That will change by the end of the year, said Zack Miller-Murphy, vice president and controller of N.Y.-based Loews Hotels Inc., when Loews finishes rolling out software to better monitor and control the food and beverage operations in its hotel restaurants and bars.
It's not uncommon for some facets of the hospitality industry to be less tech savvy than others, Miller-Murphy said. "[Hotels] should be more computerized, but the industry just hasn't gone [in] that direction."
Loews has monitored sales, inventory, ordering and food portion control with spreadsheets and other reports for years, but it is slow and cumbersome. "A lot of that has to do with the fact that in food and beverage control, there are so many transactions you need to track," he said. "How much steak you buy, how much arrives, how big a serving, if it sold, was it stored properly" and more, for every single food and beverage served. "Every hotel in the world has these systems set up to do that."
What Loews found is that compiling reports is so labor-intensive that workers weren't able to analyze ways to save money. Instead, the reports took hours to complete and were often shelved without even being reviewed. "We felt like we were operating in the 19th century from the systems standpoint," Miller-Murphy said. "We realized that we were woefully behind the times a few years ago."
About three years ago, several Loews executives met to figure out how to update the company's food and beverage management system without hiring more people or adding inventory. "It was from a desire to improve what we felt were lackluster controls on food and beverages," Miller-Murphy said.
Seven vendors were reviewed by a task force and Eclipse software from Adaco Services LLC was chosen. Loews had installed the Adaco software in its Miami Beach locations on a trial basis five years ago. "We saw food and beverage costs drop one percentage point," Miller-Murphy said. "If you're able to move food costs by a point, everybody in the industry would say, 'How'd you do that?'"
That eventually led to the company-wide rollout that began last year and now includes 60 percent of the chain's hotels. Instead of having to use three- or four-part forms and manual tabulations to order restaurant and bar supplies, workers using the software have cut response and approval times and reduced the amount of manual record-keeping. The company also plans to use the software to manage inventories of dishware, linens and glassware in the next 12 months,.
The system has worked so well that Loews is considering a centralized property management and reservations system, said Tony Del Mastro, CTO for the hotel chain. Property management is now done locally at each hotel, with information later dumped manually into a centralized data repository. The hotel chain's central reservations system is run by Pegasus Solutions Inc. of Dallas, but Loews is now analyzing whether to stay with Pegasus or bring those operations in-house, he said. "From a technical perspective in managing that technology ... it's a lot simpler to run it centrally."
The Eclipse software starts at about $15,000 for a single-property version for five to 10 seats and $30,000 for a multi-property version for the same number of seats, according to Mark Pinsley, CEO of Williamsville, N.Y.-based Adaco. Eclipse competes with traditional ERP packages, he said, but is specialized for hotel and hospitality service operations, he said. The software integrates into point-of-sale systems so inventory and sales are kept up to date.
Robert Goodwin, an analyst at Gartner Inc. in Stamford, Conn., said hotel and hospitality businesses have been slow to automate services because they often are owned by local investors who don't want to invest more money. "Sometimes there is a reluctance to spend something until you know it's going to give you a short term turnaround," he said.
With hotels, Goodwin said, the one area where IT spending is worthwhile is in first-class reservations and property management systems, because they are the operations' bread and butter, he said. "Other [upgrades] like this could save money, but there's no real critical need for inventory control," so it is often left undone. "It's always been a kind of second-tier effort".
Andrew Bartels, an analyst with Forrester Research Inc. in Cambridge, Mass., said he's not surprised that Loews is just getting to this point in its IT operations. According to Forrester, 33 percent of the global 2000 companies with more than 20,000 employees weren't using browser-based tools for purchasing last year, and 49 percent weren't using online sourcing to find suppliers. Forty-seven percent of the companies surveyed by Forrester weren't using Web-based integration with their suppliers' systems to make purchasing easier and more efficient, he said.
"There are still significant numbers of large enterprises that aren't using online buying," Bartels said. "It's particularly difficult when you have many different locations" and want to centralize it, as in a hotel chain. Because individual hotels in a chain might have different investors, they may not want to share information and data, he said.
"So there's a high degree of decentralization to let each entity run its operations," he said. "These factors have tended to drive very decent activities on the purchasing side but on the same token, many hotel chains are learning that there are efficiencies to be gained together, even allowing for local differences. I think Adaco has done a really good job of understanding the unique requirements of the business."