McDreams Hotels' Managing Director on Immediate Applications of AI in Hotels
When we talk about the AI brain, when we want always to connect the PMS data to the data of the AI. Yeah.
Speaker 2:From Hotel Tech Report, it's Hotel Tech Insider, a show about the future of hotels and the technology that powers them.
Speaker 3:Today, we're speaking with Dominic Klein, the managing director of Mc Dreams Hotels. McDreams is a budget hotel brand in Germany, which will soon open their 9th hotel. Dominic shares how his properties have adopted technology to create a seamless guest experience. Dominic also explains how technology can help hotels retain their best employees and why it makes sense for budget hotels to invest in technology. I like to start the conversation by getting more of an understanding of your background and what you're currently doing.
Speaker 3:So if you could please walk me through your career so far, how you got to where you are today, and what you're doing for your organization.
Speaker 1:Of course. So I studied economics there. And in 2009, I founded Magrimserteles. And now we are operating for 15 years and started with the first property in Wobbatau in Germany. And now we are operating 8.
Speaker 1:And in Stuttgart in August we were open the 9th one. So, yeah, we are in the budget segment. We always try to be surprised leadership, get advice leadership and have a lean product. Just concentrate only on room nights. All houses are around 100 rooms, some a little bit less, some more.
Speaker 1:The biggest in Munich at the airport with 145 rooms. And yeah, so it's my career, what I did and was in a little bit in consulting for PKF Hotel Experts to get us in touch there. And, yeah, and then found it directly my own company, and it worked. And, yeah, now we are 15 years operating. Yeah.
Speaker 3:And how many hotels do you have in the portfolio?
Speaker 1:8 hotels we're operating now, and the 9th is opening in August.
Speaker 3:And are all of your hotels owned and operated by McDreams, or are you franchising?
Speaker 1:No. We have our own brand, and we operate by by ourselves. Yeah.
Speaker 3:Well, let's dive into the technology that you're using at McDreams. I understand that you just experienced some changes with your tech stack. So I would love if you could walk me through what you're using to run your hotels from your PMS, guest experience app, anything else that guests or employees use on a daily basis?
Speaker 1:Yes. Yes. So in last year, we did a big change in our technological leap. So when we watched through the markets for the last years, we get after Corona and after the Ukraine war, the costs explode. And we have to also check our personnel costs.
Speaker 1:They raised too high. And afterwards, we say, oh, how we get changed and get our product in the right way back again. And first of all, then we say, okay, we have to change the PMS system because we want an open API based PMS. So when we wanted to change our PMS to an open API base so that we can always react quickly and flexible. And also, we had to change due to Corona with cashless payment in all our hotels and we changed the operational structure.
Speaker 1:We don't have this long reception times now, and we changed it from 5 people of a reception to 1 host and changed more to an operation system like the serviced apartments do in Europe. Yeah. And this helps us to save personal costs, yeah, and also to get the quality higher because when we then optimize our digital guest journey, we put a product in like magic, which was perfect fitting for us. We get this easy online check-in. And for the guest, it was a higher quality.
Speaker 1:He can react via WhatsApp and get his progressive web on, where he can check-in online, where he can book, where he can change his address or his company address. He can open the room. He can get Wi Fi or TV connections there. So this was, I think, the biggest change with the guest journey, the PMS. And also we put in AI components.
Speaker 1:Yeah. So we had a lot of calls in the past in our reservation and help center. So in the last month I checked it, it was 10,000 calls per month. Yeah. And all the quantity in Apto is we've hired over the last years.
Speaker 1:It was not that quality we wanted or we expected. Yeah. And so we now have the big chance to hire our AI assistant, Lisa. And she works 24 hours a day, is never ill, and she knows everything. She's our super brain.
Speaker 1:And if you call her and ask her about if you want to park on an electric vehicle, the parking place, she knows at which hotel we have this. And this has also helped us a lot.
Speaker 3:For Like Magic, which you're using for the guest experience app, how did you choose Like Magic? What was your process to select a vendor?
Speaker 1:Yeah. We got a overview of what's the big topics what we need for our customers. As we are only operating with the room nights only and don't have any f and b out, it was much easier than if we act like a normal hotel. And so we checked what's the best one for us. And, yes, there are some operators out.
Speaker 1:But with Marcus from, like, Magic, we get a very good contact, and they did a lot for us in programming special task for us, and so it was a perfect fitting.
Speaker 3:I just wanted to learn a bit more about their relationship with LikeMagic. So do you have regular meetings with them to review how the app is working for you? What if you have a suggestion for a feature that they could add?
Speaker 1:Yeah. At the beginning, it was like daily meetings. Yeah. And afterwards, there was a weekly call. Nowadays, we installed everything between mid of December to mid of March.
