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Sept. 11, 2000 |
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Talent Scramble Heats Up
Hotels and restaurants compete for skilled IT professionals
By Cheryl Rosen
here's no purchase quite as personal as the food people eat or the beds they sleep in. So nowhere is it more important for companies to know their customers than in the hospitality and travel industry.For the IT departments of hotels and restaurants, though, the customer isn't just the individual guest. There's also their own business units, the franchisees that own the outlets, the business-to-business buyers, and the thousands of internal employees who check customers in, take their orders, and deliver everything from a burger with no pickles to a safe haven abroad.
With Y2K concerns behind it, the hospitality industry has been focusing on getting down to business in 2000, using technology to better understand and meet the needs of all its customers--or rather, its customer sets. During the past few months, the job has been to find and retain workers and provide them with better access to the information they need to get their jobs done, no matter where they are--in a take-out restaurant, a hotel in a faraway city, or even at sea.
Just ask Ken Nelson, CIO of Aramark Corp., the nation's largest purveyor of outsourced management, staffing, food, and facility services for businesses, schools, hospitals, sports arenas, and convention centers. He says "people management" is the core business and the primary IT focus at Aramark this year. But before it can send good people out to serve customers, it needs to find them for itself.
Throughout the coming months, a larger-than-ever IT staff at Aramark will be focused on significantly expanding the existing core set of human-resources information systems. "There's a war on for talent, with everybody looking for the same people," Nelson says. "Retaining and hiring good people is a major challenge, and there's tremendous opportunity for us to improve that with retention tools, career development tools, recruiting tools, and resumé-management tools."
After what Nelson calls "many years of underinvestment in information technology," Aramark has spent the past year expanding its IT department and standardizing its internal technology. "Our focus was connecting our enterprise to an in-frastructure that improves our product and focuses on our people in the field," Nelson says.
Aramark addressed its Y2K concerns by replacing its legacy infrastructure with a Unix desktop environment, connecting its 150,000 employees to an Oracle database, and standardizing its applications to improve productivity. Thousands of locations nationwide have been hooked into a single wide area network. The Front Line Manager's Tool Box developed by Nelson's staff gives field managers instant access to financial data and analysis, online purchasing information, and a knowledge-management system that includes customer contact names and information, as well as companywide best practices.
Beyond its employee base, the hospitality sector focuses its IT eyes on the franchisees who buy into the company's message and take it to the streets. At fast-food companies, the focus this year is on the bottom line.
Wendy's International Inc., for example, looks to bring greater efficiencies to its supply chain. "The most important issue for our franchisees is reducing costs, and that relates to two very expensive elements in the overall cost structure: the labor and the supply line," says senior VP of IT Bob Jarecki. In the past few months, his staff has focused on creating a more streamlined structure with suppliers and distributors so that franchisees can improve forecasting, minimize inventory on hand, and reduce costs.
Making the job easier is the fact that 80% of Wendy's restaurants use a single supplier, Sysco Sygma Network Inc. Through a direct link with the Sysco system, Wendy's franchisees can submit orders and payments directly--and that's just the beginning of what will soon be possible. "The object is to build more and more seamless, Internet-based connections for E-commerce activities for franchisees and for ourselves," Jarecki says. "We're creating the business rules using Java and C++. We didn't buy anything off the shelf."
With the new system, Wendy's franchisees receive a suggested order based on their history. They can approve the suggested order or make whatever changes they see fit. Orders are delivered three times a week. In a business where every penny counts, Jarecki's goal is to use supply-chain data to improve forecasting, then to reduce costs by cutting deliveries to twice a week
Also on the agenda is technology to help crew scheduling and enhance customers' experience through a new system that uses Windows NT software and touch-screen front-end devices. The system measures the time from when an order is placed at the drive-up window until the customer gets the food in hand. In an industry where employee turnover is rampant--so much so that Wendy's, with a staff of about 40,000 on a given day, runs through 200,000 employees every year--the system will let managers monitor performance and help analyze opportunities to provide incentives to the best workers, Jarecki says.
The hotel sector also took advantage of its Y2K technology reviews to update its technology backbone and automate its supply chains. Marriott International Inc. "refreshed its infrastructure," connected to its franchisees through new notebook computers, and upgraded its servers and applications, says Mike Dalton, senior VP of lodging systems services. Marriott replaced its back-end legacy systems with a central data warehouse, which generates online reports that franchisees can access over the Internet.
"It was actually more cost-effective to put in a whole new technology than to upgrade the old one," Dalton says. "We'd print out 100 pages of reports on average daily rates and the length of stay of various customers, and the hotels would read one page. Now they can look at what they want, and cut and paste it into Excel spreadsheets." Also being replaced are the fat three-ring binders outlining standard operating procedures for opening a new hotel, which visiting executives from headquarters would often find "still shrink-wrapped on the floor, a year later." All of this information will be online.
Also new is a database for and about the franchise operation. Marriott tracks information on franchisees, new hotel openings in the pipeline, investors looking for development deals, lawyers, and construction companies. This lets owners share common information and stay current with what's available.
