In this article... The new Power Tool How did we get here? The Internet is… What does this mean for a hotel? Reservations Sales & Catering Property Management Systems Purchasing Concierge Training Support/Help Desk Admin Handle With Care Security In general Finally Sidebars XML - The Business-Enabling Standard Round-Up at the Ranch ASP Satisfaction at Sunburst

The current hype and rush to jump on the Internet bandwagon seems almost ludicrously overdone - and irresistible. Should you join in? As in so many areas today, the answer is "Yes, but…"

Yes, the Internet can be a tremendous boon, offering significant efficiencies and new opportunities throughout your operation. Its strengths and newness are highly attractive, and can make it seem like an urgent, essential direction to take.

But it does need to be used properly or you can bury yourself in its details, or lose customers through very public mistakes. As we all get used to its ways it will quickly become just one amongst many ways of conducting business- albeit one of the most powerful - and the emphasis on "e-everything" will, mercifully, fade away.

The new Power Tool
The Internet is the newest, shiniest and most powerful tool in your toolbox. It offers unprecedented increases in efficiency in almost every area of operations, to large chains and small independents alike. But it's not the only tool you need, and it is only a tool. It won’t change the fundamental operations your company needs to perform, although it does give you the means to improve how you do many of them.

Like any powerful tool, however, if you mis-use it, it can hurt you. It puts you and your performance more in the spotlight by increasing customer expectations. Failures and mis-steps are far more visible on the Web, and customer retribution for problems can be merciless and swift - they can go somewhere else instantly. This article looks at some of the ways the Internet can help improve your business, and some of the pitfalls to watch out for.

How did we get here?
Originally a means of communication, the Internet long ago expanded to become a vast information exchange, great for announcing your presence and products to the world and for researching virtually any topic under the sun. But it's now become, far more importantly, a powerful place to do things, to conduct business. You can not only find things, you can buy and sell them, and do both in a bigger marketplace than you could ever have imagined any other way. You can not only find an accounting company, you can dial in to their copy of a high-end financial package, enter your data and prepare your financial statements on-line, for far less than it would cost you to buy and support the package yourself.

But what's new about this? After all, out-sourcing, remote access and electronic data exchange between companies have been around for decades. The difference this time is two-fold: it's cheap, and it's universal.

Cheap, because the communications are handled by a worldwide network that can be accessed via a local phone call (or a relatively low-cost permanent connection) instead of via long-distance calls or dedicated lines to the specific remote sites you needed.

Universal, because of the worldwide adoption of a common standard for displaying information (HTML) and of Web browsers, software to read it that runs on any PC, or Apple, or workstation. So anyone, anywhere, can have inexpensive access to any information published by any company, without having to tweak their systems to match the individual computer hardware and operating systems involved. And now XML (see sidebar) is becoming equally widespread as the standard for doing things with that information.

It's important to keep in mind, especially for those of us still relying on dial-up modem connections, that "Internet" doesn't necessarily mean "slow". Fast links to the 'Net via DSL phone lines, cable modems or high-speed T1 lines are available in many areas, and make a significant difference to response time, although you'll still be impacted by heavy traffic on the public network and by the responsiveness of the server you're trying to reach.

But Internet technology can be applied to private networks too, and companies have for some years been implementing it to form their own high-speed Intranets. Many also allow access (via secure connections) to external companies, whether clients or vendors, turning it into an Extranet. The cost savings over older communications methods are clearly not the point in these cases; the value of giving simple access to everyone in the company, from any kind of PC, is very much the point.

So how can this magic wand benefit a hotel? We'll take a look at several different faces it presents to the world, then review some specific areas within a hotel operation.

The Internet is…

• an inexpensive network to link existing applications. A good example is HSI's Falcon central reservations system (CRS), which uses the Internet as the link between the CRS call center and the individual property PMSs, avoiding the need for a private network. For smaller limited-service properties with few time-critical demands, a dial-up connection allows for the simple receipt of CRS reservations and feedback of availability changes. For more complex locations a dedicated higher-speed DSL connection, whether over the phone lines or via the cable-TV networks, simply works better.

• an information resource, a huge combined library and billboard where you can find information to help your business and can post your own advertising. You can look up information about vendor services, competing hotels' facilities, local event timings and costs, or use an Intranet for access to internal policy documents, HR forms, etc. Potential guests can find you just as easily. This kind of research was the predominant use for the Internet for some time, and is still immensely valuable, but it's increasingly being supplemented by ways of doing something with the information once it's been located.

• a place for conducting business - clearly the hot, high-growth area. The addition of encryption allowed financial information to be sent over the Internet securely, and opened the door to travel sites offering not just flight information but tickets for sale, to Amazon offering books and then everything else, to the creation of purchasing sites where you can list your property's requirements and have vendors bid against them, and to much, much more.

