by
Jeffrey Stephen Parker
Oct 1, 2024

The 2024 CIO Summit Nashville Review

While my colleagues may occasionally kibitz about the events or speakers (not this year!), the core value of building lasting relationships in the greatest industry in the world can never be underestimated. We all owe a huge debt of gratitude to the one and only, quirky Rich.

The 2024 CIO Summit Nashville Review

by
Jeffrey Stephen Parker
Oct 1, 2024
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While my colleagues may occasionally kibitz about the events or speakers (not this year!), the core value of building lasting relationships in the greatest industry in the world can never be underestimated. We all owe a huge debt of gratitude to the one and only, quirky Rich.

I have been attending the CIO Summit for nearly two decades. In the early years, I was starstruck by the leaders in attendance, who were not only willing to share their knowledge but also offer mentorship, which was invaluable at that stage in my career. Now, I see the importance of welcoming new leaders and continuing to connect with the incredible people in this industry.

One of my favorite CIO Summits took place in Seattle, where we had an unforgettable tour, and Rich’s friend from Boeing delivered the keynote in one of their massive hangars. It was fascinating, fun, and eye-opening to hear about the logistical challenges one of America’s great companies faces in facilitating global operations – things most of us hadn’t fully appreciated.

Had the summit ended there, Seattle would already rank among my top CIO experiences. But what made it even more special was what happened afterward. My oldest son was graduating from the University of Alabama (Roll Tide!) the following spring, and he was working hard to stand out among Boeing job applicants. I reached out to Rich, saying, "Hey, no pressure, but my son is pretty amazing–could you introduce his resume to your friend at Boeing?"

Rich didn’t hesitate. He shared my son’s resume immediately, and within moments, his friend at Boeing sent an email to the recruiting team. Within 30 minutes, my son had his first call, followed by a swift interview, and soon after, a career with Boeing, where he’s growing into an outstanding engineer. Rich has continued to support my son, asking for updates and celebrating his successes along the way. I will always be indebted to him – thank you, Rich! While I can’t give Rich all the credit, this experience reinforced one of his core messages: Relationships matter.

The CIO Summit is a testament to that truth. While we’re happy for Rich, none of us hope this is his final ride into the sunset. We need him to remain a part of our networks, friendships, and lives. As for this year’s summit, it could easily be called the “AI Summit,” with three sessions dedicated to AI and many others weaving in AI-related themes. The consumerization of AI is undeniably having a significant impact – the question remains whether that impact will ultimately be positive or negative.

THE STATE OF THE INDUSTRY

The first session, Hot Temps, Hot Chicken, Hot Data: State of the US Hotel Industry, kicked off with a deep dive into statistics and trends presented by Jan Freitag, National Director of Hospitality Analytics at Costar. He highlighted key shifts in how competitive market information will be delivered, urging industry professionals to stay updated.

Looking ahead to 2025, ADR is projected to rise 2%, but ‘Real’ RevPAR will still be 6% below 2019 levels due to economic pressures. Inflation is impacting travel, with rising costs in rent, insurance, food, and energy affecting consumer spending.

Freitag noted that hotel demand growth is no longer tied to GDP, signaling a possible "new normal." Upper-tier chains are expected to see growth, while lower-end products will see limited expansion.

Corporate transient demand has decreased due to fewer people working in offices and the rise of virtual collaboration tools.

Interestingly, the luxury segment is forecasted to grow by 4.5%, while the economy segment is set to decline by nearly 4%. Freitag attributed luxury growth to the "wealth effect" and pointed out the increase in hotels charging over $1,000 per night, which has tripled since 2019.

Other trends include more Americans traveling abroad due to the strong dollar and a decrease in ASIAPAC travelers visiting the U.S. Additionally, Americans are flying more but spending less time in hotels, driven by factors like cruise popularity, AirBnB competition, and unknown variables.

FORMING AI HABITS & PERSONAS TO REDUCE STAFF TURNOVER

The second session really pushed us into AI, and personas with Michael J. Goldrich, the founder and chief advisor of Vivander Advisors.

