contributes to higher job satisfaction among employees. In an age of high-profile data breaches and cyber threats to major hotel and casino brands, the importance of enhancing data security is paramount. With 76% of respondents prioritizing this initiative, hotels are increasingly adopting robust cybersecurity measures to safeguard sensitive guest information, maintain trust, and ensure compliance with data protection regulations. A data-driven approach to decision-making is now table stakes, with 72% of respondents highlighting the significance of improving analytics. Advanced analytics tools enable operators to gain insights into guest preferences, operational efficiencies, and revenue optimization.
Top Lodging Technology Challenges
The top lodging technology challenges for 2024 are rated by perceived moderate or major impact. (See Fig. 7, below.) These challenges are not insurmountable, but rather critical aspects of the ongoing tech journey. Acknowledging and addressing them is simply part of adapting to the changing landscape. The top challenge faced by the hospitality industry, according to 69% of respondents, is the difficulty of integrating new technology with existing legacy systems. The consequences of this challenge include operational inefficiencies, data silos, and suboptimal guest experiences.
Overcoming integration challenges involves strategic planning, a well-defined migration strategy, and the utilization of middleware or APIs to bridge the gap between old and new systems. Achieving integration is not only necessary for the efficient functioning of technology but is also instrumental in meeting the evolving demands of guests.
The shortage of skilled technology expertise within the organization ranks as the second most significant challenge, according to 54% of respondents. The fast-paced evolution of technology demands a workforce that is adept at implementing, managing, and optimizing complex systems. To address this challenge, hotels must invest in training and development programs for staff, hire tech-savvy professionals, and consider outsourcing or partnering with technology service providers to fill the knowledge gap.
The third major challenge, identified by 43% of respondents, is the difficulty in deriving a return on investment (ROI) for technology roll-outs. While technology investments are made with the expectation of improving guest experiences and operational efficiency, quantifying these benefits and realizing a clear ROI can be complex. To tackle this challenge, it is crucial to establish clear Key Performance Indicators (KPIs) and metrics for evaluating the success of technology initiatives. Regular assessment and data analysis are essential to track the impact of technology investments and make informed decisions regarding their continuation. (We dig deeper into technology’s ROI below.)
Technology’s Return on Investment
The concept of return on investment (ROI) has been a fundamental yardstick for measuring the financial performance of technology investments. Here, we explore the perspectives of industry professionals on the challenges and possibilities associated with measuring ROI for tech initiatives. (See Fig. 8, below.)
While 32% of respondents believe it is easy to measure ROI for technology, the majority acknowledge the complexities that can arise in quantifying the benefits of tech adoption. Traditional ROI calculations often rely on straightforward financial metrics, which may not fully capture the wide-ranging impacts of technology on an organization.
A significant portion, 61% of respondents, point out the limitations of traditional ROI metrics, indicating that they may falsely indicate a zero return when the actual benefits are more nuanced. The challenges associated with measuring ROI in technology investments are multifaceted, including the time lag in realizing benefits, the intangible nature of some returns, and the difficulty of attributing outcomes to specific technology initiatives.
One of the most compelling findings from our survey is the openness of hotel operators to consider alternative metrics to traditional ROI. A substantial 78% of respondents express their willingness to explore different measurement approaches.
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