Hotel Tech Insider

SPEAKER_00:
Homes today are full of technology. There's technology everywhere, from Alexa to the smartphone, to touchscreens, to automatic controlled environment, and things like this. So our hotels are also adjusting and changing with regards to that. Because if I'm telling you welcome home, but then I'm hosting you into a home of the 60s, there is no connection between the two things. So we already have some properties, and we will have more in the future, especially the new ones that we're building. that will have a lot of the home technology that you see, streaming on the screen, whatever you want, having a touchscreen from where you can control everything from lighting to curtains, or very simply a way to use your smartphone to ask something to housekeeping or to ask for a cocktail while you are enjoying some time at the pool or because you need a different bathroom.

SPEAKER_01:
From Hotel Tech Report, it's Hotel Tech Insider, a show about the future of hotels and the technology that powers them.

SPEAKER_02:
Today, we're talking with Paolo Gagliardi, the Director of Technology at Falkensteiner Hotel Group. Since Paolo didn't take a traditional hotelier career path, his fresh perspective helps him build a tech stack by taking inspiration from other industries. Paolo gives us an in-depth look at the technology he's implemented at Falkensteiner, including an innovative data layer that connects data from many different sources, and makes it possible for his team to build a holistic profile of each guest. You'll want to listen to hear more about Paolo's focus on personalization and efficiency to get a sense for how impactful his investment in technology has been for Falkensteiner. To get things started, I like to get a sense for your background and your career so far in the industry. So if you could walk me through how you got your start in the industry, what roles you've had, what companies you've worked for, and then finally, what you're doing now.

SPEAKER_00:
Yeah, with pleasure. Well, the news is that before joining Falkenstein and Michaeler Tourist Group, I never touched hospitality before, if not as a customer, as a guest, right? I am an Italian of origins and I'm an engineer as education. So I spent 26 years of my 28 years career in things like system integration. So very traditional IT. Telecommunication a lot but also the digital payments and general digital transformation according to the period that the various technologies we were dealing with so. Therefore, I've worked in different continents. I've worked in Europe. I worked in U.S., California at the time of the big bubble, the dot economy bubble. I've worked in Asia, in India. I've worked eight years in Dubai. And while crossing the oceans, I was also stopping in Europe every now and then. So I've worked with, you know, large telco organization in India and Europe. I've also worked for startups. And you could say I'm a very normal person who did the traditional jump from a technical background into a managerial position until i've been running companies as CEO CEO and then i reached an age where i said okay this is not fun anymore so i really want to roll my sleeves up again and i was lucky and blessed to have the opportunity to join this group of companies i have a fantastic relationship with the owners and the founders. especially Mr. Miguel and the Falkensteiner brothers that trusted me to design and execute the digital transformation strategy for this group of companies. And the good news is that this group realized probably for many other hospitality groups that digital transformation is a tough but sort of needed requirement because hospitality needs to evolve, needs to change and enter the 21st century also from a technology perspective. And this is exactly what I'm focused on now with a lot of non-hospitality experience, but a lot of horizontal technology experience in my background.

SPEAKER_02:
Can you tell me a bit more about what you're doing now and share a bit more about the hotel group?

