Steve Rowley, chairman and CEO of the IHS Group, remembers the coin game he used to play as a child – where you have a pile of coins lined up on the edge and all you have to do is throw one more coin in there and everything tips over.

Well, that’s where he believes the hospitality industry is today – at the edge of a major transformation driven by technology.

“We are on the brink of something going on – everyone’s talking about a consolidation on the supply side and I feel the coins are about to tip,” said Rowley, an experienced software executive with more than 20 years of technical, operational and sales experience in a variety of sectors.

The US$30 million investment into Australia-based hotel booking company SiteMinder by Palo Alto-based Technology Crossover Ventures in January; Vista Equity Partners’ acquisition of US-based Lanyon, provider of SaaS-based software solutions for the hospitality industry and, of course, the acquisition of IHS by Battery Ventures last July.

“Serious investors are putting money into the industry in a plan and determined way,” said Rowley, who came into IHS via the Battery Ventures’ acquisition. Battery’s relevant experience in travel includes investments in ITA Software (acquired by Google), Duetto Research (US), GoEuro (Berlin, Germany), HotelTonight (US), and Sabre (US).

“Investors now see opportunities in the industry,” and he reassures, “We are builders, not sharks.”

Part of Rowley’s role is to scout for investment opportunities that would add value to the IHS Group which comprises Worldhotels,Trust International, Nexus World Services and IFH Institute for Hospitality Management.

One of the first things Rowley did was to sell off IFH. “At Worldhotels in particular, we want to offer all the services to allow them to be successful. Do we think training and mystery shopping is part of that? Yes, but if we cannot offer the very best of breed, then we need to partner with someone who can offer those services.”

It sold IFH to The Performance Solution, a company that offers corporate culture change programmes to clients such as British Airways, and signed an agreement to integrate their offering into Worldhotels.

Expansion in Asia and US through organic growth and acquisitions

One of his key priorities is to achieve a better geographic balance for the group. “We are strong in Europe, we have a growing presence in Asia and could do more but we are not big in the US at all. ”

As such, he will prioritise growth in Asia and the US to enable IHS to “address the global opportunity”.

“Expect us to invest more in those territories. We will invest in the existing business and acquisitions will also play a role. Hoteliers don’t change that quickly so we need an acquisition component to drive growth.

“Hospitality, compared to other industries I’ve been involved in, is behind in recognising the importance of technology and the role it can play in their business, hence the slow adoption, and I believe this is linked to financial analysis of the business.”

For instance, he said there is a lack of understanding of how managing the different channels can be crucial to a hotel’s financial success. “Clearly different channels have different costs and the variation is huge – from 25% via OTA to 1-2% through your own website – but I don’t see that reflected in the way it should be.

“You’d expect hoteliers to be more sophisticated about financial models and how you attract and retain customers.”

He understands the reason behind that though especially for smaller groups and independent hotels. “Being a hotelier is a 24×7 job and they are passionate about operations and looking after guests – when they lie in the bath, they think about that and when I lie in the bath, I think financial models.”

He also appreciates it’s a complicated world outside the doors of the hotel and this is why IHS exists.

“There’s a bigger role for us to play in having a more integrated distribution offering which allows hoteliers to make business decisions. We need to make it easy for them to use and we need to deal with the complexity.

“If I were running a hotel today, the chances of me making the right decision are slim because the information presented doesn’t allow that.”

Reducing complexity for customers and brand-building

As such, what he sees missing is a fully integrated channel management solution into the Trust offering and this, it will do via a partnership or acquisition. He also sees an opportunity for Trust to expand its client base beyond large and medium hotel chains. “It is individual hotels who need us more.”

As for Worldhotels, he said, “I’ve been amazed by the emotional and rational connection that hoteliers have with us. The emotional is the community. The rational is, the services make a difference to successful distribution. I learnt that one service which is most highly valued is the demand sales force promoting large corporate accounts – 90 sales people promoting 435 properties.

“Personal sales force on top of technology, that’s Worldhotel’s strength.”

With this, he cannot imagine Worldhotels scaling beyond 500 hotels. “When you get to that kind of size, you need to spawn a new brand.”

Another task at hand is to promote Worldhotels as a consumer brand. With the way technology was moving, Rowley said consumers need to become more attached to brand. A mobile booking engine for example would allow the brand to play more of a role in managing the customer experience, he said.

It is also launching the Peak Points loyalty scheme – no plastic card, all online – in what Rowley calls “another step in the direction of promoting the brand and customer loyalty”.

Lessons from other industries around social media and payments

Rowley sees lessons he can take from other businesses he has run.

“My last business supplied systems to large retailers and we introduced a real time promotions engine around social media. It allowed restaurant chains in real time to look at inventory and to see if, for example, in the Berlin outlet, there was too much cheese cake left in which case you could run a promotion and get ride of the cake with free coffee.

“It allowed people to pick up virtual vouchers on their mobile and redeem them and restaurants can watch these vouchers being accessed and redeemed in real time. And when you realise you’re out of cheese cake, you turn off the promotion.

“It allows you to drive demand according to your inventory and this is especially relevant today with instant messaging apps and communicating with Gen Y and Z consumers.”

Rowley, who also sits on the board of a payments company, said the concept of payments has also changed with technology. “In the past, paying for something has generally been a process, very little to do with the thing you are buying. Now it’s changing, it’s an integrated part of what you are buying.”

He cites the example of Paypoint which offers a mobile car parking system. “It encourages you to pay via mobile and alerts you via text when your time is up.”

Said Rowley, “The question for us is, how can we better integrate every aspect of the customer experience – payment in hotels is a pain. There are lessons to be learned from what’s happening in social media and mobile payments and some real points that can be solved with technology.”

Sharing is powerful

Rowley is also excited about the sharing economy. “There are things I want to do in my life that I can’t afford to do – however in a sharing world, I can. For example, I like to sail, ski and stay in nice places but I can’t afford to buy a big boat or an expensive ski chalet but I have a share in a big boat.

“An expensive asset that has a lot of idle time – it’s a great opportunity for the sharing model.”

He’s also stayed in a few Airbnb places and find the experience “similar in a bizarre way” to Worldhotels. “It’s always authentic, everyone is different and these days, people find that much more appealing. I often pay more for an Airbnb place than I do for a hotel – and that’s because I wanted a different experience, not because I wanted to save money.”

He admits he feels like a kid who’s come into a new playground. “It’s a fun industry. Their job is hospitality so people are pleasant to be with, it’s a more charismatic industry.”

So I had to ask, are you going to spoil the fun? “No, I hope you will rub off on me than the other way round.”

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