• a computer. Another hot area of interest, although with fewer real applications as yet. This is essentially the concept behind Application Service Providers (ASPs), companies which host software applications you can access directly from your Web browsers. Instead of having to buy and support a complex application yourself, you buy access to it from an ASP, saving all kinds of implementation and support costs. Instead of signing on to the software on your in-house server, you sign on to your secured copy on the Internet through your browser, and in a very real sense "the network is the computer", to use Sun's phrase.

Each operational area will benefit in its own way. For example:

Reservations
- the Internet adds new and richer ways to reach your guests. It won’t replace the existing networks yet; the established systems are too well entrenched, and are fast and reliable. But a Web page is visual; it offers a far more helpful and involving description of your property than a text-based GDS ever can, and a good design can draw in a prospect's interest very effectively.

It's also a great leveler; to a search engine looking for "Hotels in Seattle" a 4-room B&B is just as visible as an 800-room Sheraton. You can't afford not to have your own Website, to catch those prospects doing their own research. But you should also make sure you're listed properly with the GDSs and a few appropriate Websites from travel aggregators covering your geographic area and/or type of property, to catch other groups of guests who have a preference for going through intermediaries. On the Internet it's not possible to be in too many places at once - as long as you're equipped and staffed to handle inquiries and bookings from every area.

As people become more used to the efficiency of one-stop seeing and buying, it's becoming almost mandatory to take bookings directly from your own Web site. This can be either directly into your PMS, or via a block of rooms allocated to a third-party Website which handles that function on your behalf for a fee. It does present a challenge to those properties with special locations or facilities that usually capture sales via lengthy phone discussions with prospects. They still need to do this, but unless they can also find a way to capture the essence of their special nature on a Website, they risk missing a whole segment of guests.

Sales & Catering
- here the Internet has so far been mostly a communications tool, simplifying the consolidation of sales activity across different territories, allowing Sales Managers to access their property's availability from the road, and more. But with the growing interconnectedness permitted by the 'Net, booking control systems such as Passkey.com are beginning to help group organizers get secure access to their group's room block in your PMS. This gives them the ability to manage it and enter individual guest names directly, a major timesaver for many group-oriented properties.

Other companies are beginning to send out their annual RFPs over the Web, and vendors such as IXATA are automating the response process, parsing the incoming forms, filling in the generic descriptive data fields and routing the RFP to the appropriate Sales Manager for pricing action. Some RFP business is being put up for direct auction on the Internet, allowing companies to play different hotel bidders off against each other for the sake of a quick decision and the chance to reach some business they may not otherwise have been offered at all.

Property Management Systems
- The Internet has had little influence on PMSs so far, but there's a growing interest in the ASP concept, especially for limited-service properties. These sites typically have very little systems support expertise in-house, so off-loading this responsibility to a specialist systems provider makes sense. An ASP approach for smaller properties might also appear in the franchise market. There's been some resistance to the larger chains mandating a specific PMS to their franchisees (or even giving it to them at no cost), based on the hoteliers' reluctance to be locked in to a brand by its technology.

With an ASP-supported system, which requires only generic hardware and browser software at the property, changing from one brand's system to another becomes just a matter of typing in the URL address for the new system, entering a new password and re-training the staff. Of course, no brand wants to encourage its hotels to leave the flag, but they'd all like to make it easier for competitors' properties to switch, so this area seems destined for a lot of growth.

Other impacts include the increasing number of systems becoming Internet-enabled to allow direct booking from Web browsers, or to accept reservations from Internet-based CRSs, and the use of the 'Net as a communications channel for consolidating reports and statistical data from multiple properties.

Purchasing
- This is currently the area with the most clearly-defined payback. Sometimes it seems that all numbers associated with the Internet are massive, but according to The Aberdeen Group, a Boston-based Internet research group, the hotel community currently spends and amazing $107 billion on procurement expenditures annually. Aberdeen's research shows that online purchasing provides real saving benefits; administrative costs are reduced by up to 90 percent, inventory costs by up to 25-50 percent, and purchasing costs by 15-25 percent or more by eliminating off-contract purchases and improving processing efficiencies. That's a lot of savings.

Some benefits come from specific vendors making their catalogs and pricing available to individual properties. Others arise from the establishment of on-line trading communities or marketplaces, which combine several different vendors' product ranges into one site. This site can be accessible by multiple properties, but each will see only those prices and terms which it has negotiated with each vendor. Time and effort can also be saved by allowing vendors to monitor your inventory levels and usage levels on-line, and suggest re-stocking orders at the most efficient times for your specific operation.