SPEAKER_00:
Yeah. Well, this is a group of company, which is now 66 years old. Everything started with a small property in South Tyrol in Italy. From the Falkensteiner family until across the years, especially in the mid-90s, it developed into the large group that we know today. We have more than 30 properties, all of them high-end leisure hotels, four-star, five-star, five-star plus, located in seven countries across Europe with a very strong focus on countries like Italy, Austria, Croatia, and a vast majority of our customers coming from the countries that I just mentioned, or in general, the DAC region, which is Germany, Austria, and Switzerland. But we also have customers from all over the world, from US, from Eastern Asia, but most of our customers are coming from Europe. And we offer, as I said, high-end hospitality with a very nice personal touch. Our motto is welcome home. So we strongly believe that, you know, whenever you go into any of our properties, you should really feel like you're going to your house, to your place, to the place that you love, the place that makes you feel fantastic and safe and well treated. And therefore, you know, even when we work on technology, we should never forget that technology should never be just a cold tool that, you know, makes things for us. but should always look very carefully how we make the experience for our customers even more engaging and more pleasant so that, you know, when they leave our properties, they always leave with fantastic memories and fantastic feelings. And they only look forward to coming back the next time they have the opportunity to do that. Right. So what we're doing, the thing is that hospitality, the reason why probably hospitality is a little bit behind in terms of technological development is nobody's fault. It's just that Hospitality started to accumulate legacy landscapes by putting solutions on top of each other's without not too much attention on the technical requirements because of a lack of a skill set in general industry and therefore nowadays you have. Probably most of the hospitality companies big ones small ones it doesn't make any difference running on a lot of legacy systems on premise based proprietary closed auto references, you know, stuff like that does not make the evolution of the business easy, but it still makes it very complex and very expensive to run. And more importantly, now in 21st century, especially now that AI is here with us, data are really everything. So the quality of the data, standardization of the data and easy access of my liberation of data, It's essential. Companies that can't really do that are not leveraging on anything, right? Hospitality has an immense knowledge about people because, I mean, we end up knowing a lot of things about people, who they are, what they like, where they go, what are the things that they prefer doing, where they are off, stuff like that. And the only way to give them even a better experience and to leave those memories I was mentioning is actually to use that knowledge to improve what we do every day, every second, every moment. that they are seeing with us in one of our properties. And therefore, we are transforming the entire landscape, moving it from the constraints that I just mentioned to more of, you know, cloud-based, API-first, standard data that allows us not only to have a better data governance, but also to always make the right choices. Because one of the biggest challenges that we identified initially two years ago was that Even if you recognize that you're not running the software or the softwares that you would like to run, replacing them is a terribly hard job because you risk jeopardizing or paralyzing your operations for weeks or months if you're not careful, not to mention that you would lose a lot of data. So if I can mention one of the critical projects that we decided to start and it's almost completed now is we introduced a new layer in the landscape it's a orchestration platform we like it to call it by loop. It is basically an ABI middleware which is able to talk to any platform in any possible way ideally using ABI's but we don't dislike using static files if required. And the objective is not just to have easy integration for whatever we want to replace or whatever we want to introduce as innovation to our landscape, but it also allows a much better governance of data. We have standard data, we capture all the data that flow across those communications from platform to platform. We store them into a central database that is of course in the cloud, hosted into Azure cloud, that we now consider our source of truth. So we are moving away from having 28 scattered sources of information across the landscape into a single one. I'm not saying we are there, but this is where we're going. Moving data, especially where you talk about millions of guest profiles. I'm not going to give you the exact number, but it's millions. Moving data is not a job that you do overnight, but it takes months. And this is exactly what we're doing. And now that we have this machine in place, we're very happy with it. We are using a technology from a company called MuleSoft, which is a Salesforce company. The platform is called AnyVoint. We have an amazing partner working with us. It's called Cap4Lab. It's a German company. These guys are a golden partner of MuleSoft, and they really know how to actually leverage the capability of that platform to the best. We have already realized all the necessary integration to keep running our business without disruptions. So we will convert to this new landscape very soon, in the next two months. And from there on, of course, we'll need to grow. and keep integrating, let's say, less important solutions, but also to introduce new technologies. This is also what we're doing. We are working on introduction of some core elements that we replace some old core elements, so to speak.

SPEAKER_02:
I'm curious to learn more about this data layer. How did the project come about? Was this a need that you recognized there's pain associated with getting data from all these different sources and maybe it's not accurate? And then how did you go about implementing this project? Is there a team doing it? Is it in-house? Do you use a vendor?

