On why old-school interfaces are giving way to open APIs in web-native PMS like apaleo.
Dale: Hello, I’m speaking with Alan O’Riordan, Director and Co-Founder of apaleo. Well, we like to talk today about some of the views he has on the industry and about apaleo itself. So, Alan, welcome.
Alan: Hi, Dale, how are you?
Dale: Doing very well, thank you very much.
Alan: Good. Good. Good.
Dale: So to kick off. Can you tell me a little bit about your own history in hotels and hospitality; how you got into the business?
Alan: Sure. Actually, I’m in my 21st year in hotel technology sales, or hospitality technology sales, I guess I should say. It’s a kind of an odd one in that I was in manufacturing for the first seven years of my career. I ended up getting involved in an IT implementation project, found IT quite interested me and decided that was the direction I wanted to head in. And so, a local PMS provider was advertising a role for which I seem to be qualified, so I applied for it and, to my surprise, I was offered the position. That was in 1999.
I’m now with apaleo and this is the third PMS vendor that I have been with. So, I’ve had 21 years in the industry, all primarily involved in business development, senior management and all with PMS suppliers.
Dale: So 1999, 20 plus years?
Dale: What did the industry look like way back then?
Alan: Well, it’s interesting because one of the things I like about spending my first seven years in manufacturing is that it taught me, because we were selling consumable items, that customer service is everything. Because if you didn’t keep up the customer service and provide your customers with a very good experience, it was very, very easy for them to place their next order with another competing supplier. The first thing that struck me when I came into the industry was how sticky PMS was in hotels and how difficult it was, once implemented, to reverse a decision or to change out your PMS or to look for something different, because it just felt like open heart surgery doing it. As a result of that, what I noticed was that there wasn’t quite the emphasis on support and looking after customers that perhaps I had been used to, having been in a different industry where that was crucial to maintaining your customers.
So I guess my first impression when I joined that company back in 1999, was that there were systems which perhaps shackled, that might be too strong a word, but shackled their customers and made people a little bit complacent about support.
Dale: Back in 1999, though, there weren’t a whole lot of, I guess what we would call sophisticated PMS is in the market. So what challenges did you face when you’re going and meeting new clients or new prospects?
Alan: Well, if you think back to 1999, I guess Fidelio was still the dominant system. It was a DOS based system and a very solid workhorse. And then you had other systems like Innsite and IGS, here in the UK at least, and they were solid DOS based workhorses. And at that time, the move was happening towards Windows based systems in order to make life potentially – at least, the sales promise was that life would be easier with Windows based systems, which is partially true from a technology perspective. But some would argue actually, it was a step backwards in terms of the interaction of hotel staff with their guests.
I think the biggest challenge that we faced was resistance to change, you know, that “nobody ever got fired for buying IBM” kind of mentality, because Windows based systems were still a relative novelty at that point. And a lot of people were resistant to changing from the DOS based workhorse they knew so well.
But actually, when you think about the problems, the challenges that the industry faced at that time, they weren’t too different from the challenges that the industry faces today, which was needing to keep up in order to harness the power of the technology that’s available today and having to constantly upgrade systems on that basis, but being very reluctant to do so because of the perceived pain of change in that process.
Dale: It’s interesting because you were there at the cusp of the change from the DOS based applications to Windows and that was a proper sea change in the way we operate today and looking back now, I don’t think any of us, even though I remember the old systems, you know, micros Fidelio, v6 product, but I don’t think any of us would do without Windows in that kind of environment now. So, looking more recently, how did this end up with you and Uli Pillau founding apaleo?
Alan: Well, I guess in the 19 years before I joined apaleo, I just noticed the same problems over and over again, regardless of the advances in technology, both with PMS and other complementary systems. Support has always been a pain point for hoteliers – there was a global study on PMS a couple of years back and support was identified as the number one pain point for hoteliers and hotel groups. And that has always seemed to be a tricky one to overcome.
The second, I guess, was integrations, which are actually listed in that same study as the second most painful issue that hoteliers and groups and chains have to deal with. And then the third was the overall cost of ownership and the pain and disruption and fees associated with having to change PMS. So I really shouldn’t take too much credit, because Uli and some of the other founders within apaleo had already conceived a new approach to PMS long before I joined the company. But really, the primary purpose of founding apaleo was to address head on those three points, I guess, and really to free up hoteliers to be able to innovate in a much better way than they could before.
Dale: So now to the nitty-gritty, what makes up apaleo different from the other products in the PMS market arena?
Alan: Well, on a purely technical level, we are API first. And for those who are not familiar with API technology, that essentially means that we put the integration platform, or the platform to which third parties can connect, at the centre of our thinking. So we develop in the API layer first, we put the logic and support for any features that we need in there and then our PMS connects to that API to provide the feature to the end user. But our PMS connects to the API in exactly the same way that any third party or any hotelier or hotel group would.
