by Robert D. Kugel CFA | 2011-07-18 | Article ID: QT11-27 | Article Type: QuickTake
The hospitality industry has a complex structure. It encompasses a broad range in size of operations and ownership, and sales and occupancy rates have been dramatically affected by consumer use of the Internet. Its IT requirements are complex also, requiring software for many different aspects of business. Infor stepped into the fragmented hospitality software industry through its acquisition of SoftBrands and its suite of reservation and property management software, and soon thereafter added property management software. It now offers a broad set of software to manage most aspects of the hotel and resort business, including performance management (with planning, budgeting, reporting and scorecarding) and financial consolidation. But it and the competition face a perpetually difficult environment.
Evolving technology will continue to be a market driver. It can help alleviate the industry’s intense cost pressures through a combination of increasing the efficiency of employees and automating manual processes, and new means of delivering IT capabilities such as cloud computing can substantially decrease the operating costs of hospitality operators, especially smaller ones, by offering economies of scale. Mobile devices as well can be used intensively in operations because most employees are not tied to a desk or fixed location. Infor’s hospitality business has the key advantage of being packageable as individual components (because few if any operators will toss out all of their systems at once), combinations of components or a full suite. While the market remains challenging, Infor has the raw material to gain share if it manages its product development strategically and markets it effectively.