How Hilton Learned to Love the Cloud, with Michael Leidinger & Aditya Thyagarajan

Episode Transcript

Michael Leidinger: If you look at what causes cybersecurity incidents, many times it’s because a vulnerability isn’t patched on a server or a PC. Well, now everything is up in the cloud and you’re able to maintain that globally. So the team is able to patch and maintain all of that environment centrally as opposed to now where you may have to go out and patch and maintain 7000 servers around the world. So that’s far, far easier growing up. 

Michael Leidinger: Welcome to the Innovative Hotelier podcast by Hotels magazine, with weekly thought provoking discussions with the world’s leading hotel and hospitality innovators. Welcome to the innovative hotelier brought to you by Hotels magazine. I’m your host, Robin Trimingham. The question of whether a hotel should switch from a legacy to a cloud based management system depends on various factors, including things like the hotel size, the budget, technological needs and the goals to be achieved by the cloud based management system. As we all know, making a data migration like this can be a significant undertaking and requires careful planning and consideration in order to achieve a smooth transition. My guest today, Aditya Thyagarajan, co-founder and president of Hotel Key, and Michael Leidinger, senior vice president and chief information officer for Hilton, are here today to chat about their recent partnership and to offer their perspectives regarding evaluating the costs, benefits and risks associated with making the switch. Join me now for my conversation with Adi and Michael. F.O.H Is a global food service and hospitality company that manufactures smart commercial grade solutions. Headquartered in Miami, the company designs and manufactures all their restaurant and hotel products. They have showrooms and distribution centers located throughout the globe, and their products are always in stock and ready to ship from any of their distribution centers worldwide. Welcome, Adi and Michael. Thank you so much for finding time to chat with me today in general terms. Adi what are the main advantages of a cloud based hotel management system? 

Aditya Thyagarajan: Yeah, so seems like cloud is the new buzzword from my perspective. I think what what the industry and what folks like Michael are looking for when it comes to cloud is you sort of reduce your technical debt, right? You’re getting into a more advanced infrastructure. The cloud products are simpler to use. They’re simpler to deploy, enhance, maintain. And one of the key things, what we have seen with the cloud based product is you can have one version of the product across your estate. When you have on prem installs, many times you have a certain version for a particular type of hotels or for a particular type of country continent. With cloud, it’s much easier to deploy a version enterprise wide. Then there is real time access to data visibility across your portfolio. And then most importantly, there is an ROI to all this. It does reduce your hardware cost in the long run. So again, you know, to summarize, it’s an advanced architecture which in the long run brings your cost down. That’s why we are seeing adoption of cloud based products across industries. 

Robin Trimingham: So for some of our smaller boutique brands, because not everybody listening is from a brand, a substantial and robust as Hilton. What differentiates the hotel key system from a competing, cloud based hotel management system? 

Aditya Thyagarajan: We feel we are all about our clients, whether we are having a very, very rosy implementation in a phase, whether we are running into a couple of issues during an implementation. One of the things with Fareed and myself, we listen to our clients from an architecture perspective, programming perspective, resources, everything. We are all about what our clients want. And the second thing about us is between the two of us, without a lot of external pressure, we are able to make decisions which we feel are beneficial to our clients. We don’t need a month of approval to add resources. So I think one of the things with us, in addition to having a modern architecture, a nimble framework, is we believe we are focused on our client needs, right? So we are sort of talking to our clients clients all the time. Then I think the second thing about us is our products are easy to use. When we look at training time. The feedback we have received from our enterprise hotels, boutique hotels is that the product is is easier to use than what’s what’s out there. And over the last 4 or 5 years, if you look at enterprises, we have had track record of working with enterprises and having successful implementations. I would say again, the bottom line with us is we are very client focused and we want to listen to our clients and improve. And that, I believe, sets us apart. 

Robin Trimingham: No, I was thinking Michael nodding his head in agreement with you. So clearly you are a very agile company. Michael, let me ask you, though, transitioning from a proprietary legacy. See system is a really big decision for a brand the size of yours. What were your main concerns about doing something like this? 