So the API first development allows us to offer much better, much deeper and much more seamless integrations. And because the API sits at the centre of everything we do, we don’t charge for those integrations. So they’re absolutely free of charge to the hotelier. We don’t care whether a hotel has 25 integrations or one, they will never pay us a penny more. And we also don’t put any cost barriers in place for third parties needing to integrate with us. Everything is public, fully open, real time and it’s completely free to integrate to apaleo and we will provide help and support for that process.
So that’s one. The second is, because the API first approach allows us to have very deep, seamless, easy integrations with third parties that do their specific job very, very well, it means that we can reduce the scope of PMS, which has over the decades become, in our opinion, bloated and it’s tried to be more than a PMS was originally intended to be. For example, the traditional legacy, monolithic PMS’ have a lot of peripheral functions around the edges, which we feel are better served nowadays by dedicated third party systems that are out there and doing a very good job with that.
Dale: So just a best of breed approach?
Alan: Yeah, and I think the benefit from our point of view there is that, number one, the hotelier can pick and choose their own products, to build out what we would call the perfect tech stack to run their specific business. And the integration that’s available today allows that to happen without any increased support overhead or any impact on the user experience for their staff. But it also allows us from a PMS perspective to promote what we would call a lean PMS philosophy, to the extent that it can be self-onboarding.
And by self-onboarding, what I mean by that is that traditionally, when you’re thinking about buying a PMS, you’re expecting to have to pay tens of thousands of pounds in CAPEX to the PMS supplier for professional services around project management, configuration services, training, interface commissioning, live cover, project reviews, all that kind of stuff. And we’ve done away with all of that. As long as, of course, that’s what the hotelier wants, then they can completely self-onboard. We will provide assistance remotely with web guided sessions. And we have many, many examples of customers who have done that very successfully. So zero CAPEX on that basis as well.
Dale: Great. So, what does that mean for hoteliers? And we’ve talked about the self-onboarding, what else does that mean if I were hotelier looking at apaleo?
Alan: Well, just to touch upon self-onboarding again. To give you a real life example, we have a client here in the UK who self-onboarded 10 properties with 750 bedrooms, connected to distribution, in one working week. So they went from zero to live in all 10 properties in one working week and without any help from us. They had implemented a pilot property with some guidance from us on configuration and training of the system. They piloted that for four weeks and then they took the decision internally to go ahead and deploy to a further 10 properties. Just like that.
So you can imagine the benefits from that. They see the agility and the speed with which they can deploy is a huge benefit for them. It was at a time when they were just heading into peak season. If they had been implementing a traditional PMS, they would essentially have had to wait until after their peak season before they could have considered doing something on that scale. But because of the self-onboarding concept with apaleo and the relative speed with which these things can be done and third parties can be connected, they were able to squeeze that into a very short period of time and get their ideal tech stack in place in time for that peak season. So that’s a huge, huge benefit, I would say, and demonstrates the reality of self-onboarding, even for groups like that.
I think there is also an improvement in the support experience. Because of the API-first approach and the improved technology that’s available today, integrations tend to generate way, way fewer support calls. And actually, with apaleo, the average number of calls per property per month is currently sitting at around 1, which is a strong measure for PMS. We could break those down further and look at the number that come from lack of user knowledge, for example, but long story short, what our clients are seeing is a significantly reduced support overhead and a much better support experience as a result of that.
And I guess it allows them to innovate and to respond to market trends, without feeling as if they’re completely handcuffed by their PMS vendor. If they find a new application that they think is interesting and that will help their business, it’s very, very easy for them to give that a spin and do a trial with it, even connected to the PMS as part of that trial, without having to wait months and months and without having to pay the vendors thousands of pounds and without having to commit and then be caught up in a solution that perhaps isn’t right for them and not find it easy to pull back from that.
Dale: So using apaleo, I would be able to get my teams up and running very quickly with self- onboarding, minimal training and the support would be better than if I were looking at a larger PMS environment, so to speak, that would have lots of different applications or modules built within it, plus, it cost me less.
Alan: Nicely summarised, Dale!
Alan: That’s more concise than me!
Dale: Looking for all the benefits.
Dale: Alright, so obviously, apaleo is different. It’s significantly improved in a number of key KPIs. Where do you think the future of PMS is headed?
Alan: Well, I think that if we look at the definition of PMS specifically, as I mentioned earlier, I think some of the traditional PMS’ that currently dominate the market, or the legacy, monolithic systems, as we would describe them, have become a little bloated. So number one, I think we will see a return to a more lean system when it comes to PMS. apaleo is primarily concerned with availability rates, inventory, reservations and financial data. We also add payment into the mix, which perhaps traditional systems didn’t do so much. We do a lot on really, really tight payment integration to automate payment processing wherever possible.
