Ted Horner: Navigating hotel tech ROI, AI, and the future of hotel profitability

Sebastien Leitner

Welcome to The Turndown. My next guest argues that hotel brands have become marketing companies, warns that owners are spending too little on technology to survive the next decade, and predicts that front desks, room phones, plastic key cards and entire hotel departments could disappear faster than the industry expects.

Meet Ted Horner, a hospitality technology pioneer who helped shape the industry before digital strategies even existed.

A co-founder of HT and G and the first non-American inducted into the HFTP Hall of Fame, he has spent four decades attending high-tech and advising hotel owners globally.

We dive into AI agents, the future of hotel loyalty and why OTAs have become more profitable than the hotels themselves. In short, TED doesn’t hold back. Let’s get into it. I’d love to get going. We are typically opening up with sort of the standard opening question, which is what keeps you up at night?

Ted Horner

Yes. That’s interesting because that’s typically asked of GMs, and I’m not a GM.

But I think probably right now the issue with keeping everyone awake is the emerging ruthless slash threats of artificial intelligence.

I think that’s the thing that everyone’s worried about because, know, look at all that’s happened in the last month. Oracle is letting fourteen thousand, Amazon, Apple, everyone is getting rid of staff, you know, and it’s it’s a scary thought. So job security for people. How do you explain to someone, listen, you’re my spreadsheet guru.

You’re my revenue manager. And, hey, can press a button and automate the entire process of revenue management and thirty years of experience walks out the door, you’ve made redundant.

So I personally think and every conference I go to now, all everybody wants to talk about this. It’s actually driving me nuts, actually. It’s it’s, you know, everyone wants to talk about AI. Where are you at? What are you doing? How are you doing? But interesting, four thousand CEOs last year were surveyed in the United States, and all of them said that they’d invested heavily in AI, but have yet to see an ROI.

Sebastien Leitner

So you said a threat of AI. Where’s the threat? Is it to labor, to your job? Like, where’s the threat?

Ted Horner

I think the threat is job security, because the automation of tasks, right? Now everybody talks about the benefits of AI, you know, okay, we’re going to hyper-personalise, we’re going to put more power in the hands of my staff and they can know more about Ted Horner down to the transactional level. But there’s also, you know, like where is there going to be an accounting department in a hotel now? Because we’re going to have now, you know, we’ve now got agents, You know?

Then you gotta start talking about the future next couple of years because AI an AI agent to an AI agent at a hotel. I’m assuming in two courts, I have my own travel a lot. Right? I did eleven trips last year and a hundred and forty six days outside Australia last year.

So eventually, some an AI agent for Ted Horner is gonna know everything about Ted Horner. It’s gonna start automating, planning my trips, telling me how much booking my hotels because it knows my preference for hotels that I’m on. I don’t need to like to be on the fifth floor. I like a gin and tonic.

I don’t need to be I’d I’d need to be away from a lift. I love a club sandwich, you know, etcetera, etcetera, etcetera.

Sebastien Leitner

How much of that is life today?

I get future sort of vision.

Ted Horner

Not there. The reality is, hey, that’s the problem because it’s the unknown. Right? And that’s the greatest fear that I don’t know yet. And the problem at the moment is still difficult to quantify the benefits.

Like you go and talk to someone like Scott Strickland, who I know quite well, the CEO of Wyndham Hotels, and what they’ve rolled out to all their franchisees is a voice agent.

Know, because when you ring a hotel today, what happens is if there’s no dedicated phone operators anymore, so they put you through the front desk and the person on the front desk is checking someone in. So you hang on for five minutes and then in the end you give up. But imagine for Robin’s sake ringing a hotel, an agent is answering the call and handing FAQs, all sorts of things, you know, enabling you to book, hey. I’m I’m gonna be arriving this afternoon.

Can I have a club sandwich in my room one hour after? You know, I check-in, these sort of things. So I think but the problem is everyone’s talking about what I’m going to do, but I’m still struggling because I consult to owners quantifying the ROI, and I don’t think we’re there yet. Everyone thinks it’s gonna revolutionize our industry, but we’re also gonna be casualties.

And I think that’s because we have bed down and everything. I think that’s the fear factor for everybody. Am I gonna lose my job because of AI? And no one yet has been able to say, yes, you are or no, you’re not.

The odd concept that people, hopefully, isn’t trying to say, well, what AI will do is lead to a redeployment of staff.

But there’s gonna be a lot of staff that aren’t going to be redeployed. Daryl’s dangerous and mundane tasks. I even saw a robot at ITP a month ago in Berlin that’s been built to make beds. Right?

Now I don’t know if you know that many years ago, the Japanese hotel chain had robots checking, all the way handed. It’s gone now because it didn’t get it. It didn’t make the, we would call it, Australia pub test. Just didn’t gel with people.

One of the questions you’re asking down the track is, is there a traditional reception desk gonna survive in a hotel?

Well, maybe for five stars, but when you get down to one, two or three stars, you’re seeing now with the rollout of Apple Wallet, we’re now pushing usage levels up to fifty percent, whereas the previous generation using apps and, other things, using Bluetooth or BLE or NFC, we were still in the twenties.

But Hyatt has been a pawn in this area, and Cameron Hammond is a good friend of mine, an Australian guy who’s about number two or number three at all, is saying that Hyatt has really been at the forefront, particularly originally with Apple.

The only downside Apple won’t is the transaction finish, you have to pay Apple, because Apple is not giving you all the technology.

Sebastien Leitner

No, no, and they wouldn’t. So you mentioned something really interesting. In the limited service hotel industry, two, three star hotel, there’s a motivation to get rid of the front desk, which is, you know, I can save a lot of labor, I can save a lot of cost. As a hotel owner, if I can have my staff at the reception, that’s great, right? Or I can reduce the number of people that are working, even close the reception early, which is great.