Michael Leidinger: Yeah. So we we embarked on this journey several years ago as we worked to renovate all of our core systems, moving away from legacy monolithic architectures, client server models to something, an environment that’s really driven by application programming interfaces and microservices. And that was a key, a very key decision of ours. And anything we brought into the ecosystem had to meet with those architectural principles. So before we chose to meet with Hotel Key, we met with many hotel technology companies to really get an understanding of their capabilities, their architectures and how that would align with where we were taking our entire technology ecosystem and where we were taking our future technology strategy and we had extensive due diligence meetings with some very important hotel key customers, the biggest of which were extended Stay America and G6, which have very large deployments. And those meetings really. We were able to walk away with a lot of confidence that Hotel Key was the right partner for us. They had really done a good job thoughtfully addressing the concerns about what it would take to transition from that legacy client server model to a modern cloud based PMS. 

Michael Leidinger: And this really went beyond just replacing the existing PMS. We really wanted to ensure that the new system would be fully future proof and ready for what’s next. Being able to leverage APIs to do rapid integrations, being able to leverage IP based interfaces and moving away from serial interfaces. And again, what we were very impressed about with Hotel Key and took in mind as we were developing our platform is really having an open platform that can easily connect not just with existing solutions on the hotels but also future releases. For example, we want to continue improving our contactless check in and check out capabilities and enable more discreet add on purchases in the booking channels such as Pet stays or paying for parking. And again, to ensure that seamless transaction, we had a very deliberate deployment process. We started very, very gradually with a few pilot and proof of concept properties in December of 2020 and then really kick things into high gear last year with the broader deployments. And our goal is to have things wrapped up by around mid 2026. 

Robin Trimingham: No, no. When you make a move like this, that can be very complicated because you have to have the buy in of so many different entities, so many different departments, because you’re moving from a legacy system that everybody’s depending on. So for our listeners, what’s your advice to, I’m going to say other leaders, other executives who may be struggling to build support for a move like this? 

Michael Leidinger: So I think one of the key things you have to do in an organization to build support for changes in magnitude is really getting out there and listening carefully, considering and incorporating the feedback from all of your partners about what’s going well, what areas can use some improvement and what are the major roadblocks they see that dialogue and feedback is so crucial, and part of that is making sure that the key stakeholders not just are communicating, sharing their thoughts, but active participants through the process so they can feel comfortable about raising new issues, addressing challenges they may not have considered, and creating those safe spaces. So you can have that open and frank dialogue to create that buy in and make sure that all your stakeholders feel that they’re being listened to. One of the things that we did very deliberately during the early stages of the Pep deployment was listening to very candid, very direct feedback from our properties, from our general managers about things that worked well and things that needed some improvement and then we turned and worked hand in glove with Hotel Key, who has been very responsive working through those changes and making sure that we are upgrading that as we continue the system rollout. And again, that continued partnership, it not only encourages the successful adoption of something like Pep, but also helps us pave the way for the future collaboration and innovation around it. 

Robin Trimingham: You’d mentioned the importance of listening. And of course, I couldn’t agree with you more. It doesn’t really matter what sort of business you’re in. Addy though, I imagine because your system is I’m going to call it relatively new in that there’s lots of hotels still on a legacy system. Sometimes when they come to you contemplating a move, they don’t necessarily know what questions to even ask. How do you help companies understand what it is that they need to understand about a move like this? 

Aditya Thyagarajan: I think the first case was Hilton, as Michael said. Hilton was already looking at this for a for a few years. So our experience with Hilton has been a little bit different from what it is when we work with other other individual hotels or groups of chains. Hilton definitely had had a roadmap, like as a great example. Hilton had a vision in terms of training, like they wanted to do it like new style with the in-built training tools. So we worked with Hilton together. We built out Train Key, where somebody in the product can learn. The entire product doesn’t have to go to manuals or stickies or videos, etcetera. Right. So to answer your question on Hilton, definitely had a roadmap in mind. And to be very honest, I think think Fareed and myself learned a lot from Michael and and his team. So, you know, that that is sort of the fact. But at the same time, many times we run into groups and hotels where, you know, we have our playlist, right? Which is obviously first thing is you understand the requirements, you understand the business cases. Then you educate about how we are going to how we’re going to deploy it. You go to a pilot hotel, then you go as exactly as Michael said, right? You deploy, you learn, and you go forward. That is what our strategy is. But again, with Hilton, Hilton had a good idea of how they wanted to do it. And it has been an amazing partnership. 

