Four Major Mistakes Hospitality Technology Companies Consistently Make

Written by: Ira Vouk

Our industry is at a pivotal moment as the pandemic accelerated the adoption of digital technologies. As those adoption rates are steadily climbing, more companies seek to scale their software and hardware product offerings in the industry. In order for them to be successful and grow their business efficiently, they need to clearly understand the hospitality market and avoid the major mistakes that can kill their entire business.

We all know how hard it is to source tech-oriented talent from within the hospitality industry. So, inevitably, technology companies tend to hire from the outside. Most employees at these companies do not have a background in hospitality, so it takes them a while to understand the ins and outs of the industry. That creates many challenges, which also slows down technology adoption as a result. In fact, this also pertains to many founders of these companies, especially startups. While these players are actively seeking to better understand the industry in order to become more successful, not a lot of options are available for them to be educated on the topic.

Having consulted many hospitality technology companies, I have put together a list of top four mistakes that tech companies tend to make in our industry, all of which can be easily avoided with the right knowledge.

Mistake #1: Underestimating the complexity of our industry, which leads to not understanding your end user and not differentiating between user types. 

Many companies “just build” to see what happens. But did you know that there are at least 17 different types of end user personas in our industry, and they all have different needs when it comes to technology products? To address this mistake, I have put together a comprehensive list of end user personas that can be identified in our industry, within each target segment.

The highest-level division of industry market segments is related to whether your product is B2C or B2B, which essentially then drives your entire product, marketing and sales strategy. B2B represents a very large portion of the hospitality tech ecosystem. In B2B, the highest level of division is between property-level and corporate-level users. These are very different user category types, and each has a very specific set of problems and tasks, which essentially dictates the functionality they are looking for in technology tools they use on a daily basis. 

Within each type, there is another layer of segmentation (based on the property chain scale for property-level users, as well as on the type of stakeholders for corporate-level users). This results in a total amount of 17 end user persona groups in our industry.

Mistake #2: Building new functionality and even entire products without validating the idea in the market and analyzing its market potential.

Far too many times, technology products are built because an executive of the company had a brilliant idea — but not because the market actually needed the product (I have actually done this myself on multiple occasions). This often results in significant losses of time and money. These losses can be avoided if all major product ideas go through a proper market validation process and an “opportunity assessment” exercise.

In addition, did you know that your go-to-market strategy needs to be carved, at least on the high level, before you even start building your product — not after? It’s an absolute must. 

I have also seen many companies make the mistake of building product requirements without having conversations with their existing or potential clients. But clients are actually willing to share. They’re happy to share. That makes them feel important, valuable and engaged. So don’t be afraid to ask.

Mistake #3: Talking to the wrong decision-maker or using the wrong language. 

In order for your sales and marketing strategies to be effective, you need to identify the right buyer personas (key decision makers and influencers) in the target segment you are pursuing. 

For that, you need to understand the composition of the industry, main players and stakeholders. Not very many industry professionals are actually aware that a lot of challenges that the hospitality industry has faced in the last few decades (including the main challenge of low tech adoption) stem from the problem of fragmentation, as well as the conflict of interest among different players in this space. 

Due to the way our industry has evolved, we have ended up with “a three-legged stool” of players. Unlike the airline sector, we have different players (stakeholders or entities) now in the picture:

• Owners
• Management companies
• Brands (franchisors)

In many cases, this results in a situation when there are multiple stakeholders involved in the operation of the same hotel, with each having their own priorities and interests.

The type of decision-maker you need to approach depends on many factors. And once you identify them, it is also important to understand their mindset, so then you can understand how to approach and sell to them. 

Mistake #4: Ignoring integration dependencies.

This can actually kill your entire business if underestimated. You need to clearly understand the hospitality technology ecosystem, and identify where your product is positioned in it and whether you have any integration dependencies. This will dictate your entire product and sales strategy, and your development timeline, as well.

So, in order for you to build the right strategy for your product, you need to first answer the main question: is your technology solution dependent on any stream of data that you don’t generate internally? If the answer is yes: then you have an integration dependency. That means you won’t be able to sell your product unless you have the right integrations in place. In that case, you need to identify industry players that you need to integrate with, in order for you to start selling, and start working on those partnerships right away (don’t wait until your product is fully built). 

For example, if you’re dependent on PMS integrations: you’re limited to the customer base of the PMS you are integrated with. Remember, there are a total of around 1,000 PMS providers in the world. So, you need to identify which systems your ideal customers use (for example, if you’re targeting independent, branded or mid-market, limited service versus full-service resorts, or a specific geographic region, they all have a list of preferred PMS companies that are popular in that specific segment). Identify those and prioritize your integrations accordingly. Until you build integrations, you can’t sell. 

Moral of the story: if there’s a way for you to avoid integration dependencies — please do. That will make your life much easier and your business much more scalable. 

References:

To download the full version of the “End user personas” guide, click here.

Ira Vouk is the author of “Hospitality 2.0”, a software founder and an educator who has consulted hospitality technology companies for many years by leveraging her past experience as both a hotelier and technologist.