But you also mentioned that in luxury hotels, they will keep a hotel reception. Why do you think that’s the case?

Ted Horner

There’s a correlation between, you know, it’s also demographics.

Sebastien Leitner

Okay.

Ted Horner

You know, I don’t if you’re aware, but Resort World Hotel last year went with a new Apple solution.

And at the same time, their preamiscus property management was down. We won’t mention who the vendor was, but I’m sure you can guess. Anyway, what they did was posted, multiple QR codes all around the reception in the lobby. So all people had to do when their penis was down was go take their camera, look at pick up the QR code, and it would then give them information in terms of where they could go to their room. So here’s the issue. I have a little bit understand why people wanna stand in the queue for forty minutes to check into our hotel in Las Vegas.

Sebastien Leitner

I don’t want to.

Ted Horner

I don’t. So here’s the reality is older people now I’m a baby boomer, but I want technology.

So what I’m seeing now is in the low end, there’s a low expectation. As you said, space is I mean, the people who started tablet or check-in was Citizen back in two thousand and ten when they opened their first property in Schiphol. Now back then, nobody was doing it. What they had was ambassadors standing there in the event that you couldn’t do it yourself.

But what also has brought technology quickly to the fore was COVID.

Suddenly we had a situation where contactless was an important criteria. So we may have still been embracing non-contact, I mean contact environment if it wasn’t for COVID. So all of a sudden now, we had this drive to, okay, can I avoid interacting with humans altogether? It’ll I’ll give you a thing. I when I get off a plane and when I fly from Australia to the United States or Europe, and it’s sixteen hours or twenty two hours, okay, with a stop if I go to Europe.

So do I wanna be standing in care for fifteen minutes when I’ve I’m bloody all I wanna do is get to my room and grab a sleep or whatever? No. So everyone’s different, but it’s interesting because I was at an investment conference speaking a couple years back, and I asked the audience about three or four years ago if do you ever envisage seeing a tablet check-in at a Four Seasons hotel?

Now there are a thousand people in the room, and only three people put their hand up.

But I can see now I mean, we’ve got the soft few couple of soffitels here in Sydney, and they’ve just redesigned the area. Now they’ve got eight tablets to check-in, and there’s two areas at the back where you can sit down and have a one to one check-in. And guess what’s happening? Everyone’s making a bill line to the tablet.

So it’s an interesting thing. It’s also about where the kiosk or the well, not so much the kiosk. It’s more a tablet now. Right?

It’s not like there’s chunky thing you see at the airport, but people are now coming coming to tours with that, and it there’s not a lot of keystrokes involved. So, you know, I’ve always felt the one thing in hotels that hasn’t changed much in the in thirty years is the check-in process. You know? But for your credit card three times, even though you’ve got given it in advance with a pre auth or whatever else.

You know, then having line of ridge card, blah blah blah, and all all I wanna do is get to my bloody room. You know? But not everyone’s the same. So I think what you’re gonna see is in the low ends, I think you’re gonna see almost almost totally the elimination of front desk.

And what I see is and already now, if I look at some of hotels and see what they’ve done is got rid of their front desk and have set up pods.

So, you you know, you walk to an individual. But so I’m just seeing now in the future. Still gonna I think you’re gonna see hotels offering mobile key, the Apple Wallet, a tablet check-in, and still so in a Four Seasons hotel or equivalent, I still think they’re gonna offer. You know? Because there’s still an element of guests who want the personal face to face.

Sebastien Leitner

Who don’t Yep. Absolutely.

Ted Horner

Want. And maybe they’re a lot of maybe they’re technology. Luddites anyway don’t wanna be embarrassed themselves by being looked as if they don’t know what they’re doing when they’re trying to check-in themselves. But it’s a pretty simple process these days. So, you know, I see that, you know, it’s a busy look. I don’t know if you know, but in your country, but in Australia now, cash only represents thirteen percent of all transactions.

And by two thousand and thirty, we’ll say it almost disappear.

Sebastien Leitner

Thirteen percent in Australia?

Ted Horner

Only thirty percent of all transactions in Australia right now are cash.

Sebastien Leitner

That’s still a lot.

Ted Horner

I know. But think about how quickly we’ve transitioned to credit cards in the last five years. Right?

Yeah. Yeah. Now that’s an old figure. I don’t know, but maybe it’s a new one. But, you know, we got, by the way, I don’t know if you still have them in America, but no one uses checks in Australia. Checks are gone now. Do you are people still using checks in the US?

Sebastien Leitner

No. No. No. Very rarely. I don’t believe so. But Yeah. I know. I’m in Canada right now, so I Oh.

I can only speak for Canada.

And we we use, credit cards or we use a bank card Yes.

Ted Horner

Which is sort of Yes. The cheaper version. True.

So you’re based in what? Montreal, are you? Correct.

Sebastien Leitner

Correct.

Ted Horner

Lovely city. So let’s getting back to this technology. So I think Yeah.

Sebastien Leitner

And I’m very curious, like, you just finished your TED Technology Summit in Sydney.

Ted Horner

Yes. It was finished. It finished a month ago. It’s the fourteenth edition of TED’s conference. Yes. Technology Summit. Correct.

Sebastien Leitner

Yeah.

You had in the audience a lot of general managers, hotel owners and operator. What what keeps them up at night these days when they think of technology?

Ted Horner

Well, I think probably, know, building strong ROI cases.

See, owners are fascinated by the value of the asset. One of the challenges we have in our industry is, even to this day, my clients are all owners of hotels, by the way, because they’re the ones that sign off on the checks. I personally believe, and I put this in the last podcast, is that I believe vendors in our industry do a very poor job building strong ROI cases.