Speaker 1:We take over all our properties, PMS, guest day. And so, yeah, nowadays is one time in the month where my team get all the impulses from software needs and reports to them. And it's easy. As a very good team, they also want to expand and take over more properties. So yes, they know they have to do some small topics.
Speaker 1:But in total, it's a very high quality of system.
Speaker 3:I want to step back and talk about the migration process a bit. I know we have some listeners who are considering switching from an old PMS to a new PMS since you have just recently migrated 8 hotels. Do you have any advice to share on the process of migrating to a new PMS?
Speaker 1:Yeah. So it was easy. I never thought that it would go through like this. But as all the new systems known to this, especially Apalio, they have a very good team in LiveMagic also. So we could transfer the data easily.
Speaker 1:And from our side, we could make good project managing. So I think this is important to have a team where everybody knows about the things to do. Yeah. A leader who take over in the processes and yeah. So but nowadays, I think it's no problem to change the technological leap, its infrastructure.
Speaker 3:So you do have a few different systems that plug into Appuleo, and I understand Appuleo has an open API so you can really create a network of systems that you use on property. Was that one reason why you chose Appuleo? Were there some other things about that system that drew you to it?
Speaker 1:Of course. When you react quickly and flexible, it's so much worse because in the past, when we wanted to get an interface new, nearly needs 1 year to one and a half years for just an easy interface. And why this needs a long time? But there are so many integrations, processes in the back of the big PMS vendors, so they can't get it so quickly. Yeah.
Speaker 1:And our markets also always need that we can react quickly and flexible. We search for PMS that can react quickly and flexible. And with Appelio and with Filip from Appelio, we had from the beginning very good meetings. And also, everything what he told us now works, and we are very happy with the change.
Speaker 3:Can you talk me through the other systems you use that connects to Apalio? So you mentioned Wi Fi payment processing. Are there any other systems that plug in?
Speaker 1:Keycard interface. Yeah. It's in channel manager. We have reputation management. We have Magic.
Speaker 3:And what are you using for channel management and reputation management?
Speaker 1:We use, DS 21 for channel management and Trust You for reputation management. So many differences there.
Speaker 3:Something for revenue management?
Speaker 1:Yes, of course. Of course. Telestat. Telestat, we work. We also in the past had another revenue management system, also switched to this one.
Speaker 1:So it was also very, very good change. And they're in the future looking company and also have a very good product that's what fits to ours.
Speaker 3:So with so many systems, how do you make sure that everything is working the way you want it to? Is there a annual review process where you check-in and say, this system is performing well, but maybe we want to switch to something else for revenue management? How does that sort of auditing process work for you?
Speaker 1:Yes. We always keep our eyes open what's on the market and what's new and what's happened. Yeah, of course. But we are always in contact with our partners to improve the systems. Yeah.
Speaker 1:My team, Ralph, Lin, Franz is a connectivity team and management team. So they do the weekly or monthly meetings with our partners. They try to improve, give them some advices. And so this helps. And of course, sometimes you also have some topics.
Speaker 1:But in total, when we are used to work for a long time with partners, yeah, with our PMS provider in the past, we worked for 10 years. And, also, you know, when we have a partner, what's a partner, how he can help you, and it's like in a relationship. Everybody has to work.
Speaker 3:It sounds like you have a very modern tech stack right now, but is there anything on your wish list or anything that you're considering implementing in the future?
Speaker 1:So what we already did with AI components, we put in those call agent, Lisa. Yeah. And here, we want to do more in the future there. I think in AI, the door is now open. We are already through, but now we have more chances.
Speaker 1:I think about Hikma segmentation. We want to do a little product like an eCocierge, where all our guests get not the spam mails like everybody that gets this hyper segmentation that we know of. He's, for example, like an electric car driver. When he comes to the next hotel, I have to inform him advance that he can book the electric car parking or if he knows that he's a football fan and coming now to the European Soccer to Germany. Then he sent him a short message how he gets to the football stadium.
Speaker 1:And so this is our big topic, to collect the data from our calls and from our chats to get the data into, say, a guest profile and use it in the future for this hyper segmentation.
Speaker 3:For the guest profiles, is that data all stored within your PMS, or do you have a separate system specifically for CRM?
Speaker 1:There is a connection between LikeMagic and Appelio. So everything is, like Magic, collects, and they put it to our guest profiles and get it into Appalio. And also, when we talk about the AI brain, when we want always to connect the PMS data to the data of the AI. So when you change maybe for the parking, it costs normally 10. Now you switch and now it's €12.
Speaker 1:So we wanted to directly go through to the AI. And you don't need to have many systems and collect data in every system. So we want to have one system, and this goes out and all the data to the other systems.
