Hilton Hotels: Tim Harvey, CIO

Tim Harvey, CIO of Hilton Hotels, sits down with ZDNet Editor in Chief, Dan Farber to share his views on new technologies that will make visitors feel like their hotel room is their "home away from home". Below is an excerpt from the video interview.

Farber: Hilton is a very large-scale operation, 3,000 hotels, 500,000 rooms, across 80 countries. How do you deploy technology across such a diverse set of properties?

Harvey: It's about trying to take the things that all hotels do, check-in, check-out, taking reservations, taking care of the customer consistently at all hotels through one common, integrated technology platform that's proprietary to us. It's called OnQ. And then as you go on to the various countries you have localisation requirements, you have differences by brand. As an example, services that are offered in a Hampton are going to be different from a Hilton. But without that base platform, its consistency, it'd be awfully hard to do.

Tell me a little bit more about the OnQ platform -- it's something you built internally, it's proprietary. I guess it costs you about 50 million dollars -- how does it give you enough competitive advantage to justify building something proprietary?

Harvey: You know, Dan, it's like when your grandmother comes to your house. You know exactly who she is. You know exactly what she eats for breakfast. You know what kind of pillow she likes. You know whether she can climb the stairs or not so you know what room to put them in. We have the same passion about our hotel business. We want to know who are customers are and we want to take care of those customers every time we have an opportunity to touch them. So the value of OnQ is primarily having that information with that in-depth knowledge about customers. Obviously it's not going to work across almost 3,000 hotels around the world, you can't do it on a 3x5 card. If you want to treat those customers consistently, the only way you are going to do it is through technology.

Another way to say caring for customers is to get a greater share of wallet from those customers. Can you point to any metrics or success stories in terms of how the system has improved your ability to serve those customers and generate revenue?

Harvey: Hilton Hotels Corporation acquired Promus Hotels Corporation back in 2000. With that acquisition, they acquired four brands and about 1,700 hotels. The very first measure was starting to cross-sell. If someone calls in New York for a room in New York, and they want to stay in a Hilton, prior to the acquisition you just hung up the phone. After the acquisition, it was about using OnQ to then leverage those customers when there wasn't a room available in the Hilton to be able to cross-sell them to the Embassy Suite or Double Tree Hotel in Times Square. And at last count, starting in 2000, we run on an annual basis about US$400 million in cross-sell revenue.

US$400 million in cross-sell revenue out of a total of how much revenue?

Harvey: About US$10 billion.

Now when you talk about the OnQ system, it's really about customer relationship management and what we're seeing often right now is a lot more self service. How has the Internet and self service have impacted your bottom line?

Harvey: When we sell hotel rooms to customers, one of the channels that we sell through is the Internet. We get just about 20 percent of all of our rooms sold through the Internet. That's about US$2.3 billion. So the Internet, in creating a personal relationship with the people that like to shop in that way, has been instrumental. So for instance, we know who the customer is. Our loyalty program is called Honors, so we know if you are an Honors' member. We know what your preferred room types are. We know what your preferred in-room amenities are. We are able to customise those experiences on the Internet and as a result we have seen 30-40 percent growth in Internet bookings each and every year. And we believe the reason for that is customers can come there and get the kind of service that's customised to their needs.

We have announced (and will be delivering at the end of the second quarter of 2007) the ability to actually check into a room just like you do for an airline seat. Prior to leaving for an airport, you check-in, you get the seat on the plane that you want. We're going to offer that same service on the hotel side -- where you can actually see the hotel. You can actually pick the room that you want to stay in. For instance, I want to be on the west side of the building cause I'm going to sleep late and I don't want the sun rising too early. I want to be close to the pool. I want a view of the mountains. You are able to see all of the available rooms and actually pick the one that you want. So we're going to try all that and start with our Homeward brand which is an extended state product in the second quarter of 2007.

You're collecting a lot of data about your customers which obviously gives you the capabilities to deliver a better service but I would assume that you would have to deal with a lot of security and privacy issues surrounding that.

Harvey: Yes. It's paramount for us to protect our relationship with our customers. We give our guest the opportunity to opt in and out of our program, and full disclosure on what we do with the information. Staying in a hotel is about trust, you want to trust the hotel; you want to trust that you are going to have a secure room. That's how we treat the customer information.

Now that you've developed this CRM system, can you point to any major innovations that allow you to compete better against the Marriotts and Starwoods and IHGs?