And as a result of that, over the years, we’ve allowed operators or either management companies or franchisees to drive the technology decisions when they don’t actually pay.

So now in the context of which I operate now as the elder statesman in this country is one of my clients, will not sign any technology CapEx or software as a service request without having a second set of eyes and Ted Horner reviewing it, peer reviewing it before we sign off.

And that I think this is going to happen because I think what’s happened to be honest is a lot of owners have grown unhappy with some of the technology recommendations made by their management company or their operator or their franchisee, whatever you got to call it, and they’ve wasted money.

End of the day, one of the questions that was raised there is why is the spend in hotels, which is three to four percent, so much lower than banking, airlines, finance, retail, etcetera? Because the pool of ears is to this day, a lot of owners don’t see a real ROI in investing in technology.

And they’ve invested a lot of money over the years and the returns have not naturally been there. So, you know, people need to understand as I see and they’re all of my clients is that, you know, technology budget has to compete with refurbishment budgets, new bedspreads, refurbished lobby, etcetera. You know, anything. New air conditioning, HVAC. And the problem is at the end of the day is the problem in our history is the sales cycle is very long partially because, and I said this in the last podcast, that vendors don’t get to meet owners.

And therefore the other issue is an operator, whether it be Marriott or a management company, Highgate or any of the others, there’s lots of them out there, right, put in a CapEx request to an owner and that owner then may say, well, okay, yep, but we sign off it and that’ll be in next year’s budget, so you have to wait twelve months.

So I don’t know if you’ve experienced that in your time, the sales cycle in the industry is long because there’s not a lot of interaction between the actual vendors selling the solution and the owners who have to sign off or yes, say yes or no.

Sebastien Leitner

Here’s a controversial question for you. Yes? If a hotel brand like Marriott or Hilton or IHG, I don’t want to single out anyone. Is it a marketing company or a hotel company in your perspective?

Ted Horner

They’re a marketing company.

And it’s interesting, all I’m going to say to you is I couldn’t distribute the presentation.

Paul Bleekers prerecorded a session at my conference and basically said that AI could lead to the death of some of the brand hotel brands as we know them today.

Sebastien Leitner

How is that from your perspective?

Ted Horner

Like, he thinks that probably that AI, if it’s adopted properly, that would lead to because what what’s what’s I mean, let’s be honest.

At the moment, the profit for hotel owners is not good.

We must be the only industry in the world that was stupid enough to hand bull their inventory to OTAs who now make more money than the owner of the hotel. What other industry do you know that has been has had that situation? So his owner’s making five percent return, and he only have Expedia and Booking dot com, the big boys, right, making fifteen to twenty percent plus.

Now one of the questions you talk about OOTAs is they’re not lying down. They’re spending billions of dollars in r and d. You know, because you worked for them previously. Right?

How are hotels going about to compete? The bottom line is is that, you know, the OTAs that are the the elephant in the room. They’re the gorillas of our industry. Right?

So the challenge for hotels, in my opinion, is trying to create a scenario where a guest will go to a hotel website as opposed to an OTA. But it’s a bit like now, you know, if I wanna bloody get a a ride share, I call Uber. They’ve done such a good job. It’s almost now front and center.

Now we don’t, by the way, in Australia have Lyft like you do. So essentially Uber dominate the marketplace. And then when COVID came along, now even more so now with Uber Eats, right?

So the reality now is the problem is Booking dot com and Expedia has become that big that people begin their search looking at them. Right? And also, I think the problem is I look at the booking process with Airbnb. Simple, easy.

And someone else said, you know, there’s too many keystrokes in filling out a reservation on a hotel website. Why the hell can’t we simplify that process?

We want to know more, so we ask more questions. But in the event, we’re well, I look. I just wanna get a bloody root for Christ’s sake. I don’t wanna tell you, but how often I you know, how often, you know, I fly and all the other things that I’ve how many other frequent flyer programs I belong to, blah blah blah.

So I think, you know, my personal feeling is is that the the challenge in our history is trying to convince owners to invest more in technology when they don’t really yet get their head around the ROI. Part of my role as a consultant, the senior guys, is to get owners in a room and have education to give them a sense that how important the strategic investment in technology and how it will deliver a return.

But your point also was that the owners of a franchise property is not provided a choice to pay the right to Right?

So they’re prescribed, here’s the technology you need to use in order to be brand ABC.

So it’s almost part of the cost of doing business.

That’s why I personally think, the problem with now is, look, I’ll give you a story because I like to tell stories to put make a point. Many years ago, I was at a conference, a hotel investment conference in Hong Kong. This is twenty plus years ago.

And the moderator was interviewing an old gentleman that had the original Holiday Inn, the Golden Mile in Hong Kong.

And the moderator asked this gentleman what did he think of it wasn’t called IHG then, I don’t know what, maybe Six Continents or, you know, they’ve gone through, or Bass at one stage.

It was probably a brewery, a British brewery.

Well, so you know what he made the most fascinating comment? And he said to me, he said to the audience, I would like, I would feel much happier with my hotel management company if they spent more time looking after my interests instead of running around town trying to plant flags all over Hong Kong.

Now, what does that say? You look at: why does Marriott need fifty brands? Really? So, I’m an owner of a hotel. Which brand in the city of Sydney is gonna get more attention?

What is that? What is what are married to? They have set up a marketing department, and they then basically, distribute marketing costs not equally sometimes. And so some hotels say, I’m contributing to the marketing budget, but I’m getting one fifth five percent of a budget when I’m contributing more.

Or the operator says, we’ll put the marketing department in your hotel. Right? Or, hey. Listen.

You know, owners of hotels have to fund fifty in all the loyalty programs.

So what’s happening now, of course, is as we move to next generations, millennials and zillennials, they really don’t care about loyalty.