The 'Net also makes it simple to get comparative bids. Several sites host areas where you can post your product needs and invite bids against them, which may easily attract vendors you've not used before. And it's much easier to place and chase orders, especially when your staff is limited to buying from a specific on-line catalog with negotiated prices and terms. This isn't limited to physical supplies, either; many companies use essentially the same process for travel booking, restricting their staff to just those airlines and hotels for which they have negotiated discounts - which brings us back to the need to incorporate the Internet into both your Sales and booking processes, so you can bid for and implement this business.

Concierge
- Clearly there is little need for a dedicated concierge system any more. With a high-speed always-on Internet connection your staff has instant access to comprehensive information on the full range of activities available locally. And they can book more of them immediately for your guests as more theaters, restaurants and other activity suppliers automate their own booking processes. It's not too far-fetched to expect that the courier services - FedEx, UPS, etc. - will be notifying recipients, and the hotels they're staying at, of the expected date and time of arrival of packages; it's all in the name of providing better guest service.

Training
- Computer-based training has made great strides, benefiting from its flexibility in letting trainees work individually with the course elements wherever and whenever they can. The Internet has increased its efficiency even further by allowing instant updating of the material (since all lessons are accessed from a single central site), by recording students' progress and results centrally, and allowing access to the course from any computer, at any time. Staff can even access the courses from off-site locations, if necessary, though without a high-speed connection it may be more effective to combine CD-based courses with Internet-based recent updates, supervision and progress tracking.

Support/Help Desk ops
- The Internet opens up the opportunity for systems vendors to provide far more effective support to your staff, through such measures as the on line posting of information on the more common problems, remedies and Frequently-Asked Questions (FAQs). Natural-language queries, developed for the more flexible Internet search engines, mean that you could check at least the more common issues yourself. And if the answer's not apparent, it's possible to click on a button and be connected directly to a support technician without making a separate phone call. You should also be able to download reports on systems issues and problems reported by your own property, for analysis and discussion with the vendor about possible bug fixes (which are probably downloadable) and/or user training.

Admin
- E-mail is the overwhelming example of both the huge benefits and inherent problems of the Internet. Very few of us could operate effectively these days without the speed and detail of e-mail communications - and few of us have learned how to limit it to the effective core of meaningful messages.

A more specific benefit for larger organizations can come from using the Internet to hold virtual meetings between remote staff members. These collaboration tools have become remarkably usable recently, whether in ASP mode (WebEx, for example, only requires a browser to access its collaboration sites) or by linking PCs equipped with products such as Microsoft's NetMeeting. You may still need to set up a conference call by telephone to complement the shared workspace, since making phone calls over the Internet connections still taxes most of these arrangements too heavily. But the benefits from adding visuals to the shared discussion are significant.

HANDLE WITH CARE

So what are some of the downsides to this magic tool? Well, you can let yourself get overwhelmed with its richness; it's very public, so any problems are immediately and widely visible; and the very universality of its communications makes your business vulnerable to intruders and other ne'er-do-wells.

Take the richness first. One of the great things about the Internet is the huge amount of data available, and the astonishing variety of things for sale. This is a blessing and a curse; you can find anything you want, but you can also spend far too much time checking out just one more vendor, one more piece of research information, one more price comparison, or going down one more distracting rabbit trail... Peter Drucker said years ago that one of the most important management skills lies in taking responsibility for knowing how much information you need to do your job - and what you don't need. Just because you have a library card, you don’t have to read every book in the library.

Then there's the very visibility of it. The Web site that advertises your property has to present your very best face, the essence of your appeal, almost instantly and completely reliably. Vendors too need to entice you to check their product range and pricing in the first few seconds. If you offer the ability to buy directly from your site, the whole process must be fast, reliable and straightforward, and have been considered completely from the users' viewpoint. The primary drive to use the Internet is not to be more efficient - though that comes with the territory - but to enable customers to do business with us in a very easy fashion.

Potential guests and buyers alike have little patience with sites that take a minute to display, no matter how beautiful they are when complete. Sites should also be flexible; customization and passwords can give different groups of visitors access to different areas aimed at their specific needs. Group organizers are different to FITs; you buy different items (and on different terms) than your competition, but from the same vendors. The prime focus must be on the users' experiences, and on integrating their needs throughout a chain of products and services.

Above all, the Web sites you put up, and those you use from other vendors, must perform. They must be fast enough to be useful, and they must always be available. The Internet can generate unexpectedly high volumes of traffic, and your servers and communications lines must be capable of handling it. And especially if you go with an ASP instead of installing key systems yourself, company reliability is as important as that of the equipment (see sidebar on Sunburst).