SPEAKER_00:
Well, as I said, we realized that if we wanted to implement a digital transformation strategy, transforming was not going to be as easy as we thought, just for the simple reason that some of our core technology that are so important and so essential for the business, I'll just mention one, the PMS, the property management system. This is the platform that all of those use 24 hours a day to run hotel operations, right from check-in down to anything. Now, If you want to innovate on that front, you can't just introduce another solution overnight and swap the attempts because you cannot jeopardize operations. And also that data migration out of platforms which are proprietary, they don't really have interfaces that you can connect to or you cannot connect to them easily. make the migration of data impossible. Now, if you extend this, you know, basic considerations to a number of platforms, which could be, I don't know, the booking engine, the central reservation system, and things like these, you just realize that you cannot innovate if you don't create a subsystem or sub layer of systems, which enable that transition without disruption. Okay. So we came to the conclusion that we had to build this layer to orchestrate the integration across platforms so that we could, while we were providing this new integration and therefore new channel to exchange information, we could actually remove or do something on the other side. Let me give you an example. Today, the PMS, the property management system in every hotel, not just in this one, is interconnected to a plethora of different platforms, for example, a booking engine, right? So when you go on the website and you book your vacation, the first thing that that machine will do, we talk to the BMS and make sure that you get a room, right? And then there is a room for you in that period for the number of people that you're bringing along and stuff like that. And then you get a confirmation. When all that happens on a provider channel in a provider way, you can't really intercept anything. You cannot stop it. Otherwise, you don't offer people the ability to book anymore until that situation is done. If you create something that on a parallel track can actually deliver the same information in a structured way, you are achieving at least two results. Number one is that you have a much easier flow of information from A to B and back to A, but also you capture all the data properly. You put those data where you want in the format that you want. And that means that for every booking, We can capture information about the bookers, right? So who is this person? Who is his family? What is that they like? What is that they want? What is their requesting? How much they are spending? All this information. You realize that once you have a few millions of this information, you have a lot of data, which become very useful to actually customize your offer more and more and try to match what people want from us rather than offering always the same flat service to the same people. And this is particularly helpful in a situation like Falkensteiner, because we have several different offers that we give to different people. So we have family hotels where, for example, we put a lot of focus on kids entertainment, right? But we also have active hotels, which very likely are more oriented towards people or couples that like to be very active. They like to do sports from the moment that they wake up before they go to bed. We have wellness hotels where there is a lot of attention to what we do in the wellness center in the spa. So once you know your customer better, you can actually squeeze those capabilities that you have to the maximum and offer customized or tailor-made hospitality products and services, which is exactly what this world wants today. Hospitality has also changed a lot and people discriminate a lot when they decide where they want to go depending on how good you are on matching their own needs and requirements. And therefore the ability of different shade the offer is an essential element and like i said data and everything and another problem that we had is that. the best way that we could find in the previous years to collect those data was to, you know, sort of dig into those 28 different sources of information, try to aggregate the data in the best possible way. Tons of scripts and made scripts running overnight, trying to bring the data where they were supposed to be, producing management reports or financial reports. Okay, all good, but very expensive, very difficult to run, very risky. and also not always accurate. And the last thing that you want is give the wrong financial reports to the CFO or to the CEO, right? So by considering all these and made all the thoughts that we could, we came to the conclusion that we needed this additional software. We initially thought we could do it internally. But, you know, one of the challenges of hospitality is that the core business is something completely different from technology. We sell experiences, we sell emotions. And therefore the effort and the budgets that you put on technology, they are always limited, especially when compared to the car business. This is something you cannot get away from. And therefore we came to the conclusion, we didn't have the skillset and even the resources to do this because this was going to be, and is actually now a central element of our landscape. It has to work flawless. It has to be extremely good on performance, reliability, scalability. And in order to achieve all these things, you need knowledge and resources. So we went out on the market, we scouted for a few solutions, and we concluded that we wanted this Anypoint solution from Ubisoft. And we asked one of their golden partners, Cap4Lab, to actually help us to build this platform. We did a phase one or a prototype, which was very successful. And now we almost finished with phase two. And when we finish with phase two, it can go into production.

SPEAKER_02:
The focus on personalization is really interesting to me. When we look at other eCommerce websites like Amazon, all of the recommendations are so personalized. Amazon has so much data on us and is able to make really relevant recommendations and take all of our money. So I'm curious, what sort of results have you seen or any early signals that the focus on personalization is giving the results that you want

