Role of Cloud Computing in Hospitality Industry
Tags: cloudcomputing, cloudnative, hospitality, cloudpractitioner
Published: 2023-07-26 13:19:46

Hospitality has been a part of human culture for millennia. With the evolution of industries and the addition of newer technologies, the hospitality industry has evolved as well, and the services which were once considered exceptional have become the basic expectation of customers. Today, services like WiFi, TV, AC, and Parking Space are expected by every customer booking a hotel. However, 20 years ago, many of these were a delight. Thus, for anyone involved in the industry who wants to survive and thrive in the longer run, it is crucial to upgrade continuously and integrate emerging technologies. Today, hospitality technology amalgamates technologies like Artificial Intelligence, Augmented Reality, Analytics, Cloud Computing etc., to address the changing customer demands and improve their overall experience.

## Classification of Hospitality Industry:
The hospitality industry can be broadly classified into the following three sectors:

**Accommodation** – The Accommodation sector consists of Hotels, Motels, Hostels, and Resorts which essentially provide lodging facilities to both local and non-local guests.,

**Food and Beverages** – The food and beverages sector includes Restaurants, Catering services, Bars, and Cafes, primarily offering a satisfying dining experience consistent with the budgetary constraints of its customers.

**Travel and Tourism** – The Travel and Tourism sector includes Vehicle rental services, Cruises, and Casinos, targeting customers away from home seeking a memorable vacation.

All three sectors run parallel to one another and often complement one another by offering a variety of services to the customer in geography.

Managing hospitality services often involves complex processes, and even a minor human error may lead to an underutilized employee and a dissatisfied customer, eventually impacting the balance sheet of the company. This is where technologies play a major role. Traditionally, in the hospitality sector, too, companies have IT infrastructure and dedicated teams which are responsible for handling functions like Reservations Management, Customer Management, Employee Scheduling, Marketing etc. However, with time, companies have begun streamlining their IT processes by opting for Cloud Computing in Hospitality Industry.

## Application of Cloud Computing in Hospitality Industry
According to Microsoft, Cloud computing is the on-demand delivery of computing resources like data storage, Analytics, and software over the Internet without actively engaging the user in their management. Cloud Computing saves the effort of building up your own physical IT infrastructure and its management, brings scalability and saves costs as it is pay-per-use (you only pay when you use the service). It is different from outsourcing one’s IT as, here, the owner still has direct control over the data stored and processes running on the cloud. Cloud Computing services are provided by reliable IT giants like Amazon, Google, IBM, and Apple.

For multiple reasons, which include reducing costs, bringing scalability and automation to business operations, and providing seamless customer experience, major players in the hospitality industry have already integrated their applications onto cloud platforms. Therefore cloud computing in hospitality business can have several applications, including the following:

### Customer Management:
Customer Management services can be availed through a subscription to cloud services. These services are scalable, flexible, and easy to integrate into one’s business. Customer Management tools over the cloud also generate analytics related to customers’ data that can be easily accessed over the Internet. Because of a low, upfront cost, these become a good choice for small businesses that are unlikely to develop their own Customer Management environment. These also help in reducing the direct interaction of guests with employees. For example, if a customer wants to access the helpdesk module, they can access it using any device by connecting to the internet.

### Reservation Management:
Cloud Services are widely used to provide reservation services to end consumers over the Internet. These include online ticketing services, reservation of tables in restaurants, and advance booking of accommodation. The tools available on the cloud automate the management of appointment scheduling and allocation of services while forecasting approximate waiting time, confirming bookings, and providing information to consumers. With the rise of accommodation booking service providers like MakeMyTrip, Agoda, booking.com etc., online booking is now a universally accessible technology in hotels.

### Event Management:
The goal of any event management team is to plan and execute a flawless event. It involves dealing with people, including teams, clients, guests, and vendors and controlling things needed to make the event successful. Cloud services are useful in managing events as they assist in allocating responsibilities and improving coordination within and between teams while addressing business developmental goals. Using cloud computing, it becomes feasible to provide a unique interface to each stakeholder, mentioning their schedule, duties and responsibilities.

### Point of Sale Service:
Point of Sale is the place and time where a retail transaction takes place. Long queues and uncertain waiting times have historically been a problem when many customers choose to avail of a service at the same time. Shifting point-of-service transactions online and automating the billing process benefits cashiers and consumers alike. It reduces the burden of cashiers handling many customers and accurately approximates the waiting time. An excellent example of hospitality companies adopting POS service is the fast-food restaurant chain McDonald’s. It offers its customers rewards in the form of points that can be redeemed to get delicious dishes when they pay using a QR code.

## Benefits of using Cloud Computing in Hospitality Industry
According to a Consumer Research Study done by Oracle, 73% of customers prefer hotels that offer technological solutions and minimize contact with the staff and other guests. Using Cloud Computing services in the Hospitality industry is beneficial to both the user and the end customer, as it advances the services provided while being cost-effective at the same time. Today, several big players in the hospitality industry, including Marriott International, are adopting the asset-light Business model, and shifting to the cloud is a quintessential example of that.