For its own information needs, Marriott has built a database on yet another set of customers--businesses and associations with whom the hotel has long-term contracts. All information on national accounts is entered into a shared global database, so salespeople at the property level can cross-sell meeting space and sleeping rooms anywhere. For example, two sales reps, one in New York and another in Atlanta, calling on the same account have access to complete information on the account and its overall business relationship with Marriott to know what to sell. "That's raising our closure rates and driving up revenue and profits," Dalton says.
In all, 1,800 Marriott salespeople have been trained on Siebel Systems Inc. software, which they can access through a PC, a notebook computer, or via the Internet.
In the wired world of travel, Marriott also has been pushing the envelope for online sales, offering visitors to its Marriott.com Web site the same capabilities a travel agent has to access room inventory and prices. Here, too, cross-selling is key. In August, the system was upgraded so that if an online customer asks for a room at a Marriott in a particular city and none is available, the system offers other Marriott brands, such as Courtyard or Renaissance. In the first half of 2000, 2% of all Marriott sales were generated online, with 75% of them through Marriott's own site.
In the marketplace arena, Dalton acknowledges that the hotel industry is talking about a shared hotel-owned portal, like the Orbitz site that the airlines are planning. He declined further comment. Meanwhile, Marriott is teaming with Hyatt Corp. to launch a procurement marketplace for the hotel industry.
Carlson Companies Inc., parent company of Regent International, Radisson Hotels, and Country Inns & Suites, also is trying to find IT solutions for franchisees, guests, and internal operations. During the past three years, it has spent $20 million creating three major IT systems: CustomerKare customer-relationship management system, CurtIS-C (pronounced "courtesy") reservation system, and Harmony suite for franchisees.
In addition to tracking whether customers like feather pillows or nonsmoking rooms, CustomerKare initiates E-campaigns that find customers with common characteristics and sends them special promotions. It tracks past customers who haven't been back in a while, finds the promotion that attracted them in the first place, and pushes a similar promotion to them, all electronically.
"The database keeps getting smarter in terms of learning what type of customers respond," says CIO Scott Heintzeman. Typical hotel mailings get a 2% to 3% response rate; Carlson sees a 15% to 20% response rate on E-campaigns, he says.
CurtIS-C, a three-tier client-server system, is linked to a voice-response booking system, an online site, and a travel-agency system, all offering the same view of all inventory. Harmony also contains software that figures how much to charge for each room to maximize profits.
But one of the most anticipated items on the horizon is moving information skills and knowledge-management systems to handheld portable devices throughout the hotel, allowing the general manager standing in the lobby to see the status of the reservation center, which VIPs are in the hotel, and what their personal preferences are.
"We've taken the two areas of the company that most impact the bottom line--marketing and technology--and intersected them," Heintzeman says. "The system will bring general managers the key metrics and business indicators and allow them to triage the performance of their hotel without having to sit in front of a PC."
Other businesses in the hospitality and travel sector haven't adopted a franchise-based business model. Starbucks Corp., for example, considers the fact that it owns 2,500 of its 3,000 outlets to be a singular advantage. Its IT focus isn't on franchisees, but on growth. The company's vision is to grow to 20,000 stores in the next few years.
"A company growing as rapidly as we are depends on technology," says senior VP and CIO Ted DellaVecchia--and the challenge is simply to keep up. "We need new ways to run in-store technology beyond the current client-server, and while our visions would clearly be to have totally thin and Web-based devices, that doesn't work for the size of the network we're going to need to run to connect 20,000 outlets. We're trying to figure out a way to thin out our systems to reduce the cost of ownership on a per-store basis--and we're very close to a solution."
In the meantime, Starbucks is busy building a system that focuses on improving its ability to capture traffic-flow information and analyzing which corners in which cities would be the perfect ones for a new Starbucks.
Next on the agenda? "Things aimed at customer convenience, loyalty, and improvements in business-to-business," DellaVecchia says. "What we call our big, hairy, audacious goal is an enterprise portal on a global scale that allows each user segment to access what they want."
Like Wendy's, Starbucks looks at more direct links to suppliers. "We're centralizing procurement and through that, we'll consolidate distribution and logistics," DellaVecchia says. "We're one of the largest consumers of dairy products in the world--and we see IT as playing a key role, leveraging things like enhanced electronic data interchange and the Extensible Markup Language and EDI to keep us a business that's easy to do business with."
The role of IT also has become key to Royal Caribbean Cruises Ltd. Gone are the days when vacationers truly could get away from it all on a cruise ship. Under new CIO Tom Murphy, who reports for the first time directly to the president, Royal Caribbean is adding Internet access to state rooms. And it's throwing out its entire legacy-system backbone and rebuilding from scratch, with the customers' needs at the center of every IT decision.
"We need every single person to think of himself as a customer-service representative," Murphy says. "And our goal is to give them the tools to focus on the customer and add shareholder value every day."
Illustration by Jeffrey Fisher
Photograph by Doug Knutson
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