But think about some of the stuff around the edges of PMS – guest communications, CRM, business intelligence, sales and catering – that perhaps some of those traditional PMS’ will include as part of their portfolio of products, or as modules that you can switch on or off, or sometimes as core functionality within the system. I believe that, over a period of time, they will become less used as part of the core PMS and hotels will start to specify dedicated third-party solutions that integrate seamlessly with the PMS. That really gives the hotelier control moving forward. As I mentioned earlier, they can plug and play, they can try out solutions much, much more easily. If they’re multi-property they can trial, as has happened with one of our clients, two different solutions separately connected to different properties. And at the end of the trial, they can decide which one to move forward with.
So I would see that really as the future of PMS, being a fully open, self-onboarding, leaner system. Still mission critical, of course, because it’s the core system that’s holding your key reservations data, but becoming more plug and play and, as a result of that, vendors will perhaps live and die a little more by their support and by their commercial models.
Dale: Well, for apaleo and a few others that are web-native or have been created solely for the web environment, what does that mean for the monolithic hotel PMS you mentioned earlier, I mean, they will likely be left behind, it sounds like?
Alan: That would be my belief. I think, if you have a PMS which is based on older technology, it’s extremely difficult, if not impossible, to keep up with the pace of innovation that’s happening today. And, whilst you might be using 10, 15, or 20 year old interface protocols that can still somehow connect a third party system, the quality of the integration will not be up to scratch.
Think about the consumer experience that we now have on our mobile phones every day, the way in which apps can be downloaded and connected to Facebook or to some other application and how they interact with each other to provide you with the best possible experience, the fact that you don’t need to call an engineer from that app provider to come to your house and install it for you. This is our normal experience as consumers these days. And it’s absolutely the case that business applications should follow suit. So the legacy systems will struggle to keep up with that pace of innovation and to satisfy their customers and not hold them back in terms of total cost of ownership or the ability to innovate. Also, when it comes to the core PMS itself, the speed with which new staff can be trained, all of those topics are going to be very, very difficult.
Dale: So we’re getting rid of all the tin that’s down in the basement of these hotels?
Alan: Oh absolutely. For at least the last three to four years, if not longer, in pretty much every project I have been involved with, one of the two or three “must have” requirements is for the system to be cloud based. And I would go further and say now, it must not just be “cloud based”, but it must be a true, cloud native system, designed from the ground up as such, in order to future proof yourself.
Dale: Alright. So we’re talking about future, what’s the future for apaleo?
Alan: Take over the world, of course! Commercially, we currently have somewhere between 250 and 300 contracted properties in eight countries. So the pace of growth, we’re starting to see a nice curve there and we would expect that we will continue to see that growth accelerate and the number of countries in which we are active also increase. We have a mixture of independent hotels and groups in our portfolio at the moment, but I think that we become more and more interesting to chains as we grow.
From a product perspective, we have a marketplace which currently has about 90 connected vendors and we’re very focused on increasing that. And we’re starting to see some of the bigger players now connecting with us as well. So, over the next three to six months, you could expect to see some of the significant industry leaders in other software categories appearing in our marketplace as connected partners.
And of course, we continue to add core features to the PMS and to enhance the system in areas such as, for example, fiscalisation for certain countries, where there are legal or regulatory requirements that need to be met. So all of those things will be keeping us busy during the course of 2020.
Dale: I’ve got to say, back to your point about fiscalisation, that seems to be one of the points that we’re hearing more and more that a lot of companies…and a lot of products, not just PMS but a number of products that can’t meet the fiscalisation requirements for countries not only across Europe, but also to Asia.
Alan: Yeah, absolutely. I think it can be a little bit more difficult for some of the older systems that perhaps started life as a local system without necessarily having that sort of international mindset. apaleo has been conceived from day one as a product which is designed for multinational enterprise, to scale to meet the needs of the largest groups in the world. So at its core, it has in its design principles support for fiscalisation. And we’re now at the point where we are putting into place the architecture to support that. And we will start to announce supported countries over the course of the remainder of 2020.
Dale: Right. Assuming this discussion has whetted to the appetite of a hotelier or group CTO or CFO, what do they need to do to get in touch?
Alan: They can do many things! They should certainly follow us on social media, particularly LinkedIn. We’re pretty active on social media, not just in terms of blowing our own trumpet, but also talking about industry issues and promoting partners that have connected to us, that kind of stuff. And our website, of course, www.apaleo.com, is a good starting point to find out a little bit more about us. You can also email email@example.com. Or, for anybody who would like to contact me, I’m available on firstname.lastname@example.org.
Dale: Right. Well, thank you, Alan. It’s been very enlightening. I think, it’s certainly shown the benefits of a cloud native environment over the legacy systems and I’m hoping that we’ll be able to touch base again in the near future.
Alan: Thanks very much, Dale, I appreciate it.
Dale: Alan, thank you.