Sebastien Leitner

Yes. Why is that? Baby builders are big. I mean, that’s one of Marriott’s biggest thing. They think their biggest asset is their two hundred million whatever bongo members all around the world.

Ted Horner

But here’s the other problem, and people need to understand this. Fifty percent of revenue in hotels in the next ten five to ten years is going to be generated outside the room.

So what are hotels doing to grow that revenue? How is it that hotels what can hotels do to involve themselves local community?

You know, I’ll give you another story. I travel all around the world. So I’ll go to a city and I’ll meet with a vendor or someone.

The only meal that Ted Horner ever has in a hotel when he’s traveling is breakfast.

I never have meetings, dinner meetings at the hotel I’m staying at. One, because the local person must be take to their favorite restaurant or a restaurant. Why is it what why is it does that that scenario where they’re not getting the food and beverage that they should, where a little restaurant around the corner is getting the biz? And what do hotels need to do to convince Ted Horner to say to his guest, I’d like to eat in the hotel.

Sebastien Leitner

You That has to be a restaurant.

Ted Horner

Well, yes. Well, look at what Valius did. You know? Okay. Let’s go and get celebrity chefs.

Well, that’s great. But then the price doubles because you gotta pay them a nice fat fee. I don’t know if you know, and this is I know this is a bit of an aside, but I’ve been reading a few reports that Las Vegas is dying. Why?

It’s too expensive now. Remember the days you you’re you know, I’m not a young man. Remember the days when you go to Vegas and you could used to get free buffet breakfast or all you could eat for five bucks? Now everything.

And that you know, the thing that really annoys me the most about Las Vegas? That I have to pay forty to fifty dollars every single night under this ridiculous thing called resort taxes.

Sebastien Leitner

The resort fees.

Ted Horner

Resort fees.

Sorry. Yes. I yes. You’re right. And that’s become universal now. So now I’ve got a valet parked my car and pay a tip to the valet guy.

Right? Now I’ve got house maids putting tint cards in the room asking me to tip them for the service. I don’t even know who they are. Right?

So I’m constantly by the way, in Australia, tipping is optional. We pay our staff a lot more money, so tipping is optional. We we love Americans in Australia, or hotels do, because it’s in their tipping is in their DNA. But now now you look at twenty five percent now.

Twenty to twenty five percent is the is starting to be the norm now. And I see just think about the extra cost. So straight all across the board, everything in Vegas now has become expensive. And a lot of people are saying, you know Maybe there’s other places to go to.

Right? I was I stayed with, you know, in Stateline, which is right on the the, Nevada California border last year. And guess where lots of things are happening?

Sebastien Leitner

Rideau.

Ted Horner

Lot cheaper. Am I? And people you know? So all I’m saying is I think to some extent, Las Vegas had killed the the goose that laid the golden egg. And, you know, and now it’s got every step of the journey is expensive.

Sebastien Leitner

But isn’t it a pendulum? I mean, I I was just catching up on some news the other week with Las Vegas. They’re introducing now all inclusive packages, right, where you can Oh. You know?

Maybe that can go to the NPM grant, and you can pay three hundred and thirty dollars per person for two nights, including everything. All meals and That’s a reaction maybe to the fact that they are losing occupancy is falling.

Ted Horner

Alright? But the other thing, don’t forget the problem at the moment is and you’re Canadian, I’m assuming. Right?

Are many Canadians going to America anymore? I don’t think so.

Sebastien Leitner

We’re down thirty five percent right now.

Ted Horner

Down Australia’s down almost forty percent too. Because the two destinations for Australians in America, Las Vegas and New York City.

Sebastien Leitner

Yeah. I mean, we’re all waiting to be felt welcomed again, I guess.

Ted Horner

Well, we’re not we’re not gonna I’m not gonna talk about the president of the United States because it god. If I get on that soapbox, you’ll never get me off the bloody soapbox. But it may not welcome. And the problem is now is there’s also another place in the world to go. I mean, the great the one thing that the indirect thing that’s happened in Canada is Canadians are spending more money holidaying in Canada than other places in the world. Now that’s not necessarily a bad thing for the Canadian tourism industry, I would have thought.

Sebastien Leitner

I mean, we had, in twenty twenty five, record occupancy, record ADRs for the entire year. It’s never been as strong, and they expect the same again this year.

Ted Horner

Well, anyway, thank god you’re not Dubai because occupancy is in Dubai at six percent at the moment.

Sebastien Leitner

Wow. Right back to your original what’s keeping up people up at night is owners of hotels don’t see technology at the prima facie of asset growth.

Ted Horner

That’s the problem.

You know How do we change that? Well, we vendors have to do a better job. So I’ll give you love it. I’m a storyteller. Right? And I think I mentioned my other podcast. So when I write summary executive summary reports to my owners, their retention span is two pages.

I recently got, and I won’t mention the vendor, I recently got a slide deck from a vendor, one hundred and eight slides.

Now, okay, I accept that as a consultant, need a little bit more detail, but seriously, one hundred and eight slides? And here’s the problem. When I get demonstration from vendors, they wanna they’re like, I’ve got a shiny new object. Let’s look at it. Or they want the demo wants to go to every feature functionality going on. Why don’t you pick, you know? So I challenge so now with AI and video, why can’t vendors create a short, sharp, unique selling proposition which appeals to and addresses the subject of return on investment?

Sebastien Leitner

And what are the benefits?

Ted Horner

Alright. Like, I’ll give you an example. There’s a hotel chain here in Australia that has invested in QR codes in their rooms, handheld terminals for rear the pool. And as a result of that, they’ve increased their food and beverage revenue across the group by eight percent.

Sebastien Leitner

That’s amazing.

