Red Roof outsources its tech stack to HotelKey to tackle labor shortages

When George Limbert took over as president of Red Roof, he met with hotel brand franchisees to better understand what was going well and what was not.

He became interim president of the Ohio-based company in late 2020 and fully assumed the role in August 2021. Meanwhile, of course, the industry was struggling.

The Red Roof portfolio includes 682 hotels across four brands. More than 100 of them are operated by two franchises affiliated with the Red Roof company. The rest are operated by independent franchisees.

One of the main issues was the lack of hospitality workers in the current labor shortage. Franchises needed to reduce their reliance on workers, and technology is an important part of solving this puzzle.

“Innovating to address labor shortages is imperative for us at the brand level,” said Limbert.

That’s why Red Roof on Friday night announced its partnership with Texas-based HotelKey as the company’s official property management system.

All Red Roof franchise owners are required to use the company’s official technical system, which has always been developed, hosted and supported in-house. It was clear that Red Roof was limited in what it could invest, which is why it needed to outsource, said Ted Hutchins, chief information officer of Red Roof.

The platform’s simple interface will be of great help to owner-operators with worker training, he said.

“As you can imagine, they have a huge turnover rate in this job market. One of the biggest problems is if you have a creaky old interface, it takes too long to practice,” Hutchins said.

The HotelKey platform will streamline a number of Red Roof operations, including property management, guest management, central reservations, point of sale, connectivity to third-party reservation platforms, and a loyalty program. Owner-operators will also have access to technologies, such as housekeeping and preventative maintenance apps and electronic signatures, that Red Roof has previously been unable to invest in due to lack of resources.

Franchise owners pay a fee to Red Roof for the technology it provides. These fees had been used to run the internal software system, and now they will be used to run the HotelKey system instead.

“We came from an internal system, where we invest $1 and get maybe 10, 20 cents of innovation out of it,” Hutchins said. “The community model allows me to put in $1 and get two, three, four dollars in return.”

It’s unclear at this point to what extent the technology will drive more guest sales.

“It is difficult for us to predict this…but there are indications that better connectivity with some [online travel agencies] and less complexity in booking leads to better conversion,” Hutchins said.

Is it better to contract a new company or a former player?

HotelKey is part of a new generation of hotel technology, similar to products offered by Canary Technologies, which just raised $30 million, and Stayntouch, the MCR-owned system.

The biggest competition for new platforms is from older players in the industry, like Oracle, Saber, and Amadeus. Older companies have invested heavily lately in upgrading technology and moving to the cloud.

Whether a hotel operator outsources technology from newer or older companies is largely a matter of taste, said Klaus Kohlmayr, chief evangelist and development manager at IDeaS, a maker of revenue management software.

So far, most big brands have opted for legacy companies, especially for central reservation systems, he said. And the portfolios of most venture capital-backed hotel tech startups consist mostly of independent hotels.

“When you’re a really big brand, you want stability and you want to minimize risk, and you want to make sure the technology you’re spending on works. If you go with an incumbent or a large company, the risk is somewhat minimized, but at the same time you probably don’t have the same kind of future or next-gen capabilities,” Kohlmayr said.

“If you work with a small business, you have greater influence over their roadmap and development and can become a key partner with them. And small businesses are more nimble, flexible and nimble than some of the larger ones. actors.”

Either way, Kohlmayr is confident that the investment will continue.

A survey earlier this year of 210 hospitality industry professionals worldwide by travel technology company Duetto found that 77.6% plan to increase their investment in hospitality technology over the next three months. years.

“Innovation or investment is definitely accelerating. Covid contributed to that,” Kohlmayr said. “We are kind of on the cusp of a wave of innovation in the industry, which is just beginning to emerge. I am rather optimistic for the next few years. »

HotelKey

HotelKey supports approximately 400,000 rooms for 3,500 hotels, including 500 independent hotels, primarily in the United States. The company plans to reach 600,000 rooms for 6,000 hotels by the end of 2023, according to Aditya Thyagarajan, co-founder and president of HotelKey.

The company provides technology for all Motel 6 properties through a partnership with G6 Hospitality, as well as all properties for Extended Stay America.

While the company started out focusing on the budget hotel segment, Thyagarajan said it has expanded into higher-end segments. The 10,000-room Evermore Orlando Resort at Disney World uses HotelKey, he said.

In February, HotelKey announced a partnership with a company it said is one of the world’s biggest brands, with properties ranging from economy to luxury. HotelKey is currently used in more than 500 hotels of this company.

As a small company, Thyagarajan said HotelKey has taken the development path together with partners.

“For us, being only seven years old, see this as an incredible opportunity to learn from brands like Red Roof, and that’s how we typically shape our track record,” Thyagarajan said. “And then the whole community can use it.”

HotelKey has over 300 employees, with over 100 openings.

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