Is GenAI a paradox? Despite high expectations and significant spending, many AI projects are failing to deliver increased productivity or revenue. The promise of AI boosting performance and driving innovation has fallen short, with many projects stuck in pilot stages. Key reasons for failure include:

  • Inability to demonstrate business value
  • Resource wastage
  • Lack of necessary skills
  • Change management issues
  • Employee resistance and fear
  • Insufficient training
  • Rapid evolution of AI solutions

For AI projects to succeed, Michael emphasized the importance of thorough training and having "AI Champions" to lead the effort. He suggested businesses hold "office hours" for open user support, mandate participation from all, and ensure leadership uses the solution. Legal teams should also be fully involved.

Other success factors include:

  • Building an AI-literate team
  • Aligning AI with business strategy
  • Addressing ethical concerns
  • Focusing on one tool (e.g., CoPilot, Gemini, OpenAI)
  • Starting small and scaling
  • Encouraging continuous learning and upskilling

Engaged and focused teams can improve their skills, with one success story reporting a few thousand employees performing like 100,000. Michael also showcased how personas, even based on LinkedIn profiles, can be used in AI to simulate interactions, such as practicing a pitch with a virtual team.

Finally, he warned against trusting free AI tools, emphasizing the risks: "If you're not paying for it, you are the product." He expressed strong skepticism toward free AI in professional settings.

MIXING TECHNOLOGY & ENTERTAINMENT: ONE-ON-ONE WITHTHE GRAND OLE OPRY

Next was an informative presentation from Rao Kasibhotla, SVP and CIO for Ryman Hospitality Properties. Rao shared the challenges of migrating multiple systems to a new ERP solution, a process that took over a year and a half. The Grand Ole Opry, a collection of hotels, venues, and food & beverage outlets (including partnerships with stars like Luke Combs), faced significant hurdles during this transition. Many bars on Nashville’s Broadway are part of the Ryman Hospitality family, and the change was particularly difficult for long-tenured employees, especially in accounting, with some staff still not fully adopting the new systems. The greatest challenge was managing resistance to change, especially from team members with decades of experience.

Opry, like many large hotel brands, had outdated custom software, with some systems dating back to the 1960s. Rao even mentioned users still relying on WordPerfect. To overcome resistance, the team built a plan highlighting key benefits, including:

  • Improving guest satisfaction
  • Boosting EBITDA and profitability
  • Reducing risk
  • Enhancing business processes and efficiency

The team visually mapped the migration journey to communicate the operational impact and track progress. This massive effort involved migrating over 1.2 petabytes of on-premise performance archives to a two-petabyte cloud platform. Opry owns the Gaylord Hotels, with Marriott managing them for Ryman Hospitality. Rao’s team established their own group of product managers to collaborate more effectively with Marriott, rather than passively following their lead. This team manages roadmaps and project plans, working with Marriott to extend hardware lifecycles and maximize investments. Rao emphasized the importance of having an EVP oversee this collaboration, ensuring that investments are deployed and not left unused.

Ryman Hospitality also leverages technology to enhance the guest experience, pushing Marriott and other partners to enable better use of mobile devices for room control, communication, and revenue opportunities during guest stays.

AI @ WORK: PRACTICAL AI APPLICATIONS FOR HOSPITALITY

We had a fire-less fireside chat about Practical AI Applications for Hospitality with Canary Technologies, VP of Product Aman Shahi, and Scott Strickland, Chief Commercial Strategy Officer, Wyndham.

Shahi discussed AI's impact and growth, sharing a survey showing rapid advancements in AI within hospitality, with 40% of experts believing that Generative AI (GenAI) will significantly impact hospitality operations in the next two years. AI is particularly effective at processing large amounts of data, enhancing personalized guest interactions, and automating tasks to allow more human-focused service.

Wyndham and Best Western are currently piloting AI guest messaging systems, which handle 80% of guest messages via chatbots, improving revenue and efficiency by offering services like early check-ins and room upgrades quickly and personalized. AI is also helping to prevent payment and identity fraud in hotels.

Strickland emphasized the importance of building a tech stack that supports AI integration. Full integration (100%) is crucial to maximize AI’s value, as partial integration (80%) will only deliver a fraction of the benefits. Wyndham has seen increased cost efficiency and revenue through their AI projects, using AI to enhance guest communications and streamline operations for 3,200 hotels.

AI is being used to coach agents in real-time, correcting behaviors like speaking too fast or detecting fraud. Wyndham has also piloted CoPilot to optimize costs. Team members are now actively suggesting AI use cases, showing increased internal buy-in.

