Budgeting season is the time of the year when most of us look forward, set targets and assign a monetary value to the resources needed to accomplish those targets. But why does budgeting in technology seem so intimidating to the Hospitality and MICE industry?
Based on industry talk and industry online sources, such as Skift’s recent article: Events Sector Feels Poised for Tech Explosion, technology is coming to the hospitality industry whether you budget it or not. Technology can radically change the competitive positioning of industry participants and gives an edge for those who use it wisely. Michael Burns, global head of sales and marketing for Aventri, comments in Skift’s article:
“In the next five years I think it’s going to explode,” he said. “We’re in the early adopter phase. And this is just the next stage. I think it’ll become less of a conscious decision, and it will just get incorporated into what people now do to measure their sales and marketing.”
The focus in the MICE technology discussion seems to center on the technology itself; how new gadgets and new software solve this and that problem. Often this approach misses the point, is overly simplistic, and does not focus on the most important thing: benefits. Taking in new technology tools and making the most of them is a delicate interplay between your company’s targets, capabilities, processes, and culture.
Let’s look at a practical example to better understand how you can budget according to benefits, rather than technology for technology’s sake. Say you have set a target of improving the conversion rate of your meetings & events sales efforts. Additionally, let’s assume you have defined that the way you present your meeting spaces and information about them as one of the improvement areas, as our studies we have found this to be one of the top three problems mentioned by MICE salespeople.
The amount of money to be budgeted depends on the ambition level you have chosen for yourself. In the below example, we have chosen three examples of virtual tours with increasing degree of sophistication and benefits:
Maturity Level 1 – Basic Virtual Tour
Showing images of the spaces in context. This is the right starting solution for a lot of venues and hotels. This solution has clear but limited benefits, and improvement for the investment is very difficult to measure.
Maturity Level 2 – Advanced
Showing images and information of the spaces in context, aiding your customers in their buying process and your salespeople in their sales process, and measuring both. This is a more advanced solution, and the benefits are measurable.
Maturity Level 3 – Professional
Showing images and information of the spaces in context, aiding your customers in their buying process and your salespeople in their sales process, and optimizing the material for different channels and uses. This is a fully professional solutions, where the results can be measured and optimized.
What kind of a budget would be needed for each of these options?
There are three basic sources of external and internal costs you should consider. They are on-boarding, monthly running costs, and possible photography. The price ranges below are rough estimates for one hotel or venue and allow you to use a reputable provider that should be around for years.
|Maturity||On-boarding costs||Monthly running costs||Photography costs|
|Level 1 – Basic Virtual Tour||From few hundred euros to about 500 euros.||Recurring cost from 20 to 50 euros||Cost depends on the number of images taken and image editing needed. For a single hotel a good estimate is from about one to three thousand euros.|
|Level 2 – Advanced||From 400 euros to 1.500 euros||Recurring cost from 100 to 300 euros.|
|Level 3 – Professional||From 1.000 euros to 2.500 euros||Recurring cost from 200 to 800 euros.|
|Internal costs||The cost of personnel to find relevant material (e.g. photos) to be included. Typically, from few hours up.||The cost of personnel to keep the presentation updated (if not outsourced). Typically, from hour per month up.||The cost of personnel to guide the photographer and set up the spaces to be photographed.|
The most important point when budgeting in technology, is to execute fast, experiment, build competences incrementally, and select a vendor whose solution may be extended, as your needs grow. This way you are able to generate immediate returns and leverage the learnings from previous phases.