Speaker 3:I'm curious how have your guests responded to the AI communication? Are they happy with it? Do you see anything in guest reviews? Does anything show up and trust you with guests mentioning how they feel about it?
Speaker 1:In the past, you called and maybe waited for 5 minutes to get a call agent on. And now we went down to under 1 minute. So the guests like it very much. They can get all their main topics from Lisa. And if they have special requests, they call.
Speaker 1:I like to speak with the call agent, and we have a very direct flu on, and so it's easy for them. So I did not see any bad interest here. So I think for them, it's a higher quality and they get a profit. For them, it's good. Yeah.
Speaker 3:Switching gears a little bit, I'm curious to learn about some of the high priority business objectives that you're working on right now. So I know McDreams is looking to grow in the future. If there's anything else that is high up on your list of goals, how is technology helping you get there?
Speaker 1:Yeah. Technology helps a lot. Yeah. So we always as of when we founded 15 years ago, we are not were interested in technology, but there was no online check-in or 15 years ago. So we did it in the first steps manually.
Speaker 1:We send it as messages to our guests with a PIN code to the room. And with all these components that came over over the last years, it helped us a lot. And now with AI, it's so easy. One process we discussed 2 weeks ago that we always check from channel manager if as the booking went through to the PMS, and we checked the mail. Yeah.
Speaker 1:Just a quick review. Yeah? And why we do this? And we gave this to Jochen and say, hey, Jochen. We need this checked by the AI.
Speaker 1:Yeah? And in between 1 week, we announced this process digitalized. And you can imagine we have like 200,000 bookings per year. So it's a lot of safe time and our employees get more quality inside their normal business because they don't need to do this work with the stupid work. Just look and, yeah, okay.
Speaker 1:So I think this is the way it goes over the next years. Also, when we talk about salary, yeah, in our segment, people are not so well paid like in other segments. Yeah? And through the technology, I think we can pay better salaries. We can do exports in every part.
Speaker 1:And, yes, this helps also our in the hotel area. Yeah.
Speaker 3:I'm curious to hear from you. We're just thinking of changes in the workforce and hospitality. What do you feel are 1 or 2 skills that a hotelier should have today to be successful?
Speaker 1:I think what's important in the hotel and tourism is that you always try to figure out in which way the market moves after Corona and after the Ukraine war. I think a completely different market compared to the years 2009 to 2019 for over 10 years now. We have more hotels in Germany. The demand changes a little bit. You need to be clear in your price strategies.
Speaker 1:In event times, you have full hotels, you have high rates. In the other times, it's low season and it's price war. So I think you have to be clear in your strategy and you have to get your costs in a good way that you can operate in high times, in the event times and also in the poor seasons. I think this is important. And the other part is what I talk to train employees to get them in a higher quality, to not to have this higher end file structure.
Speaker 1:The the work for a long time for them, that everybody knows the structure and the systems and is willing to perform well.
Speaker 3:Thinking of the future again, I know you're very interested in AI and also robotics. How do you feel these two technologies will influence the hotel industry?
Speaker 1:I think especially for the budget part or the economy segment, like, also for the service departments, this will, in fact, remark here because the data and all the AI processes will help to get the cost down, to get the quality higher, to get the the staff well paid, and to improve your product. And also with robotics, I think what you asked is a special part in the next years because also stuff in the housekeeping is not so easy to get people there. You always have problems there. And so when you have big lobbies, why don't don't use robotics also in the F and B part? Yeah.
Speaker 1:We don't have the F and B part, but I saw about the robotics inside there. It helps. Yeah. And I think this is very interested for the industry and also for us. Yeah.
Speaker 3:Before I let you go, one final question. What is one thing that you believe about technology that your peers or your competitors might disagree with?
Speaker 1:I think in the budget, everybody will agree with me, yeah, with the technology. But I think when you're a 5 star hotel, you don't agree with my mind because you need more personality. You need someone at the reception helps you bring your suitcase up. That's what people expect from a 5 star luxury hotel. They don't want to speak with a machine or they don't want to get a robot to bring the suitcase up.
Speaker 1:But when we look at our segment, people just want to get a quick check-in. They don't want to talk because they are in business. They talk all day in the business. They just want quick to the room. They want to have a high quality product, and then they want to leave easily.
Speaker 1:And in between their time, they want a very good Wi Fi connection. They want a good TV. They want a good sleep and shower. Yeah. And then they leave and they don't need this personality.
Speaker 1:But in the other segments or in the higher segment, I think to adapt technology for them is much more difficult than for budget or for service departments.
Speaker 3:Well, thank you very much for your time, Dominik.
Speaker 1:Thank you.
Speaker 2: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 concept 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.
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