Ted Horner

I know. Now it might say something about how poor it was before, and maybe that’s exaggeration. But but this what happened was that the annual report of this company it’s a published company. The CEO, because they’re also in cinemas, this company, right, pretty big. They got about seventy or eighty hotels, Quoted in that their investment in technology, that was her words, the CEO. She’s not she doesn’t run the hotel division. She’s above the hotel the head guy for hotels, said that their investment in technology had been very good because one is they invested in technology providing upsell capabilities and, making it easier for people who order food and beverage far easier than they were in the past.

So there’s a strong example. Now, I’m doing a seminar in New Zealand in July and each vendor gets ten minutes to speak.

So I’ve then said to each vendor, I don’t want you guys to get up. It’s an educational session. I don’t want you to get up and tell you how bloody great you are. Why don’t you focus on ROI or benefits or testimonials?

People want to I spend all my time reference checking. So I’m now looking at, okay, you’re speed x. Tell me what where’s the ROI? What were the issues?

You know? Have you experienced the growth in certain areas? Because my owners are only it comes to investing in technology, Tig, will the technology increase revenue or decrease costs? And if it doesn’t meet those criteria, I don’t wanna know about it.

So the old days in the past where people invested in technology for the gee whiz factor, gone.

You know, I had so many salesmen coming and talking to me all the time, and all I wanna know is, okay, you’ve got a shiny new piece of software, but how does it fit into the existing tech stack?

Now one of the questions you asked me, which was pretty interesting, and we won’t mention the name, but fascinating, CitizenM in its, what, say, sixteen year history, maybe longer, is on its fourth MS. Anyway, so all I’m saying is is that a few years ago, the CTO of ACCOL, who’s now not there, put out a paper saying they were identifying eight PMSs around the world that ACL could be looking at as preferred vendors.

In the end, that same gentleman within eighteen months decided to scrap all the others and stick with one vendor.

Why? Because they put incredible demands on those vendors, those others, and they weren’t up to the task. Didn’t deliver, weren’t able to meet the requirements of said ACCOR in the time frame, and at the end of the day, they decided to go for the big fish who has greater press puts a presence around the world than any other vendor. And, also, that particular vendor came along with a very, very, very competitive price to win ACOR’s business. Six thousand five hundred hotels is not bad.

I don’t know No. It’s not. I don’t know what the SaaS revenue is, but when the exercise is finished, and hopefully by the end of this year, nearly all of their hotels will be on in the cloud.

Sebastien Leitner

You said that the reception of front desk will disappear and will be replaced or depending on the star rating, you know, sooner or later. What else will disappear? How about hotel keys?

Is that something that will stick around?

Ted Horner

No. No. Look, plastic keys, whatever you want, they’re gone. They’re Look.

Sebastien Leitner

They’re gone?

Ted Horner

At the end of the day, is everybody look, it’s really interesting because I’m, you know, I’m I spend a lot of time. I’m a pleasure traveler. You know? You’re familiar with the word of pleasure traveler is? A man that combines Yeah. And leisure. So when I’m on the list, I was in Africa for six weeks last year on safari.

Now here’s the interesting key. Right? Old people, baby boomers, all had a mobile phone.

Why do they have a mobile phone?

Essentially, to communicate with their grandchildren.

FaceTime, messenger, upload, download photographs.

Now, so now if people of the age of baby boomers and others have their phone tethered to them, why wouldn’t I want to have everything wouldn’t it be fantastic? And we’re not there yet if I could walk into a room and control everything in a room on my mobile phone.

Tablets are disappearing in hotels because, you know, apart from the fact that they age quickly and the replacement cost is huge. So now we’ve moved to web based apps. Once again, COVID brought QR codes to the to the point where they forced were were forced on us, but now people accept them. Whether you like them or not is another matter. So every restaurant I go to in Sydney now has got a QR code on the table. Maybe I still prefer to get personal service, but if I don’t get the personal service, then I’m rooting for my phone to order on my mobile phone. So the answer to your question is, what is also, I mean, is there a need for a guest room phone?

Because the other thing is, which has revolutionized mobile phones, is WhatsApp. Now every hotel has decent WiFi in their rooms now, so why do I need a dust collector?

Now, duty of care, all that sort of stuff, I mean, yeah, okay. In Australia, I don’t know what the rule of America, Recandre, is. It is not a legal requirement to have a phone in a room in Australia.

Bob?

Sebastien Leitner

I think in some states you have to have a communication, device that allows you to, you know, evacuate and contact hotel guests.

Ted Horner

Well, you By the way, you can I don’t know if you know that?

I understand that. But you can use that via if you’ve got an IPTV system, you can actually turn all the TVs on, deliver start delivering messages either through then.

But there is there are a lot of hotels now in Australia that don’t particularly at the low end, don’t have phones.

So because I think you know, more and more now, where we were you know, when the other question was, we got down few years ago, we would download we would foisted onto lots of apps.

So now we’ve moved past that to, you know, web based stuff. Right? So imagine having a loyalty solution with whatever vendor, whatever hotel chain you are, and they’ve coordinated it, and we can do it a lot easier now where you can turn the air conditioning on, turn the TV, open the curtains, do it all in the palm of your hand. Not go to a tablet by the bedside or flick or turn the lights and have to go around, you know, find the master switch and all the other switches.

Now we’re not quite there yet. We’re getting we’re getting closer to it. So I see, you know, more and more, you know, loyalty being also I mean, I I’m going I’m a platinum with Qantas, I’m big on loyalty. Right?

But that’s because I’m a baby birther for god’s sake. And you know? But but the point at the end of the day is is, you know, everybody now is using their mobile phone. You’ve only got every time you I mean, you get on a train and I I went to the sea today to take out climb out to lunch.