SPEAKER_00:
You see the thing is that of course we already do that. Well at least we try in the sense that having those data even though scattered across platforms and not always in the same format as we wanted. that we do that so we are not selling anything flat but we realize that there is a lot of room for improvement in the sense that specially with the new generation of customers, millennials and their kids etc their expectations are changing for example they look a lot more about our places sustainable rather than what kind of food you said but food is also important because We have a lot of different choices for fruit from vegetarian to vegans to people that like eating all the fruits of whatever, or people that have a special taste for fish and stuff. So if you start building your ability to capture data with even more details, you can only become better. Let me give you an example. I'm sure many hospitality companies, they know that what people are drinking more or less, right? So for example, you can say that people are drinking water or they're drinking soda or they're drinking super alcoholic drinks or beers. But what we want to do here with this level of details on the data, we want to know what soda you drink. We want to know what super alcoholic you drink or what beer you like. Because think about the five star hospitality hotel, you know, five star, five star plus, like many of our properties requires not just a special touch, it requires a great touch, an amazing touch of attention to things. So if I know that you're coming to my hotel in Jadera in Bundaskala in Croatia, right? Five star plus. And I know you're bringing your husband along, your companion along. And this person likes Chopin. It would be amazing that the moment you step into the room, the TV screen is displaying some Chopin music, right? Or if I know that you like roses, I will do everything I can to make sure you find roses in the room the moment you step in. The first thing you see on the table is an amazing bunch of roses, right? Or that your kids like, I don't know if we can do advertisement here, but they like Pepsi. Yeah, let's put a stock of Pepsi in the refrigerator. I mean, the cost to us is zero, right? But the emotion that something so simple can give to our guests can make a huge difference. And when you can have seven days ten days fifteen days like that it's a continue surprise like these people really know me i mean it's incredible they know me to cook nice me i have been here already appreciate me like friends so the feeling of welcome home becomes real. Because if you like roses, I'm sure you're going to have roses in your house, right? And your husband will be listening to Chopin or Beethoven all day long, right? So welcome home means, okay, you're just changing the walls, but the feeling is the same. And that applies to technology as well, because the home of today is not the home that it was 20 or 30 years ago. Homes of today are full of technology. There's technology everywhere, from Alexa to the smartphone, touchscreens, to automatic controlled environment. and things like this. So our hotels are also adjusting and changing with regards to that, because if I'm telling you welcome home, but then I'm hosting you into a home of the 60s, there is no connection between the two things. So we already have some properties that we will have more in the future, especially the new ones that we're building, that will have a lot of the home technology that you see streaming on the screen, whatever you want, having a touchscreen from where you can control everything from lighting to curtains, or very simply a way to use your smartphone to ask something to housekeeping or to ask for a cocktail while you are enjoying some time at the pool or because you need a different bathrobe. I mean, take me for example. Usually when I go to a place where there is a wellness center, I get into the room and I find a bathrobe on the bed. Unfortunately, I'm a big guy. I'm 630 kilos, so I need a triple XL. Otherwise, no way I can go to the spa. And what I usually find on the bed is an L. So the thing that I have to do is get to the room, try to call reception, maybe wait because they are not always there, ask for a bathrobe, wait until somebody delivers the bathrobe to me and then I can eventually go to the wellness center. which is the thing that I was longing for since I started driving to the location. And there is no worse feeling that I get to the place just thinking about wellness, and I cannot go immediately because I have to wait for the bathroom. If that product knew that I was a big guy, they would do whatever they could to just place a proper bathroom on the bed for me. When I know that, I can do that. How do I know that? Because first time that that happens, and I'm asking for that size, the housekeeper will log that information in the mobile application that the user that we have, because we have deployed the cloud based technology that allows housekeepers and maintenance to work with that technology. We'll put that information in the housekeeping solution throughout our API middleware. We go into the property management system. So next time that I place a booking into that place, reception, we'll see that a big guy is coming and they will tell housekeeper to put the triple XL on the bed.

SPEAKER_02:
I was curious to know, how does the data translate from a report or something on your computer to real life where housekeepers are maybe changing the amenities that are in the rooms? So you mentioned you have a mobile app.

SPEAKER_00:
We have a partner called FlexKeeping. It's a cloud-based solution, which basically, you know, has a backend, but also has a mobile application. So housekeepers and maintenance people, but also supervisors or general managers, anybody interested in that side of the business can install and use that application on their mobile phones. So for example, every housekeeper will get their daily schedule on the mobile phone, so they know exactly which room they have to clean according to what priority. And you know, they also know about guest preferences, so they can do something to enhance and improve the experience at the moment the guest is stepping into the room for the first time. But not only that, for example, if you're cleaning a room and you realize that there is a damage, there is a problem with something, a pipe or the shower is leaking. From the same application, you can actually take a snapshot, put it in the app, put a quick description that goes immediately to maintenance. Maintenance will see in the photo or in the photos that there is a problem with that, can go to the room directly with a spare part and fix it in a few minutes. See, since we introduced that technology, we have reduced the number of phone calls among employees in the property by 70%. We have increased customer satisfaction by 56% and we even, you know, had people had to walk less into the property, which is, you know, they save time and they a little bit less tired in the evening because you know that when you do housekeeping in your hotel, you can walk kilometers every day or miles, right? So if you can save a little bit of debt to people, they have more time to do something more useful. and for example if i don't have to go back and forth from the room before i can determine what the guest needs of what is the damage to be prepared i'm saving so much time. All those data they go into our source of truth that i mentioned before and they actually reach the profile of every guest so that we know more and more and more we can do a much better job every time the guest is coming back in any of our properties.

