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  • Writer's pictureBernhard Lermann

"Legacy software often fails to reflect today's reality"

Apaleo founder Ulrich Pillau reveals in an interview how modern technology is compensating for the shortage of skilled workers

"Legacy software often fails to reflect today's reality"

Mr Pillau, how do you see the current trend in investments in the digitalization of hotel businesses?

Ulrich Pillau: Investments today need to be even better thought through. You can hardly count on staff in the hotel industry at the moment, it is very difficult to find qualified employees. In recent years, around 800,000 people in Germany alone have turned their backs on the hotel industry as an employer, and most of them won't be coming back. So now you have to look at how to automate processes better and that often involves digitalization.

"Legacy software often fails to reflect today's reality"
Ulrich Pillau is the Founder Managing Director of Apaleo

 The pandemic has forced companies to become more efficient. The hotels that came through the crisis most successfully were those that were already well positioned in this direction beforehand. Their success has proved them right and they are now continuing to drive this forward very successfully. And then there are those businesses that have recognized through the pandemic that now, with the upswing, is the time to tackle digitalization. They know that otherwise they will face major operational and economic problems. This customer group is currently showing the greatest interest in becoming truly digital.

What remains are the companies that are content with the way things are going now. They are happy for rates and occupancy to slowly rise back to pre-pandemic levels, and they will carry on as before. In my view, these could be the biggest losers, and the others will pass them by in many respects. This includes many established hotel chains, some of which have actually learned little from the pandemic and are often already struggling badly. These businesses make up a significant percentage of the hotel market in the DACH region. And it also affects many owner-managed smaller hotels or individual hotels that often don't understand how to digitize or lack the knowledge and resources to do so. 

What is the biggest omission you currently see in owner-managed hotels?

Ulrich Pillau: Mostly it's fear of technology, which is quite understandable. So much software has been developed for the industry in the last 30 years that many businesses perceive this as a huge barrier and don't dare to try out new tools, and that is the biggest mistake. Others still rely on software that was developed 20 years ago. But today efficient cloud software means something completely different. Not only owner-managed hotels, but actually everyone - including many hotel groups - should show more courage and take more risks if they don't want to be left behind. 

What could be done to bring about a change in such hotels?

Ulrich Pillau: One aspect is certainly the further training of hoteliers to bring them up to date with today's technology. And that leads directly to the second point: software and technology providers should make it much easier for hotels and hotel chains to implement and try out digital solutions and processes.

Many legacy software systems are simply too archaic and closed. So the fear of complexity is not entirely unjustified. The modern platform providers and innovative apps on the market are much easier to use and have a steep learning curve. This needs to be better communicated. With today's platforms, you can simply try out many apps without committing to a contract or a longer term.

What leverage can hotel chains or owner-managed hotels apply now if they notice that guests are staying away or if they want to keep up technologically? 

Ulrich Pillau: You should start by analyzing the overall picture of your hotel or hotel chain in the respective segment and for your target groups of guests. And then decide on a plan that will get you to a point where you can survive in the current market within a certain period of time. The digital guest journey is planned around the product and the necessary tools are put together for each aspect, which also fit in with the operating processes. And it's best to do this 100 percent and not just 70 or 80 percent. Even if, for example, not all the locks are automated in the first step, this should definitely be taken into account in the planning. 

What action steps do you advise hotel companies to take to compensate for the shortage of skilled workers in the hotel industry?

Ulrich Pillau: It's best to ask yourself: where do employees obviously spend a lot of time on things that can be mapped better and faster using technology? In most hotels, reception staff often spend a lot of time operating the hotel software itself and on a number of processes that simply cost time and keep guests waiting in line. Nowadays, most of these can be easily mapped using technology. For example, many guests would love to register themselves in advance in a cab or on the train so that they can get to their room quickly at the hotel. Even registration forms or check-ins are now possible digitally. Those who want to find out about restaurants or other offers in the area at reception ideally meet an ambassador or a front desk employee who can then really look after the guests. You can also compensate for the shortage of skilled workers in this way, as you put a lot in the hands of the guests or - when it comes to the back office - in the hands of technology.

As an employer, what do you think you need to offer the next generation of employees to get them interested in the hotel industry again? 

Ulrich Pillau: If I want to attract employees these days, I have to offer them technology that is fun to use and easy to learn. And without having to work through hundreds of pages of documentation or training material. Software that requires days or even weeks of training is completely out of touch with today's reality. Modern systems are as easy to use as the younger generation knows them from their end devices. If this is not the case, hoteliers quickly have a problem.

