In January 2015, the USALI 11th edition became effective and a new schedule was born: Schedule 6 — Information and Telecommunications Systems. With the institution of a new schedule, many questions are asked, including:
- How was the transition to the new reporting structure?
- How many hotels are reporting with the new standards?
- What new metrics will be measured?
Researchers from the Conrad N. Hilton College of Hotel and Restaurant Management at the University of Houston embarked on a research project, partially funded by Hospitality Financial and Technology Professionals (HFTP), to answer these questions and much more.
CBRE Hotels’ Americas Research was kind enough to provide 2015 and 2016 information technology (IT) expense data they collected from hotels located in the United States (2015: 5,193 hotels and 2016: 5,640). The hotels in the samples represented all facets of the lodging industry with the greatest concentration from the upscale chain scale, luxury property type and consisting of less than 250 rooms.
Detailed information included in the USALI Information and Telecommunications Schedule is broken out and classified into four main areas: Labor costs and related expenses; cost of services; systems expenses; and other expenses.
From the data provided, the first metric calculated was total IT expenses as a percentage of total revenue. In 2015, total IT expenses as a percentage of revenue was 1.21 percent for all properties reporting. Said another way — for every dollar in revenue 1.21 cents or $0.012 was spent on IT operating expenses. In 2016, this number increased to 1.38 percent or 1.38 cents for every dollar in revenue.
As the CBRE Hotels’ Americas Research data were analyzed, what surfaced was eight line items, which were being reported with regularity from the hotels in the databases across the two reporting years of 2015 and 2016. When looking at the data, the following were the IT items of interest presented as a percentage of total revenue and percentage change. The line item with the most significant change was total other expenses, with an increase of nearly 112 percent.
The analysis was broken out further by total IT expenses to total revenue by daily rooms available, chain scale and property type. The following provides a glimpse at IT expenses as analyzed by daily rooms available. For both 2015 and 2016, properties with between 500 and 1,000 rooms spent more on IT and telecommunication costs.
When analyzed by chain scale, luxury properties spent the greatest percentage of total revenues on IT and telecommunications expenses for both years. All chain scales experienced increases in IT expenses in 2016, except economy properties. These properties declined from 1.45 percent in 2015 to 1.30 percent in 2016.
The final glance at the data is by property type. Conference centers and convention hotels spent the most on IT expenses as a percentage of total revenue; and, as evidenced in the chart, conference centers experienced the greatest increase form 1.28 percent to 1.89 percent.
These are just a few of the observations made in regards to the data provided for evaluation by CBRE Hotels’ Americas Research. View the full report by the researchers at the University of Houston discussing IT expenses and the implementation of the Information and Telecommunications Schedule. This report is available exclusively to HFTP members on HFTP News.
Acknowledgement: We thank Robert Mandelbaum and CBRE Hotels’ Americas Research for supplying the 2015 and 2016 IT expense data set for this project.
Tanya Venegas, MBA, MHM, CHIA is the executive director at the HFTP Americas Research Center at the Conrad N. Hilton College of Hotel and Restaurant Management at the University of Houston. Contact Tanya via email at firstname.lastname@example.org or via phone at +1 (713) 743-1839.