Robin Trimingham: So what I’m hearing here, Michael, is basically you are the architect when it comes to creating a change management plan. So what advice can you offer our listeners about orchestrating a change of this magnitude? 

Michael Leidinger: Yeah, that’s a great question. It would be an understatement to say that this is a massive change management program, and it is. I would say in many ways the non-technical aspects of the change are even more challenging than what we’re driving on the technology front. You know, it starts with getting our owners, our general managers and team members on board and excited about the change, understanding why we’re doing it and what’s driving it early and often. Stakeholder engagement we found is key, and this is everything from one on one discussions with individual GM’s and brand partners to panel discussions to survey feedback, to again really go bend over backwards to make sure we’re listening to our stakeholders and taking action on their priorities to make sure they understand we’re listening and we’re actioning that. One of the things that Hilton is very fortunate for is we have a large cadre of highly tenured team members, but that means that many have been doing and using the legacy systems for years and in some cases even decades. Our legacy system was installed about 25 years ago. So unlearning the old way of doing things and embracing the new can be a challenge. And with that old system, people figured out a way to do workarounds that they needed to do it that may not be present in the new system. So again, getting people comfortable with that is so essential. And we think another key part is making sure all of the hotels are aware of what’s coming. And we maintain that excitement about the impact it can have on their property. And that’s probably one of the most important lessons for this change or any change. 

Robin Trimingham: Established in 2002 is a woman owned global food service and hospitality company that manufactures smart, savvy commercial grade products, including plateware, drinkware, flatware. Hotel amenities and more. Driven by innovation F.O.H Is dedicated to delivering that wow experience that restaurants and hotels crave all while maintaining a competitive price. All products are fully customizable, and many are also created using sustainable eco friendly materials such as straws and plates made from biodegradable paper and wood and PVC free drinkware. F.O.H has two established brands. Front of the house focused on tabletop and Buffet Solutions and Room 360, which offers hotel products. Check out their collections today at FOHWorldwide.com. So you just talked about lessons learned. Is it fair to ask were there any tough moments where you had to really think about what’s the best way forward and how do we make this all work? 

Michael Leidinger: Part of that is when we run into issues, when we discover as we have an agile development methodology, we went out with a minimum viable product and we’re being been basically doing releases now every 2 to 4 weeks. The product continually improves. But again, how do you really prioritize? What are those changes, those enhancements that you have to get out at the beginning? That is extremely important and I think that’s probably the biggest lesson learned is, is how are you using that feedback to prioritize the enhancements and the bug fixes that you have to get out to the community? 

Robin Trimingham: I think that’s a very key thing in all of this. We’re dealing with human beings on a massive scale and there’s an art to managing human capital, particularly when you are dealing with people in departments where they’ve been dealing with and really seeing the proprietary system as their baby. What’s your advice? And I’m going to ask both of you this. What’s your advice for getting people in these key areas that have been focusing on the old system to buy into and be excited about this big change? 

Michael Leidinger: One of the things that we’re doing from Hilton’s perspective is really showing what the benefits are and what the upsides are. It’s really interesting that as we’ve emerged from the pandemic, it’s no doubt that everyone is struggling with staffing around the world in every industry. And again, we had during the pandemic, a large number of people leave hospitality for a number of reasons. And I think one of the cool things about Pep, because of the training that we have developed and the training is so simple, it’s very intuitive. People can complete their training in just as under four hours. And we have plenty of examples from hotels of New team members starting on a Monday morning and they’re working the front desk at noon, and that is really huge. If you think about it, it is opened up hospitality as a career to so many other people and can help alleviate some of these labor shortages. And then even further, we as audio alluded to, we developed in partnership an online training module that you can do all the training to complete the job through embedded guides and walk through right there as you work. And that really helps ensure that both new and existing team members can spend less time training or on the computer, more time building relationships and genuine connections with guests. But I think this really helps us unlock hospitality as a career for more people. 

