Michael End,COO 25hours (photo by Georg Roske)
Welcome to the first in our new interview series. We’re chatting with forward-thinking hoteliers to get their take on the current state of technology in the hotel industry. How do hoteliers actually approach technology in their day-to-day operations? What works for them? What doesn’t work? How do they think about things like social media, analytics, and online travel agents? And how do they use technology and data to shape their demand management, revenue management, and asset management strategies?
Hospitality is called “hospitality” for a reason: The industry is built on a warm and welcoming attitude. So how do we integrate technology into a hotel’s operations so that it works for us rather than against us? It’s no longer a question of “if we can or should do it,” but a question of “How will we do it?”
To answer these questions, we invite innovative hoteliers to share their own experiences, tips, and predictions on hotel tech. We’re excited to begin with 25hours hotels COO, Michael End. Michael stopped by the SnapShot offices in Berlin recently to chat about the right balance between technology and experience, where technology falls short, and the pivotal difference between the airline industry and hotels.
SnapShot: Tell us a little about your background and what you do at 25hours.
Michael End: Currently I’m managing everything related to operating the hotels. It is my team’s responsibility for every aspect of the operations, together with the GM, including reservations, finance, human resources- operational stuff. At the moment it’s seven hotels we’re operating. We have a head office structure in Hamburg where we deliver central services towards the hotels—all the services that, from our point of view, make more sense to deliver from one central point—which is revenue, reservations, et cetera.
SnapShot: Is that common way to manage things— from a central hub?
ME: It is actually. You have big brands like Marriot and Hilton who have done it for ages because they’re super big, but you also have individual hotels, which try to provide everything in hotel operations. We actually are a little bit in a niche because we are rather a small brand but are already operating in quite a professional manner from an organizational structure point of view. So I know brands of our size which are decentralized, but most of the brands that are slightly bigger than us start centralizing because it just makes sense in terms of quality and cost.
"That’s why I’m keen on technology, because it gives me and our colleagues confidence that we are doing a good job."
SnapShot: Are there any slightly older or larger brands that you would associate yourself with or say you’re similar to?
ME: We’re trying to make something new in the industry so it’s difficult to find benchmark properties or benchmark companies. We are good friends with and are looking at companies like SoHo House, Ace Hotels, Standard Hotels, Hoxton Hotels, CitizenM. They are all still operating in a different way, but we are looking at them in terms of “What are they doing with technology?” “What are they doing in terms of guest experience?” “In terms of organizational structure?” And we try to get the best out of their worlds, too.
SnapShot: Your reputation is that you’re pretty savvy when it comes to utilizing tech and data for 25hours. Was that a natural thing to do, or did you have to grow into it?
ME: I’ve been with the company for almost ten years now – I started when I was 24 – so at the time I didn’t bring in too much experience, which allowed me to grow with the business. I was the one within 25hours who had the biggest passion for systems, for data, for IT. But we are not a super tech savvy company. We are not like citizenM— we don’t have mobile check-in yet, we don’t have in-room iPad control, we don’t have self-check in kiosks—we more believe that human interaction is important and that technology should enhance that experience. But we are, from a guest experience point of view, at the very beginning of the journey. From the background, office management point of view, we are doing quite well.
SnapShot: What are the benefits of embracing technology on the operational side?
ME: It makes life easier for everyone if it’s working well, and it allows us to get more transparency in the data and to know where we’re standing compared to our own expectations, and to our competition. [It allows us] to be in the pilot positions, not to be chased by something but to be the one who is setting the pace and the tone. That’s why I’m keen on technology, because it gives me and our colleagues confidence that we are doing a good job.
SnapShot: What kind of data do you collect?
ME: What have we have achieved in the past? How much revenue? How much occupancy? What do we expect in the future? That is even more important to me: What do we have on the books for the future?
We are collecting benchmark data from competition, too. At the moment it’s only based on historical data. We are collecting every kind of user-generated content, all the social media stuff—Facebook, Twitter. Reviews are very important for our industry. I would say the most important data points are P&L sheets. Pricing of competition is important. We look at historical performance of competition and to future pricing, but that’s all kind of revenue management driven.
SnapShot: In terms of operations, what are the tools you’re using?
ME: The PMS system we use is called Protel- very strong in the German market. From a forecast point of view we are working in an Excel environment. We look at rate shopping reports. There are multiple sources that I personally consolidate myself.
SnapShot: Today a lot of booking comes from online. Are there certain channels that give you a lot of customers?
"I believe that you need smart technology to be successful in the future."
ME: It depends on the location, for instance Hamburg is very independent. In Berlin it’s very different, many visit the city only one or two times, and they just use a generic channel like booking.com.
In terms of analytics, that’s kind of a big contradiction we are facing, in that we are putting a lot of effort into revenue management but we are actually neglecting the fact of where the booking is coming from and what the booking is actually costing us. So we try to optimize topline revenue and online marketing is trying to generate online traffic and demand. The two worlds are not totally interlinked.
SnapShot: Do you have a sense of how your peers at other hotels are managing data?
ME: There are very smart companies out there. For instance citizenM, they’re doing really well. We wouldn’t necessarily do that the same way because we are not a technology company, we’re an experience company. Then there are bigger, older companies that have totally messed up infrastructure. Kempinski, for example, Steigenberger, they are decades old and have a fragmented, decentralized infrastructure. It’s really crazy what they’re wasting on time and money. We are somewhere in between, I’m trying to lead our company into a smarter future, because I believe that you need smart technology to be successful in the future.
SnapShot: How would you describe the current scene of data in the hotel industry?
ME: There are many conversations going on about data. Everyone’s talking about big data, small data, and how to deploy it. I think we are still in the very early stages, in fact the hotel industry is always way behind other industries because it’s so fragmented. If you look at the airline industry for example, there are maybe 10-15 global players who make up 95% of the market. In Germany you have thousands of hotels, and that’s why it feels like we are unable to generate the power to change the infrastructure. Look at airlines, you can do everything mobile from booking to check-in, and look at hotels- I know of maybe two in Germany where you can check in with your cellphone. So we are actually not a very innovative industry, unfortunately. The question is: What do you focus on? More of your performance data or more of your guest experience?
SnapShot: How do you see this being managed maybe five years from now?
ME: From a customer point of view, I would expect for a more consolidated infrastructure. If you would see the IT landscape of our hotel, or a small hotel, it’s really insane. I would hope for less need for interfacing and exchanging information and data between different systems. There are many technology companies who put data into silos. They say, “It’s your data, but we are protecting it from the outside world, and if you want to use it, we need to build an interface... And please pay for it.” When actually it is our data, belonging to us, we want to use it, and we are paying for it!
SnapShot: It’s almost like a sort of Mafia protection fee.
ME: It is, really. It’s really insane that the industry has allowed that. Because it’s our data, but to access our data in a format that usable is really quite difficult at the moment.