SPEAKER_02:
And you mentioned guest satisfaction has improved as well. How are you measuring guest satisfaction? Is there a system you're using?

SPEAKER_00:
We have several ways of measuring guest satisfaction from the most common traditional tools, which are the, you know, over the top channels like Booking.com or TripAdvisor, but we have our own kind of survey process. So after checkout, in a matter of few days, our guests would receive a very simple email I wish we say hey we would really appreciate if you could tell us how you liked it you please you know feel this survey it just takes a few minutes of your time we use for us once again those informations which are stored in the CRM whatever is relevant to reach the guest profile. throughout the API middleware flows back into the database. And therefore we keep reaching the guest profile, but we also managed to know in the end how it works. And that feedback is absolutely important to us because this is what the operation senior leadership looks at every day probably, checking the scores, checking the results, comparing us with our benchmarks and finding ways to do better and better.

SPEAKER_02:
I'd love to dig into your tech stack a little more. I can't recall. Did you mention who your PMS vendor is?

SPEAKER_00:
No. Property Management System is Prodel, which is one of the well-known manufacturers in that area. Although we are looking at other potential solutions because we believe we are convinced that out there, there are new solutions which are more fitting into our digital strategy transformation needs. One of these that we are carefully looking at is Avaleo. Apaleo is a very innovative company that made the step from startup to a real company now. And that PMS is actually what I would really use to make a PMS myself. First of all, it's native in the cloud and there is a huge difference between creating something in the cloud directly made for the cloud rather than migrating something into the cloud for the first time. But the beauty of this solution is that not only is essential and goes straight to the point of operations without any other useless functionalities, but what is really good is that it's an API first solution. API first means that when you build a piece of software, you implement the API before anything else. So they have literally an interface for anything that you can do with that platform, which means that even they, when they had to build the user interface, the front end of the thing, they didn't build anything special. They use their own APIs, which is amazing if you think about it, because it gives you the possibility to manipulate every single aspect of whatever it is in the pms from guest information to reservation to logs to financial information and anything that flows into the platform from outside because they have of course being an API first platform. they have a very well documented set of api's which are ready to consume. Another limitation that i frequently see in this world, especially in hospitality, but not only hospitality, that those few software vendors that actually do have api's, they actually ask you extra money to use those api's. And usually that extra money puts stress on the room margin. which is counterintuitive. If you want, it's a paradox. If you think that if you want to do digital transformation, you have to reduce the room margins. And the more transformation you want to do, the less margins you have. This is unacceptable if you ask me. So for sure, my ideal vendor, if you like, is not just somebody that, you know, is cloud based, API first or whatever. but it's somebody that understands the hospitality business and builds a pricing model, which has to be a win-win situation. So for example, of course you can charge me on a per room basis. That's okay. But that should cover, don't ask me extra money for the APIs because that becomes inconvenient for me. Unfortunately, many out there do that. Few of them, they don't. And these are the winning horses, if you ask me. So I would say that in my view, although I was very clear in the beginning, I don't come from hospitality, so I might be completely wrong, but in my view, this is where the PMS product as a product with capital P is going in the future. Sleek, essential, API first, completely cloud based with a very, I would say, smart pricing model.

SPEAKER_02:
Yeah, and I think there's also opportunity to turn technology from maybe traditionally being thought of as a cost center. You know, this is just an expense that we have to incur, but in reality, it should be unlocking revenue. It should be saving you money on personnel time. It should be giving you opportunities to get incremental revenue rather than just being an expense line item.