Strickland highlighted significant measurable impacts from AI, such as a fourfold increase in Net Operating Income (NOI) at some properties and upsells ranging from $800 to $20,000 per month at select service hotels. Additionally, AI driven efficiencies in their call centers have saved $1.8 million annually.

Wyndham hasn't hired AI engineers but instead reskilled passionate team members. Their AI deployment process involves testing in safe spaces, constant iteration, and continuous evaluation with internal feedback to ensure success. Strickland and Shahi concluded that AI can significantly boost both revenue and operational efficiency, but successful adoption depends on full integration, iterative testing, and leveraging AI to address major pain points in the business.

WHAT OWNERS WANT

In the Asset Management panel What Owners Want, Julian Bish, Global Director IT Business Relations Hyatt Hotels Corporation, led a lively discussion where several friction points were highlighted in relation to opening, transitioning, and operating hotels.

KEY TOPICS DISCUSSED:

  • Technology and ROI - The panel agreed that while technology is necessary, it's often challenging to see its ROI immediately. However, neglecting tech upgrades can lead to negative consequences.
  • Cybersecurity - All panelists acknowledged the critical nature of cybersecurity, with a particular focus on the delineation of responsibility between brands and owners.
  • Operational Efficiency - Simplifying operations, onboarding, and reducing training times are crucial for better efficiency, especially in select-service hotels with high turnover.
  • Brand Contributions - Brand distribution channels are highly valuable, but operators want more flexibility and faster approval processes for promotions. Maximizing ancillary spend from loyalty programs and guests is also a key concern.

OUR PANELISTS

(pictured above left to right - Morosetti, Cocchiola, Shukla, Bish)
Chris Morosetti, CEO, Magna Hospitality:

  • Friction Points - ROI is essential, and technology investments must justify returns. Selling the value of tech to non-IT stakeholders can be a challenge. There's also a focus on ongoing operating costs, which impact NOI (Net Operating Income) every year.
  • Key Concerns - Difficulty in maintaining differentiation with technology because brands have similar tech stacks. He emphasizes the importance of simplifying operations to reduce training and turnover and controlling scope creep during technology rollouts.
  • Cybersecurity - CM mentioned that liabilities related to cybersecurity are a significant concern, as large brands face more risks and attacks.
  • Efficiency - Improving business models through more efficient tech use to lower operational costs is critical.

Rebecca Cocchiola, Senior Vice President, Singerman Real Estate:

  • Friction Points - A competitive environment is needed to drive better pricing and technology adoption. She emphasized that owners don't want to be forced into a limited vendor pool, especially when cheaper or better tech options are available.
  • Key Concerns - The cost of adhering to brand standards, frequent technology replacement cycles (e.g., laptops in 2-3 years), and a lack of communication regarding the ROI for certain technology investments (like credit card updates).
  • Operational Issues - Loyalty and guest satisfaction (GSS) can be harder to measure, but operational simplicity often works better than complex systems.

Prakash Shukla, Managing Partner, WayFare Ventures:

  • Friction Points - ROI remains the primary challenge in tech investments, and brands must improve adoption rates for technologies that owners are paying for. He also discussed how hotel tech is a necessity ("table stakes") but doesn't always provide a competitive advantage.
  • Key Concerns - The slow deployment of technology and long obsolescence windows create frustrations. Additionally, better communication from brands regarding cybersecurity measures is needed.
  • Simplification - PS highlighted hiring and training challenges, advocating for tech to reduce staffing needs, which would address a significant pain point.

The panel emphasized that effective communication, simplification of processes, and making decisions based on clear ROI metrics are vital for smoother hotel operations and transitions.

GENAI IN HOSPITALITY: LEGAL FRAMEWORKS AND SECURITY PROTOCOLS

In the session Integrating GenAI in Hospitality: Legal Frameworks and Security Protocols, Erin Snodgrass from Foster Garvey explored the evolving use of Generative AI (GenAI) in the hospitality industry and the associated legal and security challenges. GenAI is in a growth phase, and many companies are still learning how to utilize it effectively.