Robin Trimingham: You’re making me laugh. You two probably don’t know. I actually have fairly extensive hotel background, and back in the Dark Ages, my first job, I was in training for an entire week before they would let me loose on the front desk and the system they had. I think it was one generation forward from Dos itself. There were command prompts, things that people now won’t even know when I’m talking about. Adi what’s your perspective on all of this? 

Aditya Thyagarajan: Michael said, Right, The technology and architecture, everything is a starting point. The way for it and look at it is end of the day, the product should be easy to use. When we come out, we talk to the associates that this is a product where it’s easy to train your team. And one of the things is eye contact with guests. One thing we focus in the product, whether you’re using hotel key pep on a computer or whether you’re using it on an iPad as a touch screen. The idea is that there’s minimal clicks. You’re able to maintain that eye contact with guests and just modernize the entire experience. Right. So again, a lot is driven on how we can make things easier for our front desk associates, which in the end makes the guest experience better. That’s sort of what we’re focused on. 

Robin Trimingham: I think that is a differentiating feature because you’re right, if somebody is head down at the desk for ten minutes checking somebody in, well, that doesn’t really create a great impression, particularly when the line is building behind the person that’s being served. Addie, what other types of services or functions does the hotel key system make possible? That would have been nearly impossible under what I’m going to call a stand alone system. 

Aditya Thyagarajan: There are two key advantages we think about when it comes to pep and hotel key. So one of them is one of the key things of a property management software is how do you reduce your check in time? So that’s something we have focused on. That’s something we have seen with our the brands which Michael spoke about, including Hilton, where the check in time goes down. The guest engagement time is higher. Now, when you can use a product which is compatible with multiple devices and tablets, you could also use it to bust lines. You can take a tablet, walk around, check in. So I think one of the one of the key focuses is reduction of that check in time, which we believe is one of the core functions of a property management software. The second thing we believe in is we think we’ve thought about this a lot. We believe that a brand like Hilton owns the guest experience, and our job is to provide that back end system and, as Michael said, provide those APIs, the micro micro services where the Hilton app, the Hilton Honors app is a world leading app. It can only improve by utilizing the out of the box APIs, which we have. Whether it is enhancing guest check in functionality, whether it is enhancing guest communication, things like ordering a customized housekeeping schedule or ordering even items and things like that. So I think what we believe is in addition to reducing that check in time, increasing guest experience is providing these APIs or micro services which can be used by the Hilton Honors app to enhance guest experience. That’s kind of the two areas we focus on. 

Robin Trimingham: I think that’s very interesting. And I also think that everything is changing so rapidly. It’ll be really cool to see in a couple of years what else has become possible as we move forward with all of this. I want to ask you guys about cloud based cybersecurity. How does a cloud based system enhance cybersecurity? From your perspective and Michael, maybe I’ll ask you first. 

Michael Leidinger: Yeah, I think that’s a great question. Hilton has been building in the cloud now for over five years and building building new systems and new applications as part of our renovation program. I think we’re very comfortable working in the cloud. And one of the great advantages of cloud service providers, they invest heavily in the cybersecurity services and technologies, and they’re always augmenting those services to meet regulatory and industry standards. And there is a lot of interesting work done around encryption. So within the cloud, all of our data at rest are at transit, are fully encrypted. But even some of the basics, if you look at what causes cybersecurity incidents, many times it’s because a vulnerability isn’t patched on a server or a PC. Well, now everything is up in the cloud and you’re able to maintain that globally. So the team is able to patch and maintain all of that environment centrally as opposed to now where you may have to go out and patch and maintain 7000 servers around the world. So that’s far, far easier. And again, because we’re really driving code based deployments and configuration management that helps ensure that our systems are securely deployed and that we’re very consistent in our deployment throughout the life cycle. So from beginning to end, everything is deployed very consistently for every property around the world and even at the network level, these cloud based systems really help enable finite network access controls being applied at the system level instead of the traditional perimeter based network access controls that we’re used to seeing in legacy client server model deployed on a property. 