SPEAKER_00:
Absolutely. And again, there's a lot we can do in there. We already do something in there. Of course, when it comes to upselling, it goes without saying that the more you know about your customers, the easier upselling is. Not necessarily, but in theory, it is easier. But it's also, you know, automation can do a lot because it can save a lot of people time that they spend on routine tasks or repetitive jobs when they could actually use that time to produce more revenue or better revenue. And that is, I would never underestimate the possibility to create new revenue streams. I mean, let me give you an example. And out of the things that this new generation of customers they are really looking at very carefully is they want to go into places where they know that they can spend time outside the property and they do amazing things out there. So another thing that we're working on is actually adding the possibility to our guests also to have a sort of catalog of experiences they can get outside the problem. Of course, it's a selected set of experiences from a selected set of vendors, partners that we trust, or partners that our partners trust. And I mean, for us, the cost is, I wouldn't say relevant, but it's minimal. But the value that it adds to our guests is immense. And it also creates new revenue for us, because of course, I mean, it's a new product that you're buying, and therefore there is an extra cost for it. And it's an opportunity that I would never underestimate. And we will soon, you know, pilot this solution in Croatia. And then if everything goes well, we will extend it to the rest of the properties. We need to be extremely careful in what experiences we select, how convenient they are for our guests, if the price also makes sense to them. But I think there's a lot of opportunities out there.

SPEAKER_02:
Just going back to your tech stack, also curious to learn about revenue management and distribution. How are you approaching those?

SPEAKER_00:
When it comes to distribution, we rely almost completely on our booking engine partner. We have two partners for the booking engine slash CSR, so to speak. We use cloud technologies, which already have inside the solution all the, let's say, distribution features and connections and channels that you need. from the most well known, like booking or whatever, to some regional partners, depending on the needs. I mean, of course, as an operator, we might have needs which are completely different from Marriott or Hilton or whatever, but we also make our choices there. So distribution is managed completely from the cloud solution that is embedded in a booking engine and channel management solution. We are also looking at other alternatives. For example, recently, we are monitoring very carefully some blockchain based solution, which of course would make the cost of distribution extremely low. But we like innovation. We like the idea of being on the edge of innovation. We don't like the idea of making innovation, right? Because we are not pioneers. Again, we sell emotions. We don't sell technology. And even though these new opportunities are very interesting, we don't really see anything useful at the moment, especially in terms of blockchain. because the big challenge for blockchain is ok it's very convenient from a price perspective but the volume that you can achieve is irrelevant to the volume you can achieve for example when you use booking.com. So when you pay booking you don't pay booking because they are sending you a reservation, you pay booking.com because you are exposing you towards millions of people. that's where the value is right and so before these new alternatives compared to the traditional ways can become interesting channels I think there's a little bit of time and effort to spend on them but we are watching we watch everything probably more than we should be watching but it's better to know more than no less right and then revenue management okay revenue management of course we have a solution which is called rate board and it's easily integrated easily I won't underline easily integrated with our technologies it's a great platform we like it very much. We have an amazing relationship with them, it's part of the Zucchetti group. And they actually listen a lot to us, I think this is another premium value that I always look for into partners when they listen to you. Now I don't necessarily mean that they do whatever you want, but listening means considering and if you have a process to listen and consider your customer needs, Sooner or later, you're going to end up having interesting functionalities in your roadmap, right? I understand that when I have a software as a service solution, it tends to be a black box because when you make change something, you change it for all customers. But if you can run a process which can actually incorporate customer requirements, you can deliver, that makes a huge difference for people like us. And Rateport is a good example. And so revenue management happens through that, which means we have a lot of information coming from our competitive set, depending on locations or periods of people, et cetera. And actually we have a team that is actually monitoring and executing changes to price and to rates and offers, sometimes real time, depending on what happens. Now, what I see there as the next evolution in terms of revenue management, I see a lot of room for AI. I mean, first of all, AI can process volumes of data that humans can only dream about. And also AI can see patterns where humans cannot. So I'm envisioning, if I can say so, the next generation of revenue management solution with very AI centric, where ideally the AI will do a lot of the work, not everything, because I think that human supervision will always be required, but AI will do a lot of the work and will be a much better and much faster and more effective work that any human can do. Even the most expert revenue manager you can think about. So again, we are in a situation where a lot of work happens manually, even if supported by a lot of useful data. But tomorrow is no longer the case. So I'm just expecting the next step with the actually speed or pace that things like chat GPT or Google bar, which is going to be Gemini and things like these Elon Musk investing into that Amazon investing into that a lot will be changing. I'm sure the AI is here to stay. We should reconcile ourselves with that idea. It's here to stay and it's going to be invading our daily routine more and more. It will be everywhere. See, what I really like to think is that AI will soon bring those technologies from proactive to predictive, right? And this is where the artificial brain can make a difference. It's because, you know, if I'm telling the machine that I have an objective and the machine can foresee that I'm not reaching that objective, it can actually suggest me things to do and say, listen, now there's a situation here. If you do this, you might actually catch that number of that KPI because, you know, we changed something. But this is exactly where the human being comes into the game. Because in the end, a machine is a machine and all determinations and decisions are only based on algorithms and nothing else. And they might just be wrong. So I trust the ability of human beings to make a difference on the decision level. We don't need human beings to process numbers and data and to try to determine whether or not A is good or B is not. But when the decision comes, I think human beings can make a difference. I mean, would you ever fly an airplane without pilots in the cockpit? I wouldn't. No, because I think AI can do 90% of the work, but when there is an emergency, I have nothing else than a couple of human beings, very well trained and not panic people in that cockpit. And then on a smaller scale, that is exactly what happens with business.