Education on AI is crucial, as there are many concerns about its risks, but the industry risks falling behind if it doesn't adapt. GenAI can be applied in numerous areas such as engineering, HR, and marketing. While it offers potential benefits, there are also significant risks, including bias in AI-driven hiring processes and accuracy issues with guest-facing applications.

Snodgrass demonstrated these risks of AI:

  • Confidentiality - AI prompts may not be confidential, and data input can affect outcomes ("garbage in, garbage out").
  • Bias - AI systems may perpetuate bias, particularly in hiring, which raises legal concerns in certain states.
  • Accuracy - AI can produce information that appears authoritative but may be inaccurate.
  • Intellectual Property (IP) - There are concerns about IP infringement and protecting proprietary content when using AI.

LEGAL FRAMEWORKS TO BE AWARE OF:

  • EU AI Act - The European AI Act will have a significant impact on AI regulation, and similar legislation is expected in the U.S. (with some states like California slowing federal progress).
  • Existing Laws - Current laws, such as privacy and employment regulations, already apply to AI systems. Companies need to be mindful of compliance, especially when dealing with sensitive data like children's privacy.
  • Prompt Liability - If an AI prompt leads to privacy or IP violations, companies could be held liable.

TIPS FOR RISK MITIGATION AND AI DILIGENCE:

  • Transparency - AI transparency is a major issue – organizations need to document how AI systems are built, what data is used, and who has access to it.
  • Data Storage - The handling and storage of AI data are critical, especially to avoid risks like hallucinations (AI generating false information).
  • Contracting Issues - Companies need to clarify whether they are the "controller" or "processor" of data and minimize the amount of data collected to reduce exposure to risks.

Companies must assess whether their vendors use AI and ask detailed questions about data handling. It's also important to monitor AI model performance for degradation and hacking.

Contracts should include AI-specific clauses that address compliance with global, federal, and local laws. Using the EU AI Act as a baseline for contracting is recommended. Bias must be mitigated in AI models, particularly public ones. Human intervention is necessary to ensure fairness in outcomes, and companies must assess the equity of their data pools.

In conclusion, while GenAI offers significant opportunities in hospitality, companies must carefully navigate the legal and security landscape to minimize risks, comply with regulations, and ensure AI systems operate fairly and transparently.

THE ANNUAL CIO ROUNDTABLE

Our final session was the annual CIO Roundtable hosted by Cameron Hammond, Senior Vice President – Global Field Technology Services at Hyatt Hotels Corporation who moderated this year with some poignant questions.

We shared key lessons from the CrowdStrike outage, highlighting the need to improve communications, particularly in the field. Hyatt and others are working on formalizing processes to ensure better disaster recovery and business continuity. Communication breakdowns within organizational silos were also discussed, emphasizing the need for seamless coordination between departments and hotels during crises.

It's crucial to care for colleagues who worked long hours under stressful conditions. Hyatt also demonstrated tools used to prevent child pornography on guest networks, using systems synced with the Child Sexual Abuse Material (CSAM) database to block access discreetly. AI and new camera systems are also being used to identify human trafficking, with early successes in breaking trafficking rings.

Proper training is essential for staff to assist in these efforts. On guest technology, there was debate about check-in kiosks. While they may gain traction, most felt kiosks would augment, not replace, the front desk. Regional preferences play a role, with Americans generally preferring traditional check-ins. The group also discussed removing in-room phones, a costly feature rarely used by guests, driven by brand requirements rather than guest needs.

Concerns were raised about hotel teams being targeted for theft, despite training efforts. Brands are working with processors and gateways to combat this issue, with some success in thwarting attacks. Regarding the shift to cloud technology, discussions centered on whether this reduces team sizes or reallocates resources.

Many agreed job descriptions have become too lengthy, discouraging applicants, and suggested focusing on key skills instead. Upskilling the right candidate is often more feasible than finding a perfect fit. The move toward cloud-based systems and building a robust network is key to eliminating on-site hardware. Zero Trust and software-defined networks were also noted as potential solutions for simpler, flatter network structures.

The group also discussed remote, hybrid, and in-office roles. While some companies have fully returned on-site, most have adopted hybrid models. There was a lively debate about employees holding two full-time remote jobs, with opinions varying on its acceptability. AI tools may make this more common.

Overall, this summit provided valuable education, and I look forward to the next one in 2025.

Thank you to Rich, Geneva and the HFTP Team for another great week!

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