Big Interview: Amadeus’ hospitality tech workhorse is ‘tip of the iceberg’

Francisco (Paco) Pérez-Lozao Rüter told Lee Hayhurst about the GDS’s vision for its role in a fragmented sector

Amadeus president of hospitality Francisco (Paco) Pérez-Lozao Rüter says the tech firm wants to help hoteliers to become more sophisticated retailers just as it’s supporting airlines with the transition to New Distribution Capability 

European travel technology giant Amadeus says only the tip if the iceberg of its efforts to modernise hospitality sector technology is currently visible.

The firm has ambitions to become as embedded in hospitality as it is in aviation where its systems effectively run some of the world’s leading carriers like British Airways.

The recent deal announced with Marriott to use it is ACRS (Amadeus Central Reservation System), alongside rival IHG gives it a “critical mass” according to Paco Pérez-Lozao Rüter.

Amadeus’s president of hospitality and executive committee member was in London last week where Travolution caught up with him for an update on the firm’s progress.

Rüter says the COVID pandemic has accelerated the need for change and particularly for hotel operators to evolve into more customised, personalised and sophisticated retailers.

“We are creating a very high-performance workhorse for the industry which is a cloud-based active platform, fully real-time, running a parallel operation so it never goes down.

“This is a platform which has operational performance much higher than other systems. Originally it was in private cloud but the idea is to move it to Azure as part of our Microsoft partnership.”

The technology has been designed to be attribute-based, the key to unlocking how hotels can start to modernise the way they create offers and retail to customers, said Rüter.

He said the more to attributes and away from limited traditionally defined GDS room types is analogous with the transition towards New Distribution Capability in the aviation sector.

It will allow hotel brands to create bundles of customised in-room and non-room offers and even optimise non-room revenues from customers who are not staying in the property.

Ultimately it could lead to hotels being able to offer room-specific offers, but this is part of the iceberg that remains underwater, for now.

“Today you look at an OTA and you can see four different room types with inventory allocated in a bucket. With attributes you’ll have one bucket with lots of different attributes.

“It will be easier to adapt to the demand with a big buckets with many attributes. You can match inventory to demand and there is uplift in revenue plus an uplift in cross-selling non-room attributes.

“The vision, eventually, is to do hyper-personalisation with a mix of packaged attribute types depending on the traveller, like a family with kids. That is a tricky problem, but we need to get there, the industry is forcing us in that direction.”

Rüter added: “We want to help the industry move away from on-premises Property Management Systems (PMS) into the cloud, but having an integrated system in the CRS.

“The industry was built on having a PMA as a standalone client system at property level to run their business with all the problems associated with that like cybercrime.

“Over time, as enterprises started to become stronger and stronger they created their own enterprise layer of solutions like loyalty programmes, central inventory and revenue management, and channel connectivity.

“The PMS also connected to the channels and to payments systems. But the balance, over time, moved to the enterprise-centric view of the world.

“The problem today is the two concepts cohabitate and this creates data inconsistencies so there’s a need for synchronisation. There’s a disconnect between the PMS and the central CRS which creates unnecessary friction in the system and a lot of overlap in terms of data.

“With our two big customers, IHG and Marriott, we have a critical mass which actually allows us to build on our investment for the future.

“We have been working on this and investing heavily over the last 12 months. It’s early days but what we see surfacing now is only the top if the iceberg of this transformation.

“Some of this has been accelerated by COVID. What we have seen is that evidently travel wants to be more individualised, more experiential. We need to be able to deal with the guest in a much more customised way.”

Amadeus’s aviation clients are benefitting from its investment in Artificial Intelligence in its Altea passenger service suite which relies on accessing “deep data pockets”.

The vision to consolidate hotel tech and data around a single platform comes after Amadeus’s $1.52 billion acquisition of Travelclick and its iHotelier CRS in 2018.

“There is a strong desire for us to provide an end-to-end platform with service optimisation, maintenance and guest servicing. Hotels want something more comprehensive,” Rüter says.

“This is where we are positioning iHotelier providing core capabilities and the ability to stitch together other systems. There is a convergence here. This is a journey and this is what our partners like about us.

“We are heavily embedded in this. We did not stop investing during COVID. They want a reliable and natural partner and they like our vision when we share it.

“Enterprise customers like our capability of doing heavy complex migrations at scale and we like to look at long-term investment and stick to that.

“We work with customers to understand how they see things. It has to be a partnership. If we want this thing to stay relevant we need to be very close to them and work with them in realising what the future is.”

Rüter believes the fragmented nature of the hospitality sector provides an opportunity for a major technology player like Amadeus to have a significant impact.

And he said COVID has left many travel businesses more likely to partner with third party technology platforms as amid more scarce IT budgets and resources.

“Hospitality is a very fragmented industry in many, many ways, especially when you talk about IT and distribution.

“The big chains are strong in the US, but the more you move away from America the more fragmented the market is.

“We believe there’s an opportunity for us to help the industry evolve with investment at scale.

“If travel and the travel experience needs to become, over time, more real time it’s more a game of fast tech evolution, more of an ecosystem play.

“It’s a game of digitisation, of customisation to the traveller. These are fundamental problems to solve that if we just do it a sub-scale is going to be very tricky.”