"If I want to get new employees on board today, then I also have to offer them the technological possibilities to work intelligently, quickly and easily."

Ulrich Pillau: One of our customers operates two hotels right next to each other in a European capital. One runs on a legacy PMS, the other uses a modern platform. The management's idea was to regularly swap employees between the two hotels so that they could work efficiently in both establishments. However, after a few weeks, employees refused to work with the old technology. It was too complex and too difficult to use. I think that's a good example. If I want to get new employees on board nowadays, then I also have to offer them the technological possibilities to work intelligently, quickly and easily. And that applies to all areas of a hotel, not just the check-in software. It's about the whole environment. This will be an important driver for who hotels can attract and retain as employees today.

How can hoteliers be relieved of the fear of changing the PMS system during operation? What kind of advice can precede this?

Ulrich Pillau: In the past, a PMS change was certainly not easy for hotels. It often took a very long time and was a very complex matter, with everything that could go wrong often going wrong. However, modern technology is not only much easier to use, but switching has also become much simpler.

We are currently working with a hotel group that is converting its more than 30 hotels worldwide from an old PMS within six weeks. These are speeds that have never been seen before. It's only so easy and so fast because modern technology and integrated apps make it possible. There are enough examples of hotel groups and also medium-sized and owner-managed hotels that have switched from a legacy PMS to a modern platform within a very short space of time without any downtime. It has to be acknowledged that there are concerns, and there are good reasons for this from the past. But things are completely different today. 

"The challenge with a PMS change lies less in the technology and more in streamlining and simplifying familiar processes."

Ulrich Pillau: A PMS change should still be well planned. You should either have the necessary resources in-house to take care of this project or hire a change management consultant to help hotel groups prepare and implement it properly. We work with different consultants in different countries and have had good experiences.

The challenge with a PMS change lies less in the technology and more in streamlining and simplifying familiar processes. Such a change gives you the opportunity to reposition yourself. You should take a close look at each process to see whether it still makes sense. Is it still up to date or can I solve it in a modern way and can the technology take over? Change management refers to the entire preparation and implementation process. And that mainly has to do with operations, distribution and revenue management. So it encompasses the entire environment. I see the problem less on the technical side than in the attitude towards it. And the focus should always be on a positive guest experience.

What milestones has Apaleo recently achieved and how can the platform help hotels continue to operate successfully in the ever-changing technological landscape?

Ulrich Pillau: Apaleo was founded in 2017 and developed from the outset as a true property management platform that is completely open to the outside world and whose functionalities are 100% accessible via APIs. This is completely different from a so-called all-in-one software solution on which interfaces or APIs are later built. Platform development requires a lot more time, resources, investment and money. We took this time and were still able to serve the first hotels and hotel groups with Apaleo in the year it was founded. 

Of course, nobody knows how the hotel market would have developed without the pandemic. But we have had two record years in a row at Apaleo and have implemented and realized all our plans for growth and customers by the end of 2023. The new accommodation providers in particular, such as Limehome or Numa, whose strategy is based on technology, have understood that an old PMS environment does not give them the same freedom as a platform on which they can also develop their own applications or components. And you don't even need large teams of developers to do this, because the Apaleo platform also works with the low-code/no-code principle and is connected to corresponding tools. Our customers can easily adapt many processes to their needs or build something new with the help of modules, without any specific software development. 

"We have now proven that we can serve any size of hotel business."

We developed Apaleo as a multi-property product right from the start. We are now benefiting from this, as it is currently evident that the market is clearly demanding this from hotel groups. From global hotel chains  to individual hotels and hostels, apartment buildings, campsites and Airbnb-type businesses also benefit from Apaleo as the platform is extremely flexible. What we serve really well via the platform are functionalities such as distribution, rates, availability, reservations, payment processing and accounting transactions. Our customers use the platform to put together their own tech stack for these processes in no time at all. Either with ready-made apps from our Apaleo Store or with their own solutions, such as a booking engine. There are many ways to achieve this.

Ulrich Pillau is the Founder Managing Director of Apaleo, the Munich-based next-generation cloud platform provider for the hotel industry. He was previously involved in setting up several software companies in the hotel and travel sector, including Fidelio. For IDeaS, the world's most successful Yield & RMS system for hotel chains and hotels, he led the entire business in Europe, Africa and the Middle East and was part of the global strategic leadership of IDeaS.

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