The Converged Network in Hospitality: How Fixed Overhead Costs are Reduced

Interview with James Bina, President of Millennium Technology Group

Much has been written by technology pundits about the hullabaloo of hotels upgrading to high-definition. But the other story that’s even more exciting to the hospitality industry is how technology infrastructure is actually reducing fixed overhead costs. One example is the deployment of Power over Ethernet (PoE) switches as the foundation for the transmission of electrical power and data over the same service cable. Not only does this infrastructure reduce electricity costs but opens the door for unlimited opportunities for value added services to hotel guests—without the need for expensive rewiring. This kind of converged network enables Internet services, RFID sensors, streaming video, IP telephony and sophisticated remote-control hospitality applications.

Hospitality veteran James Bina has a unique perspective on technology. Having served in both financial and IT roles for some of the industry’s leading hotel brands, he knows the intrinsic value of technology investments. Bina also understands how all stakeholders view the world and has been involved in the technology decision-making process from multiple perspectives. At present he serves as President of Millennium Technology Group, a subsidiary company of Rosen Hotels and Resorts that specializes in providing telecommunications and IT services to the hospitality industry. In addition to directing operations of the company he is responsible for the purchasing, installation and maintenance of all technology items for its clients.

FocusED: In your multi-faceted experience as a finance executive and technologist, what impact has technology had on the hospitality industry, particularly on fixed overhead costs?

Bina: In a nutshell I would say that modern technology has made a significant impact on properties that deliver a sophisticated level of service. For example, rewiring a building for PoE and purchasing new equipment enables you to offer all the conveniences of a home or office that a guest or employee would expect to use, whether it’s email, cell phone, or Internet The Converged Network in Hospitality: How Fixed Overhead Costs are Reduced access. They can count on the same level of competency and technological accessibility in a resort hotel as they would in any business or domestic environment.

There is also the cost component. In today’s competitive environment, franchises are pushing Internet access as a value add, which forces hotels to give it away. This is putting hardship on investors, owners and operators because it is a tangible service that must be paid for, but not being able to pass along the fee makes hotels struggle. Our approach has been to level the playing field to the hotel’s advantage by creating a converged network that can be used to piggy-back almost any combination of guest services. The other cost benefit is that it’s much easier to manage and maintain, so resources can be redirected to other vital business challenges.

FocusED: What technologies have had the most impact on lowering fixed overhead costs?

Bina: Through appropriate systems and network planning you can lower the cost of electricity through virtual servers. Additional overhead costs can be reduced by taking appropriate steps to better utilize equipment and recycle where appropriate, rather than see it end up in a landfill. And building costs can be dramatically lowered with a converged network, just as we have demonstrated at the Rosen Shingle Creek property, considered by many to be the next breed of resort hotel. We were able to reduce the cost of wiring by utilizing a single wire to deliver all the guest services rather than using the standard cabling arrangement. This also enables the property to more conveniently create new innovative onsite guest services without going to the trouble of rewiring.

FocusED: How do you anticipate technology affecting hospitality operations and overhead costs in the future?

Bina: As wireless technologies evolve and mature, we can reduce overhead and related building costs even more through wireless devices, especially as phone, computer and TV are combined into one device. The ever-popular Blackberry is an indicator of where this technology is going. Eventually the building facilities and cell network will come together so that you will be able to continue with what you’re doing when you leave the building. And of course every hotel guest room will have high-definition flat screens with content delivered as part of this evolving network. That will become a must.

FocusED: Having worked as an in-house Director of IT for Rosen Hotels and Resorts and also in the capacity as President of Millennium Technology Group, in which role were you able to be most effective at implementing technologies that reduced fixed overhead costs?

Bina: I’ve been most effective as President of Millennium Technology Group because I can do all the independent research necessary to determine the most cost-effective technology that works best for guests and staff members. I have experience on the accounting and financial side, and can see how the entire operation works and also bring together different departments in ways not thought possible. This is because people don’t always know how deeply technology will affect them. I’ve been able to see all the various scenarios play out firsthand; in addition to Rosen Hotels and Resorts, we have 20 other clients that our organization supports.

There’s always been a lag time for adopting new technology in the hospitality industry. But increasingly stiff competition and acceleration of technology development is shortening that lag time. Guests are being offered more convenience and connectivity for the customary applications and for services that we haven’t even thought of yet. The good news is that hospitality organizations can make better use of technology to personalize the guest experience, reduce fixed overhead costs and build a network infrastructure that is truly scalable.