No matter how much testing you or your vendors do, the real world will expose new flaws and bugs, and you need a credible back-up plan to deal with them. If you lose the connection to your front office ASP when you have twelve guests waiting to check-in, how do you handle it? When your own reservations Website goes down, does the company that hosts it have a back-up ready? What contingency plan does your key F&B vendor have in place? Maybe all that contingency planning you did in preparation for Y2K wasn't a waste, after all…

Security
Security deserves a special mention. The Internet is modern, exciting and a place where new developments happen all the time. As such, it's a highly attractive environment for people to try to manipulate it, to see if they can get it to do different things, to see if they can get into places they've never been before, and maybe have no business being. And so we have the proliferation of viruses, and of hackers trying to get into systems "because they're there" (such as the Pentagon, or Microsoft) or because they're your competitors and would like to read whatever confidential information they can find.

Encryption works well in keeping financial and credit card information confidential in transit across the 'Net, but hackers are increasingly going after the servers where businesses store the information, as witness the recent theft of credit card numbers from CD Universe. "Denial-of-service" attacks such as those that recently shut down such prominent sites as Yahoo! and eTrade rely on hackers' ability to get into hundreds of individual, unprotected PCs. They then pre-load them with software that can be made to launch a valid information request to the target site simultaneously. And any hacker trying to set up such an attack, or to test a new virus theory and gain kudos among his friends, is completely indifferent to any damage done to your computers or data in the process.

You must protect your systems. Anti-virus software, kept up to date monthly, is an essential, and can forestall all kinds of problems. Yes, the hype about new viruses threatening to destroy computing as we know it is often overblown, but the damage they do is real enough. Anyone who's had to clean up after a malignant virus has infected a complete hotel network knows that leaving computers unprotected is almost criminally foolish. You may not be aware that your PC has a virus, but that doesn’t stop one from being there, waiting to be activated or invisibly sending out multiple e-mails in your name, as happened with the Melissa virus.

You'll also need a firewall on your Internet connection. These have usually been installed on company networks, to limit incoming traffic to approved classes of user, and to limit outgoing traffic to specific, approved sites, but a new class of personal firewalls has recently become available, intended to protect individual PCs. Probably the best known are BlackICE Defender and ZoneAlarm, both inexpensive downloadable utilities; if anyone doubts the level of activity on the Internet from people probing for vulnerable computers, these products will be enlightening. BlackICE detected five separate probes against my PC in the first week after I loaded it - and I was only on-line briefly, as I use a dial-up connection to the Internet.

If you have a permanent connection - and you need one if you have any significant business presence on the 'Net - you're exposed all the time your PC is switched on, and you really need this kind of protection. Ask the Holiday Inn Express in Highland, Ill, whose (at that time) unprotected Web site was vandalized last October by a hacker with a grudge against the owner.

Does this mean you should avoid using the Internet? No, of course not, and in any event that would be almost impossible these days, but you must use it sensibly, stay aware of possible threats and take appropriate precautions. Otherwise you could find your data being attacked or your servers being used to launch an attack on someone else.

A few general comments:
Don't get carried away by trying to do every piece of business over the Internet; you have other channels and they're still important. Don't alienate them; accommodate them.

Don't rush into it. E-commerce is a powerful, efficient way to do business, but the only companies for which it's essential to have adopted it yesterday are in the frantic world of dot-com start-ups trying to build new brand names and market share. Take the time to understand how best to use these new tools alongside your old ones, and get them as right as they can be before launching them.

Face-to-face contact and personal interactions are still critical. No matter how effective your Internet booking engine is at attracting new guests, the smile on the front desk clerk's face still sets the tone for their visit. And you can buy all the supplies you want electronically, but the vendor still has to deliver them on time and undamaged to your door. How much of Amazon.com's reputation relies on FedEx' distribution efficiency and its delivery person's smile? The customer experience has to be good at every stage.

FINALLY…

E-commerce is a great leveler, and very democratic; it promotes both brands and niche providers equally well. For those looking for a mainstream purchase, whether of room-nights or F&B supplies, the explosion of choices means that users increasingly find reassurance in dealing with known brand names with a good range of products and proven reliability, credibility and service. On the other hand, if you're looking for something out of the ordinary, or for a regional specialty, niche providers can be found for that just as quickly and easily. And ordering it and paying for it are equally simple for everyone.

No matter what the size or type of your property or business, one way or another the Internet impacts the way you work. By staying informed about it as it grows and develops, and by learning to handle it appropriately and confidently, you can use this powerful tool to transform your operation.

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© Jon Inge
First published Spring 2000, Hospitality Upgrade magazine

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