Hilton's $50 Million Answer

A customer arrives at a Hilton Hotel in San Francisco, and staff members are ready to serve him bottled water. Not because they serve all customers bottled water, but because at the customer's last Hilton stay, in New York, the hotel had run out of the product when he requested it. "We can have 40 people ask for bottled water at the same time," says Tim Harvey, senior VP and CIO at Hilton Hotels Corp. "But we will give it to the guy that didn't get his water in New York first."

It's a small example of big IT-driven change at the hospitality conglomerate, which pulled in $2.5 billion in revenue last year. The company has been working since the 1990s on a $50 million proprietary technology implementation that will let it get closer to its customers and build stronger relationships with guests at any of its nine hotel brands, which include Hilton, DoubleTree, Embassy Suites, and Hampton Inn.

The program, dubbed OnQ, creates a Guest Profile Manager for frequent guests based on information a guest provides to the company via hotel or central reservations, Hilton Family of Hotels Web sites, or Hilton HHonors membership. The profile data is combined with information about previous stays--the guest prefers a king-sized bed and a nonsmoking room-- so that front-desk employees can recognize guests at check-in and provide personalized service.

The technology platform also integrates all of the primary functions of a hotel, including front office, housekeeping, accounting, finance, human resources, night audit, groups and packages, revenue management, and forecast management, 80% of which are in-house systems. That lets hotel management forecast business trends and make market-driven business decisions based on revenue-maximization tools built into the system. "We've built a proprietary capability that brings everything together," Harvey says, "so everything feels like it's one system."

That differentiates Hilton from its competitors, the CIO says. Harvey spends $135 million annually on IT to ensure that there are no legacy technologies at Hilton. The no-legacy attitude started in the early 1990s, when Hilton sold off Holiday Inn and its technology with it. The IT organization was able to start over and develop a vision of only building or acquiring systems that would work together. Meanwhile, competitors stacked features and applications on top of legacy systems, creating a more complex IT-management environment that would make a project like OnQ difficult, Harvey says.

OnQ was conceived in 1997 and started with Hampton Inns, Homewood, and Embassy Suites. Hilton decided to use a proprietary implementation because niche vendors have historically provided technology for the hotel industry, so there was no one vendor that could provide products that could reach across the organization. "In the hospitality space 20 years ago, there were 25 property-management system vendors out there, but now there are two or three because the vendors don't have the balance sheets to be like an IBM," Harvey says. "We would have loved to have bought a [complete] solution, but the truth is there wasn't anything to buy."

So instead, the core focus of the project was to integrate into a common interface Hilton's proprietary property-operations applications and back-office applications from PeopleSoft with a few best-of-breed apps from niche vendors serving the hospitality industry. "Technically, the hardest part was building a data model that consistently defined information that could be viewed across the organization," Harvey says. Getting that done took much effort--of Harvey's 550 IT staffers, at least 400 have been involved in the project since its start.

They were able to devote a lot of resources to the effort because there was agreement across the company from the point of conception forward that it was important for the hotel to have seamless, in-house technology. Key to this agreement was the support of Hilton's leadership, and employees communicated across all levels of the organization and worked together to prioritize projects.

"This is a lifetime commitment on how we're going to operate and run our systems from now on," Harvey says. Hilton's user community is a creative group, always wanting to try new features and functionality, Harvey says. So while he needed to empower them, he also had to make sure they were able to communicate their ideas effectively. "There's a fine line between empowerment and playing by the rules," he says.

For most of Hilton's hotel-desk operators, OnQ is a reality. Later this year, there are plans to enhance some of the systems for the larger hotels, such as those in New York City, that often have to deal with large groups and collective charges. Another next step is to bring the same level of service to other parts of the organization, including the call center, so that when a customer calls in to make a reservation in San Francisco, the agent can apologize about the bottled-water shortage in New York.

Photo by Jack Kenner