How ‘the cloud’ is shifting over APAC hospitality

After years of scepticism, big hotel brands are moving to the cloud and even the less savvy CIOS are starting to see the light

Not that long ago, if you asked the CIOs of the biggest hotel chains how they felt about moving all their systems into the cloud you may well have seen a shadow cross their faces.

Until recently everything from property and customer relationship management to point-of-sale and reservations have existed on property. Now security, as we know from the major hospitality breaches over the past years at chains like Hilton, Starwood and Hyatt, is a big issue and the compromise of hotel gold, the guest’s data, every hotelier’s worst nightmare. According to a global CIO survey from recruiter Harvey Nash released in May 2015, 49% of IT decision makers cited data loss and privacy issues as the biggest challenge with cloud technology.

“Even a few years ago the moreadvanced of CIO at large chains were sceptical,” says Oracle’s Grahame Tate, who holds the somewhat lengthy title of VP Sales Hotels Hospitality GBU Asia Pacific (GBU stands for global business unit and since the Micros acquisition ‘hospitality’ has been Oracle’s 7th pillar).

So one could argue that when Oracle, the biggest cloud company on the planet, acquired Micros, a major provider of technology to hospitality firms in 2014 for $5.4bn, it was taking a big risk.

But it seems that the metaphorical clouds over this technology are shifting, and Oracle might just be in the right place at the right time. According to Gartner, global spending on public cloud services is expected to grow 16% to $204.2 billion this year, compared with 13.8% growth in 2015. In fact, the move to the cloud has accelerated over the past 12 to 18 months as firms go beyond application testing to implement broader cloud strategies.

“It really has moved along and we are seeing strong demand for us to take these hotel [large chains] estates into our cloud,” says Tate, who was an engineer before moving into sales, operations and marketing, and has been in the hospitality tech business 18 years.

Jousting for JAPAC

Perhaps unsurprisingly a major target is JAPAC, or Japan and Asia Pacific. Here Oracle Hospitality already controls 75% of the Tier 1 and Tier 2 hotel market, which include the major international chains and regional bigwigs. Here, although hospitality in JAPAC has lagged the rest of the world in the take up of cloud technology, investment by local and regional governments in infrastructure is helping to change that. That’s good news for firms like Oracle, which now has its sights set on Tier 3 and 4 – the biggest and fastest growing market.

In JAPAC, most of the applications of Oracle’s clients are still on premise, but the firm is looking to help them shift those to the cloud, which isn’t easy. Take Shrangri-La, an Asian hotel chain as an example, which is tipping up to its hundredth hotel. “To put all its applications into the cloud is an onerous process,” explains Tate. 

The big players are, however, moving in that direction so a big push now is to convince less savvy CIOs that technology firms like Oracle, and there are many others too (IBM, Infor and Fourth Hospitality to name but a few),really can drive and maintain security at a higher level than by keeping servers on property. Another advantage is that cloud technology reduces infrastructure costs, which in the fixed cost business that hotels operate in is a plus.

“Hotels are very susceptible to increases and decreases in the market and so the biggest challenge for hotels is to reduce fixed costs,” says Tate. “This simplification of IT really can help hotels increase yield”.

In fact, many hotels are recognising that IT might best be left in the hands of technology experts. At a recent EyeforTravel event, Barry Goldstein, Chief Digital and Distribution Officer, Wyndham Hotels and Resorts said: “At one time we did all technology in house but now we partnering with big technology players.”

In this way Wyndham believes it is better placed to focus on its core competency: the end-to-end customer experience.

With the acquisition of Micros now bedded down, Oracle certainly believes it has the scale and technological prowess to become the partner of choice for the world’s hotel brands. “We have more 35 to 50,000 installations if we include the POS around the world but the transition into the cloud is a very big deal. It not a straightforward process and requires a lot of investment,” says Tate. 

So the competition is certainly hotting up and the sun is coming out from behind the cloud.

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