The hospitality industry is beginning to embrace e-business, including Internet-based functions such as electronic procurement, resulting in huge supply chain cost savings, said Andre Pretorius, Divisional Director DataPro , the premier Internet service provider (ISP) and network integrator.
Pretorius said that "back in 2001" reports coming from the US showed that the hospitality industry was already getting "Internet-wise".
"During 2001 it was reported by the Aberdeen Group that the hospitality industry spends an estimated $50 billion to $60 billion per year on supplies and services. But this value," he said, "is steadily climbing."
Although we are not seeing such a large take-up locally just yet, Pretorius is confident that e-business will be deployed more widely during the next few years, saying his company expects to grow its number of hospitality clients substantially.
"For us, as an ISP that provides value-added services beyond just providing bandwidth, we see a lot of potential for ourselves as an ASP (application service provider), where we will be looking at handling the IT and e-business requirements of hospitality organisations, including hosting their central reservation systems or their supply chain requirements."
He said that because of the drop in the number of tourists visiting SA this year, some hoteliers he had spoken to are actively looking at ways to cut supply chain costs, especially in the food and beverage area. Whereas before the allocation for a breakfast "was done as a percentage of revenue", ie the cost of the breakfast versus the actual cost meant, that the food and beverage managers were "getting away with murder". Hoteliers are now concentrating on reducing the actual food costs and the only way to do this is to improve systems through the harnessing of e-commerce.
Commenting further, Pretorius said that by using the Internet for e-procurement the increase in overall efficiencies is expected to save companies million of dollars each year. "We are already seeing purchasing managers gaining better control over their procurement - and businesses are cutting back on off-contract, or ad hoc purchases, a big cost concern for any hospitality company.
"In fact, over the past few years a number of large hospitality electronic marketplaces have been established. These are already, according to research, handling at least $13 billion in revenue per year. This is also set to grow."
There is, for instance, a number of global distribution systems (GDS) and Web-based closed user groups, or intranets - and Web-based reservation portals - already facilitating e-business delivery, bringing with them the possibility of making use of `high touch` central reservation call centres.
Although the hospitality sector has definitely been lagging other market sectors when it comes to the adoption of e-business, there are certainly signs that this is changing - especially as "market demands push for this". "When it came to e-procurement, for example, the manufacturing sector was far quicker into the fray. But I believe hotels are starting to realise the need to embrace e-business - and they are starting to take advantage of the many benefits it offers, such as the Web-based applications that are available to effortlessly upgrade purchasing systems, resulting in immediate benefits, including increased levels of customer service and cost cutting."
Pretorius said that although the bubble burst on high-flying dot-com companies, the Internet - and what it heralds - will continue to have a significant, and lasting, impact on how companies, from all market sectors, conduct business into the new millennium.
"Doomsayers said the dot-com bust would cause a mortal wound for the widespread adoption of e-business. But while it did create a serious hiccup, it did not relegate e-business to the bottom of boardroom agendas. People are just wiser and more careful when implementing e-business strategies.
Companies have now realised that you cannot throw all old business principles out of the window and just madly embrace e-business. The successful companies of the future, including hotels, will be those that create a workable mix of e-business and brick-and-mortar business models and strategies. At the end of the day the successful business of the future will take the best from both the traditional and the new-wave dot-com way of doing business. These companies will effectively become a hybrid - they will become click-and-mortar organisations. But we are certainly going to see our hospitality client base grow over the next three to five years," he said. "This is going to be a fast-emerging marketplace for technology providers with the know-how."
He said there is "no reason whatsoever" why the local hospitality industry cannot echo the successes of their bigger US counterparts, who are deriving the numerous benefits of, among other things, e-procurement.
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