And on the every single person on the train, we’ve got a new underground system called the Metro, which is driverless trains that go at a hundred kilometres an hour underground. I can get into the city in twenty minutes.

Here I am at three thirty today walking on the train, and I’m looking up and down. There’s not a single person, no matter what they ride, not a single person on that train not using their mobile phone.

So the bottom is, don’t forget, technology is a byproduct of what consumers want.

Yeah. And we’ve still been slowly embraced consumer demand for technology, in my opinion.

Sebastien Leitner

I’m still the one that picks up a plastic key at the hotel reception because my phone dies too quickly or I’m worried that I won’t be able to access my hotel room.

Ted Horner

Well, which if you’ve, if you’ve looked at checked that Apple Wallet, you can open the door even if it’s dead.

Sebastien Leitner

Yeah. Do that? That’s fair.

Ted Horner

That’s fair. You saw that’s habit. I mean, don’t forget. I mean, I remember going to a hotel in London years ago.

It was a Marriott hotel. We won’t say which one. Three times, you know, because back then, we had I don’t know if you’ve been around, but we had low cal and high cal cards, mag stripe cards. And if you put the video in your mobile phone, it would demagnetize them.

Sebastien Leitner

But It was gone. Yep.

Ted Horner

When you checked in, nobody ever told you don’t put the your card, the MagStripe card, the ending would be the phone. And I showed three times, and and, you know, and I that was a big hotel, a walk all way, and you can imagine that late at night how pissed off I was when I had to come back. The third time, I would not leave the reception desk because they kept cutting a new card. I said, I’m not I need someone to come up with the master key and open my door.

I had to wait a while, but, obviously, they act accessed acquiesced to my request. But, yes, I could understand. I mean, now at least RFID cards, which is what you you’re talking about, don’t have any electromagnetic board. Not I don’t believe they do now.

But I personally think well, actually, what’s happening now, a lot of hotels you’ve been to many hotels that got bamboo cards, door look cards, sustainability, whatever. So But I personally think that I’m looking, and I’ve been watching for a long time. Like, god, it must have been been original mobile, you know, door lock stuff and everything has been around for a long time. But the problem is that usage rates are still being poor because everyone has an Apple Wallet and everyone’s familiar with it.

I have my credit card details. I have everything in all embedded in my Apple Wallet, all my tickets. Everything is, you know, I’ve got I use an app called Trip dot that I’ve got everything, every detail of my trip, on my phone. So it’s my I do carry hard copy in case I lose my phone or it gets stolen or it dies on me, which sometimes can happen, but that’s only the backup.

But all I’m saying at the end of the day is I think the reality is that once people then can do what they need to do on a mobile phone and can bypass the front desk, there’ll always be people, right, who want who’ll be prepared to stand the queue and wait.

Right? And, of course, the other thing people are saying now, oh, well, but if you don’t get the personal touch, you don’t get the upsell. No. No.

There’s all these new upsell technology that you could be upsell very easily on a mobile phone, right?

So I think probably the great challenge is what new technology is coming. Now let’s talk about because I think we talked about what’s the other area that’s going revolutionary? Robots.

Now already now, robots now are now replacing because here’s the problem in America here. Nobody wants to do housemate, housekeeping.

It’s a it’s a dull, ****** job. Now imagine having a commercial grade vacuum cleaner that can vacuum the room and save five to seven minutes. Well, you’ve got the big beast that are vacuum cleaners, that are vacuum cleaning corridors and function space and lobbies, right? They’re now doing a job, right, speeding up the tasks, right, or eliminating those needs. Then you know, once again you’ve got, as we mentioned earlier, agentic agents or others, you know, when you ring a hotel that courier an account, can be talking to an agent, not an AI agent, not an individual.

The challenge is, and this is the great dilemma. It’s simply termed high touch versus high-tech.

How can you still roll out technology but still keep the, as I call it, the essence of hospitality is a level of some level of personal service.

And some people are doing it well, others are doing it pretty poorly now. You know? But what we’re seeing is that the elimination of Front Desk is happening a lot at the low end because of people’s expectations are it’s like when you go to a a restaurant. If you go to a very expensive restaurant, you expect the food to be brilliant.

Sometimes that doesn’t happen. Or you have the reverse. See, what I hope happens in the future is if how can, and I think you asked this question in an indirect way, guests want to have their expectations exceeded, not met anymore. And when you exceed a guest’s expectation, that’s when people are happy to write lovely reviews.

The example I can give you, which was one given to me by the conference last year, was a guest at this particular hotel was a regular, and he loved Diet Coke.

So on a visit a year ago to the same hotel, someone decided, because they were obviously collecting some data or CRM and stuff, They filled his mini bar with Diet Cokes.

And he absolutely was blown away and wrote rave reviews about, wow, here’s someone who cares, who knows knows a bit about me and is trying to look after my interests. Right? So, you know, that to me is I that’s my great hope that what AI will do is will provide, you know, when I come to the bar, Ted, would you like your gin and tonic with, elderberry flavored tonic water?

I’ll use that as an example. Or, Ted, hey. Listen. You know, hey. Did you know we had a golf course? We know you got a handicap of sixteen.

Would you, like, would you be interested in having a round of golf with if we paired you with three other people on similar handicaps? I’m a golfer, by the way, so that would Yeah. Would be blown away if that happened. It hasn’t happened. I’m not sure it’s gonna happen in my lifetime, but wow would be well, if that ever happened, I would be shouting for the rooftop telling everyone, wow. Look at this you all about Ted’s golf situation.

So that gets to the point of how do we generate revenue outside the room because that’s the future. Right?

Sebastien Leitner

And that’s something that And it’s a Yeah.

Ted Horner

Of course it is. But the other thing now is the PMS is no longer the center of the universe. And that’s for some PMS vendors, they’re struggling with that concept.