Harvey: Yes, you know, we are the recognised leader in the use of kiosks. We've got over 300 hotels that have kiosks installed. We just recently introduced the ability to print boarding passes which doubled its usage. So the kiosk was primarily designed to help people check in and out of the hotel without having to stand in line. The reason we are able to do the Web check-in is because we have OnQ which has complete understanding of the inventory and displays that to the Internet so you can actually see the inventory and what's available at the hotel.

What are the core technologies that you use to deliver this OnQ system?

Harvey: We primarily use Microsoft technologies and Unix technologies. Most of the data centre systems are run on the Unix platform and our proprietary component of OnQ is on the Microsoft platform.

Besides that platform, you have a large budget of over US$200 million annually to spend on IT, and a staff of over a thousand. So what are your spending priorities for this year?

Harvey: [Our priorities will be] around keeping OnQ competitive and state of the art. We really want to keep focused on the customer area and that is the primary reason that we have OnQ. We are also going to be introducing a new sales capability that primarily [allows you to] acquire sales-technology from other vendors. What we've decided to do is take our sales technology and integrate into the OnQ platform so you can do reservations, you can do CRM, you can do revenue management, and now you will also be able to sell to large corporate customers.

The other focus for us is globalisation. We acquired a company last January that makes us a global company. We acquired 400 hotels with the Hilton International acquisition spread across 80 countries. And so one of the major focuses is to take OnQ, globalise it so that it takes care of the local requirements -- government requirements, currency, language, that sort of thing -- and make the single-platform OnQ work around the world.

Given that your focus is very much on your own technology, are you also investing your own resources in other technology areas such as networks and open source and some of the very kinds of trends we see affecting other companies?

Harvey: Yes, absolutely. In the networking world, we have some very close partnerships with people like AT&T and Cisco. The important part about OnQ is every single one of those 3,000 hotels out there all connect back to central computers. And so networking is very strategic in importance to us and we continue to look for opportunities to converge networks, converge voice, converge data, and become more efficient. We use virtualisation in our data centre so we can start to share our capacity across wherever we need the computing power. We are able to shift that computing power. Shared storage has been a big driver for us over the last several years so that we can effectively manage our storage.

What are you doing in areas of wireless and mobility? It would seem that in the hospitality industry a lot can be done not just with kiosks but with enabling people to do all kinds of things within the confines of the hotel from their wireless devices.

Harvey: Yes, Dan, that's a very good point. We made the decision coming into last year that we were going to do more of what we call high-speed Internet access in the public space and in the meeting rooms -- we were going to control that. And try to use our help desk for OnQ to help people when they have wireless and wired connection problems. We started that last year. We've rolled it out to about 60 hotels so far -- where we have gone in and put wireless in the public space, rooms either hardwired or wireless. Customers really say that this is so important -- "if you don't have great high speed, we're going to pick another one of the competitors". But there is also another bigger reason: we believe that the room will ultimately evolve past just being able to provide high-speed access but [will evolve into an] entertainment centre.

When people travel they bring their iPods with them, they bring their laptops, they bring their DVDs. So they are bringing content as well as downloading it off the Internet and we want to be able to use that high-speed highway that we control and support to allow them to bring that content into the room so that feels more like their home and office.

So when do you expect to have these rollouts completed for wireless and broadband?

Harvey: We'll do 100 percent of our full-service hotels this year and that should be complete by about the third quarter. We will begin then at that point to work on our focus service hotels. We'll complete about 25 percent in 2007 and the remainder should be completed in 2008.

You're opening a new hotel almost every day in the North Americas and probably around the world something on a similar frequency. In your vision what do you see the hotel room being like five to ten years from now?

Harvey: From a technological standpoint, what I see is not only a high-speed capability to access content off the Web but one that will also facilitate the content we bring with us, whether or not it's an iPod that has your favourite music, or an iPod that has your favourite TV program. You'll be able to plug that iPod in and utilise flat screen TVs, speakers and have an entertainment experience that's customised to what you are used to receiving at home.

Are you going to RFID tag everybody and everything in the hotel?

Harvey: We are looking at that for our most loyal customers. So Honors customers could have a card that is RFID enabled, you pull into the parking garage downstairs, you can swipe your card by the time you get to the front desk you are already checked in and are handed a room key to go to the room. I think rooms of the future will have a way to also utilise RFID and maybe even other electronic devices like handhelds to give you automatic entry into the hotel after you've kind of passed a security check when you check in.