SPEAKER_02:
Switching gears slightly, I just have a couple more questions. Wondering at Falkensteiner, what are one or two high priority business objectives that you're working toward and how is technology helping you get there?

SPEAKER_00:
Well, once again, I'm sorry for repeating it, but I would say that bringing order into the chaos of data is priority number one. Again, we have so many data that it would be a shame if we didn't do something to improve them, to make them better and more importantly, to use them. You would feel like owning a Ferrari. and then driving at 30 kilometers per hour. Now, I'm not saying you have to go 300 necessarily, but if you own a Ferrari, sometimes once a week you would like to go on a truck, you know, and free out all the horses that you have. But the thing is that if you have a Ferrari, it means you made an investment, right? You spend 200, 300,000 euros on the machine and then you never use it. It's just a shame. I would feel like embarrassed by that. And you know, hospitality needs to realize that hospitality has a lot of data because hospitality is with people and their emotions. And those data can be very useful. The problem is that you need to bring order into the mess. And this is exactly what we are doing and what we continue doing for the next few months by using the technologies that I mentioned, some other technologies and processes around it. And also to introduce, you know, I would say the introduction of artificial intelligence. is also another priority we're working on, but not just for what we discussed so far, for example, into analytics, right? I mean, of course, AI into analytics is very useful for the reasons that we mentioned already, patterns and volumes and speed, et cetera. But what we're doing, another very interesting and critical projects we're working on is we are actually building an AI chatbot specifically made for Fokker Steiner. Now the challenge there is, first of all, you don't find many hospitality products out there. And those that are made for us, but they're really basic. So in the end, we identified a partner called indigo. Um, they were extremely happy to work with us to actually build a product based on that technology, which would fit our requirements. So we designed the entire architecture and use cases and the system ourselves internally, and they developed it for us. So now we have a very good working prototype of AI chatbot that we can deploy on websites, we can deploy on mobile apps, we can deploy on mobile pages, any possible channel you can think about. which is able to answer a lot of generic questions about our properties, about our services and products has been specifically trained for that. And we have also introduced a very interesting concept. We have actually tried to change the definition of the standard booking process. So I mean, up to the day, unless you call a call center you go to a travel agency the book process is always the same, you go to the website, you start from the dates, ok check in check out, how many adults, how many kids, what is the age, ok next screen, oh i have this solution for you, oh you can go here, ok i like this hotel, click. okay based on the people i would suggest this room but we also have this other room okay i like this one and then okay would you like breakfast only or you know i don't know half board or breakfast only would you like any tennis package or okay no thanks and then you end up into the landing page where you have to fill all your information about yourself and your family and they It's ok i mean it's something that people are used to but it's boring so we have now implemented a different approach. You can actually shoot your request to the chat but like talking to a person and say hey i'd like to go to gracia from twenty january to twenty seven. What was two kids twelve years old ten years old can you make me an offer the chat but depending on the situation will ask if you have a budget in mind. And then by interacting with the booking engine in the background, things that the user will never see, of course, will just give you a choice and say, OK, listen, I think you should go to Yadera because it fits your needs. This is the meeting you should get this room. OK, you like that? Yes. OK, you want to have breakfast only, you just want to sleep or whatever. Three steps and you end up into the page where you only have to pay. Now, it's not only beautiful because it changes the experience, But we have created a booking process, which can actually place anywhere. Even if you don't have a website, you can still book your vacation using a chatbot, which is honestly amazing.