### Reduced Software Costs:
Since cloud computing services are subscription based, where users pay per use while avoiding any maintenance costs, it helps customers save money when they choose cloud-native application development services. Many cloud service providers have ready-to-use, on-demand generic software available that can be availed through the Software as a Service (SaaS) Model. This type of software can also be customized to match the client’s specific needs through Platform as a Service (PaaS) Model. All this saves the developmental costs involved in building own virtual infrastructure. Finally, since multiple processes can be automated over the cloud, the cost involved in manual efforts is saved.

### Zero IT-Overheads with Zero Hardware Depreciation:
As with all physical machines, the IT infrastructure of any organization depreciates over time, binding Companies to spend capital on frequent upgrades and replacement of parts. Traditional IT infrastructure also requires spending on daily overheads. On the other hand, there are no depreciation costs associated with cloud computing. Moreover, it eliminates the overheads involved in day-to-day IT operations and thus helps reduce the total cost of ownership (TCO).

### Unhindered Operations and Security:
Various cloud services providers like Microsoft, IBM, and Google vouch for keeping the database of their clients safe from any external access while providing large amounts of storage service to multiple clients. Cloud services are adaptable as the core functions of the client can be maintained on the premises of the client at their discretion. When using cloud services, system failure during an unstable power supply is prevented, leading to unhindered operations conducted in a safe environment. The possibility of getting stuck with one vendor due to high switching costs can be avoided using Cloud native app development methodology.

### Instant Availability Anytime, Anywhere:
With the proliferation of affordable smart devices and access to high-speed internet, the services running over the cloud are provided at the fingertips of the end customer regardless of their location. The same is the case with the direct client. Uninterrupted quick access to the database and software over the cloud brings ease of working. Since the services are subscription based, the amount of storage subscribed can be increased as the business grows.

## Disadvantages of Cloud Computing in Hospitality Industry
Cloud computing is not immune to risks and downsides. It comes with an impact on the environment and risks associated with its adoption.

### Enormous Energy Consumption:
Setting up cloud infrastructure requires large Data Centers connected over Data Transmission Networks. To keep these Data centres operable 24*7 at suitable temperatures, a large amount of energy is needed. According to International Energy Agency, data centres and data transmission networks accounted for nearly 1% of energy-related greenhouse gas emissions. This is likely to increase manyfold as more and more industries adopt cloud computing.

### Risk of Failure:
Shifting the entire IT operations of an enterprise to the cloud brings a complete dependence on it, and failure of cloud services would mean a complete failure of the business involved. In the hospitality industry, where customer experience is paramount, this would lead to failure of services at each customer touch point, a nightmare for the industry.

### Unfair Advantage to Bigger Players:
According to Google/SOASTA research of 2017, the probability of bounce (visitor leaving the website without exploring other pages) increases by 32% when page loading time changes from 1 second to 3 seconds. Cloud Computing services are subscription based, where the quality of service and the storage allotted depends on the premium paid by the subscriber. Here, a big player running several branches across different locations would be able to pay a higher premium, while a smaller player would have to settle with the subscription plan that they can afford.

While the above are some of the disadvantages associated with the application of cloud computing in hospitality players can think of with regards to cloud computing, clearly, the pros outweigh the cons.

## Effective Strategy of integrating Cloud Computing in Hospitality Industry
Migrating enterprise workload to the cloud is called Cloud Migration. Shifting the software applications to the cloud can be done by the ‘Lift and Shift Software’ approach, where the original applications used on the physical infrastructure is shifted to a public or private cloud, saving costs. Unfortunately, this approach is not agile, requires massive maintenance, and needs to be refactored according to the changing business requirements. This leads us to the concept of Cloud Native application development, which is a modern approach to developing applications that are resilient, scalable, and flexible. It is used by giants like Netflix, Airbnb, Uber, and Spotify. In a cloud-native application architecture, the original applications are broken down into several services called Microservices, which are packaged into lightweight components called ‘Containers’ that help in running the Microservices in any environment. These microservices generally interact with each other through Application Program Interfaces (APIs). This results in applications running seamlessly in congruence with one another, and individual applications can be updated regularly without shutting down the framework. An example of a cloud-native development scenario would be an E-commerce website, where the customer’s Cart interacts with the packaging and shipping department, notifying them about the customer’s order details through a robotic process automation.

Customer satisfaction and delight are the most important parameters to assess the hospitality industry today. Customer experience can be improved by minimizing physical interactions and eliminating inconvenience. In a technologically advanced world, customer expectations surpass what traditional hospitality can provide, and cloud computing is the solution to effectively satisfying customer needs in a cost-effective, flexible, and scalable manner. A lot of human effort can be saved with analytics and automation of processes over the cloud, where updates to individual applications do not hinder the system, bringing a competitive advantage. Developmental models like cloud-native software development are vendor-neutral and help in avoiding vendor lock-in, thus minimizing risks. The future is filled with a smart but impatient generation, and technology is the answer to harmonize and establish oneness with it.

This article was originally published [here](https://www.hsc.com/resources/blog/role-of-cloud-computing-in-hospitality-industry/).