Robin Trimingham: Abby, do you have anything you want to add to that from the cybersecurity perspective? 

Aditya Thyagarajan: No, I think Michael spoke about all the great. The only thing you know, Fareed, and talk about is these cloud providers, AWS and Google, etcetera. They are investing so much in security because in the end now they are hosting large organizations like Hilton, large banking firms like Wells Fargo, Bank of America, that they are more in some ways more incentivized and are using thousand X dollars than companies like us would use. So what I think we focus on is how do you add on to that? How do we work on our authentication mechanism? How do we work on our security matrix where a user is defined by user role, you know, the property they have access to, right? So I think I think where what we do is we understand what’s coming out of the box and then we write certain features on top of it to make it security proof, proof and hardened, right? And I think if a company like Hotel Key, when we started seven, eight years back, if we had to do everything ourselves, we would have had a really tough time to launch. You know, we would have instead of having 5000 hotels live today, we would have had 50 hotels live because half the time would have gone. And trying to figure out, Michael how to deploy, how to how to secure it. Right now, we can sort of piggyback on all this great work these companies have done. 

Robin Trimingham: I have to say, I want to thank you both for giving very layman friendly answers to what I know was an incredibly technical question. On behalf of the listeners, thank you very much for that. We’ve got a couple of minutes left here. Michael, what do you consider to be the biggest ROI on this investment that you’ve made and how is it actually going to save you guys time and money in the long run? 

Michael Leidinger: Yeah. So first off, what we’ve been able to drive and get to the point in our development cycle and deployment is we’re able to deliver Pep at a lower cost than our legacy on solution. So right off the bat, installation and maintenance costs are much less than our former PMS, which is a great win for the owners, right? Yeah. And again, in addition to providing those cost savings, the way Pep is going to integrate technology into the broader workflows, the hotels, leveraging those, leveraging those APIs, those IP based interfaces, that’s going to allow us to integrate services much more quickly and hopefully reduce the day to day technology burden burden on the properties, which I think is going to be is going to be great. So it’s again, it reduces costs. It’s a platform that kind of sets the stage to allow more rapid future innovation. And I think those are the two primary wins. 

Robin Trimingham: I want to thank you so much, Michael, for your time today. I’ve got one last question, and I’m going to throw this one to Addie because it kind of springboards off what you just said. We’re in a world where we’re talking about new tech and things are changing incredibly rapidly. Addie, where do you see cloud based hotel technology developments heading over the next couple of years? 

Aditya Thyagarajan: I think the natural progression is going to be in artificial intelligence and big data, right? So now when you have a cloud based system, think of it across the entire Hilton estate, 7000 hotels. It’s so much easier now to accumulate that data, make decisions which are beneficial to your brand. So I would say big data, real time data access will be will be extremely important, will be what these cloud based products will go into. And then the second thing is AI and things like ChatGPT very simple thing, like when a guest comes to the front desk, why do I have to type? I should just be able to talk. Hey, this guest wants a room next to Ocean View near the elevator and then the APIs should be able to join and say, Hey, these are the five rooms accessible, right? So, so I would say those will be the two big things. And then as I said, right, like the guest facing apps like the Amazing Hilton app. Right. What else can they offer? Because now when you look at the new generation, they want to come in, get on their app, go to the room. What’s happening in the back end could be all this interaction with the cloud based systems, right? So I think self-service, AI, big data, all that will be byproducts of a successful cloud deployment. 

Robin Trimingham: And and I think you’re absolutely right. I was talking to another individual on a podcast a couple of weeks ago, and he was talking about the fact that your data is going to become yours personally and that using AI, it’s only going to be released for like a microsecond when you make a hotel reservation or something like that, and that none of us are going to be storing these things. It’s a fascinating world that’s coming our way. Gentlemen, I want to thank you both very much for your time today. You’ve been listening to the innovative hotelier. Join us again soon for up to the minute insights and information specifically for the hotel and hospitality industry. You’ve been listening to the Innovative Hotelier podcast by Hotels magazine. Join us again soon for more conversations with hospitality industry thought leaders.