It’s all about now companies building c d CRMs and CDPs. Right? And then aggregating data all about transaction. This is where AI is coming to the fore where I can use Chachi, Petit or Claude or Perplexity or Gemini.

I mean, there’s a leap of them. Right? Or even Elon Elon Musk, Rock, which I’ve just downloaded because I’ve got a Tesla. I’ve got rock in my car now.

So I’m just playing around with it. What am I gonna be talking to my car and telling me, you know, where’s the best Thai restaurant? And I’m in you know? But the port at the end the day is that’s where I see I mean, I’ll I’ll use another example.

Do you have, subscribed to, Amazon or Netflix? Amazon Prime?

Sure. Now every single week, I get an email from Netflix recommending films I should watch.

Now a couple of years ago, Netflix hired JD Power or someone to do research. Would you be surprised to know that eighty five percent of the recommendations that Netflix make to their subscribers, they follow? Because they’re looking at the history of what Ted’s watched and suggesting, Like, my wife is into rom coms. Right?

The the only thing with her is there are hundreds and hundreds of rom coms, so she was never gonna run out of rom coms to what she retired four years ago. She got more time in her hands. But but imagine that they’ve made that investment. Now we’ve not yet made that investment because we aren’t we’re not prepared to spend the money.

Right? So that then get to the point about maybe it may be some hotel chains or enlightened as they may be who invest a lot more money, who then can master what we call the three sixty degree view, hyper personalization, that are actually using AI to get a lot more knowledge of Ted Horner and then customizing Office instead of the free biz the free night or you can buy bonus points or so, which is so bloody generic. You know, everyone’s pissed off about it now. Right?

So that’s where when my friend Flor Plieker talked about this, he was starting to talk about that some hotel chains, enlightened ones, maybe small independents, you know, maybe started to grow at the expense of the big boys.

Right? Because the problem is now, hotel chains now are not owners of assets. They operate. So what do they how do they drive more revenue?

It’s called the clip technology.

I’m gonna charge you a fee for this, for that, everything else. And in the end, you look at the total cost of ownership and you look at all these transactional fees. Right? And you think, oh my god. They it’s incremental. It’s a bit like the same concept that now people say, Ted, sign up, sign up for x, and you get a thirty day free trial.

But the problem is you have to give your credit card before you sign up for free trial, and guess what happens?

Don’t put anything. They just accept a charge within Amazon’s and they’re ten or twelve ten bucks because people don’t get around to people take a long time to get around to cancel.

Same concept. So what hotels are doing now is charging all sorts of fees, transaction fees, marketing fees, IT fees, etcetera. It’s starting to, I believe, leading to some owners of hotels being unhappy with their operators.

Sebastien Leitner

I want to go back to AI agent because you identified it at the beginning of our program as solution to reduce dependencies on the OTAs, but also reduce potentially dependencies, and compete with the big marketing hotel companies. But before we go there, I want to do a quick fire round where I’m throwing a few questions at you, and you just say a short, sneaky answer.

We’re running out of time here, and we probably Yeah. This bloody thing. Otherwise, it’s gonna be boring.

Alright. Hotels use twenty systems today in average. How many systems will they use in five years?

Ted Horner

I’d like to think maybe five.

Sebastien Leitner

Okay. Which systems will survive?

Ted Horner

Well, what you’re seeing is a what we call I call sorry. Scope creep by PMS vendors into all sorts of other areas through housekeeping, service requests, etcetera, etcetera, etcetera.

Sebastien Leitner

Okay. But five systems will remain?

Ted Horner

Yes.

Sebastien Leitner

Okay. What hotel tech could you never live without?

Ted Horner

That’s an interesting question. Probably, now, decent cellular and WiFi coverage and at high speed.

I mean, quality WiFi, not **** stuff that we still see to have to put up with at times. Right? It’s because No. Wi Fi now is like water.

Yeah. It’s a service. But still, push out pretty ordinary. If I now wanna do screen sharing and all the other things, I need to make sure that the quality and bandwidth in a hotel I know it’s pretty basic, but it there are still lots of hotels that aren’t willing to spend the money to provide a premium first class service in that component. So that’s the one thing I can’t live without.

Sebastien Leitner

WiFi. Okay. What’s the most overhyped hospitality tech trend right now?

Ted Horner

I hate to say this, but at the moment, because we’re still in the phase, I still think the most hyped up thing at the moment is artificial intelligence, to be quite frank. Because I still, everyone, I know I talk a lot about what it can do, but yet when I talk to people about what impact it’s had, it’s too early to say. There’s a lot of people waiting on the sidelines for some big guys to do things. And I’m looking at what Marriott’s doing and they’re doing some interesting areas, but I haven’t seen yet, maybe because I’m on the other side of the world, something absolutely knocked me dead definitively in an ROI case.

And I referred earlier to the four thousand CEOs which were surveyed last year right now, which is interesting considering the fact that we in the hotel industry are nowhere near as far down the track as other industries, where I think there is strong ROI because that’s why a lot of these companies are getting rid of staff, because they can see what AI is doing, and it’s already delivering. I’m not sure we’re there yet in hotels yet.

Sebastien Leitner

Okay. What’s one piece of hotel technology that you would like to see gone today?

Ted Horner

Gee, that’s an interesting question. Can I put it a different way?

Sebastien Leitner

Sure.

Ted Horner

Can’t we do something about making the check-in process much more simple than it has been? Because it’s still convoluted, and it hasn’t really changed a lot in the last thirty years.

Sebastien Leitner

Okay. What is one uncomfortable truth hotel owners need to accept today about technology?

Ted Horner

The most uncomfortable truth for hotel owners too is that you guys need to spend a lot more money on technology. That’s the uncomfortable truth.

