Mike Kistner
Lodging technology and financial services provider Pegasus Solutions last month named COO Mike Kistner to replace longtime leader John Davis as CEO. Kistner spoke with Management.travelthis week about business trends and the company's new hotel reservations system. An excerpt of the discussion follows.
How are business volumes holding up given the current economic challenges in the United States?
From a transaction perspective, we are continuing to see record transactions; from a reservation perspective, we are starting to see signs, like everyone else, that there is a slowdown. There are a significant number of customers who can hold their own, but what we are seeing is that they have to pump a lot more transactions through the system to get the same amount of business. Normally, our peak day occurs in June. We are continuing to see days that are exceeding that record in June, so that is one indication that people are working a lot harder for their transactions, and there is a lot more hunting going on. I would say that there are about 20 percent to 30 percent more "looks" beings generated right now that aren't resulting in a significant increase in the number of transactions. [But] there are some customers who are actually improving their look-to-book ratio right now and are generating more business. It is similar to past downturns that we have had. There are certain people who have been able to capture good rates and availability and are now able to generate some demand and some traffic. It depends on the strategy that they have deployed and how they manage themselves, and also the rate integrity they are able to preserve.
What lessons were learned from past downturns?
One of the lessons is that you have to manage on a micro level. You can't use a macroeconomic model to manage rates and inventory, especially if you are a global brand, because there are pockets of the industry that are affected more than other markets. There are also areas where demand may be decreased, but because there is not so much rate sensitivity you are generally able to stay relatively stable when it comes to generating revenue because you can tweak rates a little bit even though your demand has gone down, depending on the competitive nature of the market. Like everyone else, we thought the [hotel] industry had learned that they shouldn't generate too much supply based on the fact that there could be a coming downturn. Based on some of the latest reports that I have been reading, it looks like yes, maybe we did it again: There has been a little bit too much supply that has been funneling into the system. When they start to manage their rates and availability on a micro basis, they will be able to determine how much damage they did to themselves by having too much supply in the market.
Last year Pegasus said that in 2008 it would migrate more than 12,000 hotels around the world off of two aging reservation systems, which were RezView and Hotel factory to RezView NG. When do you expect to be able to shut down the old systems and complete the migration?
We have migrated approximately 1,500 properties to the new platform right now. We're finishing some interface work to bring on the next wave of customers. What we have learned in the process of doing these first 1,500 is that we now have the capacity and the capability to migrate 500 to 1,000 properties a day if we wanted to--but we don't want to. It's just too stressful for the organization [in terms of] customer support and training, but there are going to be large groups of properties that are going to start migrating in the next couple of weeks. We have customers who run under contracts that run out in two or three years, so the legacy platform will exist for at least a couple years. We won't be shutting it down cold. There will be customers who will be migrating over to the new platform [because] that is where the features and functionality are, and that's where a lot of the new enhancements are going to be going, but we can't shut it down cold because we have customers who are still on that [older] platform. They get to make a choice as to when they want to move to the new technology. We need to convince them that it is the right thing to do. This will be really not so much of a migration for them, but an upgrade.
What is the process like?
The process is very vigorous. Let's say we have a specific group of properties and we have said, okay, this is the next group of properties to be migrated. There is a 30, 60, 90 [item] checklist that has to do with getting their data migrated and getting their operational support system structured and set up. There is customer care service, training, global distribution system certification. As we step through this, the complexity of the customer increases. The system has been stable, and the throughput has been good.
How many people have you trained on the new system so far?
We have trained all of our internal people and [at the 1,500 properties] I guess you can say that would be anywhere from 3,000 to 6,000 people depending on averages. What we have learned by this process is that the WebEx and the telephonic-supported training is even more effective than we had hoped it would be. We spent a considerable amount of money in creating a WebEx session and well-documented training and deployment plans, and it is paying off. Rez NG is Web-enabled and constructed in such a manner that this is the way that most people are familiar with using computers now, as opposed to the legacy systems that existed in the industry. The new platforms that we are deploying are in synch with the platforms that people are using at home and for entertainment. It's much easier to learn.