SPEAKER_02:
Is there a revenue management component? Like if I say my budget is 300 euros a night, but maybe the bar rate is 320, will the chatbot actually adjust the rate to fit my budget? Or would they say, sorry, we're out of your price range?

SPEAKER_00:
Now the chatbot will look into the booking engine and see if there are alternatives. But we didn't want the chatbot to be able to interfere with trades because we consider that a little bit premature considering the technology. But of course, and it's amazing that you asked the question, of course we have that in the roadmap. So one day we would really like to be able to do that. But see these technologies maturing so quickly. that what you consider difficult today or even risky today will very likely be normal in two weeks.

SPEAKER_02:
Right.

SPEAKER_00:
So, you know, six months ago I was constantly comparing ChatGPT to Google Bart. And I even stopped that because it doesn't make any sense anymore. They keep changing every day. And talking about those large language models, I also wanted to add that we have made an extra effort to actually integrate our chatbot with those machines. Because we said, okay, Microsoft has invested $10 billion in the open AI. Okay. That means then nobody in the planet, if not Microsoft or Google or Elon Musk or whatever, they have the power to make that level of investment to create those monsters. Right? So rather than trying to artificially reproduce a similar situation in a small environment, we should use those machines to process the natural language. So what happens today is that when you interact with a chatbot and you ask something, of course, the chatbot knows the answer. Before giving you the answer, it will ask chat to refine the quality of the answer and create an answer which is closer to the human expectation, make it more natural, and then we give it back to the user. That really changes the experience completely from cold to hot And the reason why we decided to integrate both ChatGPT and Woolpart, well, first of all, because honestly, today we can't really determine who's going to be best. It's no way to. The second thing is that we wanted more of a fallback plan. So if one of the two has a technical issue or something, a couple of months ago, OpenAI made a massive update, a major update of ChatGPT 4. First of all, they had 48 hours of outage that nobody could do anything with it. Then they fixed it. Unfortunately, that update changed so many things in the APIs that we had to work two weeks to fix our own chatbot. Oh, no. So when that is in production, you don't want that. So now we have a fallback mechanism that if chatbot is down, it goes to barter and vice versa. If we see something wrong in one of the two, we can manually switch on the fly. So there is no interruption from the service to the service for our users. So as you see, I mean, we're building things inside. We're using our brains to create innovation. But we also use technology that is available out there when it makes sense.

SPEAKER_02:
Well, great note to end on. If there are any other topics or any final words that you'd like to share, I'll open it up to you.

SPEAKER_00:
I think for me, hospitality is an endless discovery every day. Probably because before two years ago, I knew just nothing. It's not that today I know everything, but of course I know a lot more. It's a beautiful discovery and it's a very challenging but rewarding experience. And I think maybe hospitality can also learn something from people like me in the sense that when you don't come from hospitality, you bring a different angle. You see things that I don't see because it is like this, right? And I think that having a fresh angle into hospitality also allows hospitality to realize that out there, there is a lot of technology which is not taught or made to be hospitality technology. but it's so good and so usable and useful to hospitality that hospitality should really have a peek outside and have a look at those things and say, you know what? I was looking at my own little galaxy here, but there is a universe out there I can choose from. And it's a very interesting discovery. I mean, if I can send a message, I would love to encourage hospitality people, especially decision makers, to have a look outside and see what's waiting out there, because there's a lot. There's a lot of things that we don't need, but yeah, there's a lot and the discovery process is fantastic.

SPEAKER_01:
That's all for today's episode. Thanks for listening to Hotel Tech Insider produced by Hoteltechreport.com. Our goal with this podcast is to show you how the best in the business are leveraging technology to grow their properties and outperform the comp set by using innovative digital tools and strategies. I encourage all of our listeners to go try at least one of these strategies or tools that you learned from today's episode. Successful digital transformation is all about consistent small experiments over a long period of time. So don't wait until tomorrow to try something new. Do you know a hotelier who would be great to feature on this show? Or do you think that your story would bring a lot of value to our audience? Reach out to me directly on LinkedIn by searching for Jordan Hollander. For more episodes like this, follow Hotel Tech Insider on all major streaming platforms like Spotify and Apple Music.