Sebastien Leitner

Let’s go to the AI agent. Who will win the race? Google, an OTA, or a hotel company when it comes to agentic booking?

Ted Horner

Well, as you know, there’s quite a number, like there’s Microsoft Copilot, there’s Perplexity. It’s hard to predict, but let’s just say that Google’s spending an awful lot of money trying to do leverage and try to replace OTAs because probably Google is one company that has the muscle and the financial wherewithal to go run head to head with OTAs. I can’t see any owners or hotels, from an investment perspective because, going head to head with the two OTAs because they’re spending lots of money too. They’re not idly standing by and watching AI take their business. Right? So they’re throwing in, lots of money. So probably you’d have to think probably because Google, I would suggest, is probably gonna come out at the end, with, serious cost effective alternatives and provide better opportunities for hotels in the long run.

Sebastien Leitner

So Google will win the race?

Ted Horner

Oh, well, that’s my prediction. Yes. But, hey, you know, it’s a bit like, you know, all those years ago when Bill Gates said sixty four k will be enough if you could remove it back far. Right? So you know, I’m not the world’s best at predicting where technology is going because, you know, it can take, I mean, the interesting thing is that’s happening is that there’s a new AI, there’s AI applications coming out every single day. In fact, when I was at the hospitality show last year, someone had done a bit of a review of AI applications or things that were coming towards hospitality and they said there was over three hundred.

Even then, you know, there’s so many vendors. There’s also what you’ve got now is all of AI companies looking at hospitality and see if they can make some inroads, right? And that complicates matters because their commitment to hospitality is not as good. We have a lot of people who try to run it, have a run at hospitality and find that it’s a cheapskate industry and it’s a rush to the bottom sometimes. And eventually they pull up stakes and say, let’s go back to government and education and others where we can make a lot more money.

Sebastien Leitner

Yeah.

So, you started with this, and I want to go back to this because I think it’s super important.

You started saying that hotel owners have a profit margin of five percent. How do we get back to fifteen percent? Or how do we get to a level that is sustainable?

What needs to happen?

Ted Horner

Well, three things. One is we need to decrease the reliance on OTAs, because I don’t see OTAs anytime soon dropping their commissions, right? Plus, of course, you know, so hotels need to invest in technology to as a vehicle to drive people to their websites to do the booking as opposed to, you know, competing with head to head with OTAs. And that if you can look, at the end of the day, if you can, one of my clients is heavily invested in AI and what they’re doing is spending a lot of time with Claude and other things.

What they’ve realised is that they really don’t want OTA business. Why? Because OTA business is very price conscious. My client’s aim is I want to go after and look after the guests who spend a lot of money.

They’re the people I should be investing more time and energy in rather than investing in trying to upsell OTAs, because a lot of the OTAs are very price conscious.

We’re going to see a shift, and that’s where another element is where you can see potentially, all right, where that will improve the profitability of the hotel.

So I’ll give you another example.

There’s a hotel new, in Australia, we’ve traditionally had a two tier structure, an owner and an operator. We’re now moving to white label third parties. One group is growing rapidly here, replaced the operator, became the franchisee and they took over the management of the hotel.

In one year, they improved the bottom line of the owner by fifteen percent.

So what does that tell you? That in the old days, that’s where I think to some extent big international brands is gonna start losing it because you know, they’re more just looking after themselves than those of the owner.

And if there are alternatives where people are taking a closer look at the cost side of things and can improve a bottom line of that magnitude, believe that that’s probably part of, but also look, the simple truth of the matter is a lot of the owners of hotels see hotels as an asset of technology as not, like for example, if you’re gonna buy or sell a hotel, right? So what you see, you buy a hotel, you spend a lot of money on it, and with the intention to sell maybe within five years.

How do you measure when you sell an asset that you’ve invested millions of dollars in technology? That’s still the problem, right?

So at the moment, we still have an educational issue with owners of hotels, sometimes large financial institutions and stuff, realizing that an integral part of improving the profitability of hotels is that they need to lift their investment in technology beyond what is three to four percent now. And that’s the great challenge for our industry, right? And that’s part of the reason why I think the vendors, right, no names, no pectorals, I think still have a lot to learn to build a much more robust, succinct, and concise ROI to owners.

Sebastien Leitner

Because and is your and and I don’t wanna put words into your mouth. Yep. But is your argument that, you know, right now it’s maybe three or four percent of your total expense or, you know, cost technology, but you’re spending thirty percent on labor, for instance, or you’re spending, you know, that, or twenty percent on commissions for OTAs, that this is an unhealthy balance?

Ted Horner

Well, think the problem at the moment is, and you’ve mentioned that in one of the questions, was, you know, we have a labor shortage. When COVID came along in America, millions of people left the industry not to return. Now part of the reason they did that is because particularly in America, hospitality workers are very, very poorly paid. And that is then underwritten by the tip process where they can make more money. Right? But it’s still long hours, you know, except so part of the problem is our industry needs to become more flexible when they want to recruit people that have their own needs and not work the traditional eight hours, which is the three shifts, which is seven to to three, three to eleven, eleven to seven o’clock in the morning. That’s one of the reasons why front desks are staffing up because middle of these, you probably you definitely can get rid of that third shift.

So getting back to it, that’s the issue. That’s the con is one of the reasons why we need to invest in technology is to make up the shortfall in staff who have left the industry never to return.

Sebastien Leitner

Okay.

Ted Horner

Yes.

Sebastien Leitner

On that bombshell? Yep.

I would like to thank you for joining the program today. This has been a very active conversation.

I probably could have gone on for another hour or I would have liked to offer you a beer, at least virtually over the Ted, it was a pleasure talking to you.

Ted Horner

Thank you very much.

Sebastien Leitner

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