Tim Davis: Hilton's IT man on making a success of selling hotel rooms online

A stint in the Royal Marines is not normally considered a requisite for a job in IT, but then again, Tim Davis admits: "I'm not your classical IT guy." His five years with the Green Berets is just one of a number of experiences that have brought him to his current role of senior vice-president for commercial development and information services at Hilton Hotels Corporation.

Along the way Davis has collected degrees in computer science and marketing, and has worked in senior marketing and business development roles, including some time with global distribution system company, Galileo. "I've come up through a commercial route, but I see technology as vital in delivering commercial excellence," he says.

Promoted to his current role last year, Davis, 41, is responsible for all of Hilton's technology and commercial development outside the United States. Answering to a chief information officer at group HQ in Memphis and a president of commercial operations based in Paris, Davis oversees the technology for properties in 70 countries from his office in Watford, Hertfordshire. "Each country has varying technologies and infrastructure, different legal requirements, languages and market dynamics - it's quite a challenge," he says.

But despite the diverse nature of the business, every technology decision Davis makes is, he says, determined by straightforward strategic drivers. "I ask myself, ‘will this allow us to grow the Hilton brand and international network of hotels as fast as possible, to deliver exemplary satisfaction to guests, or to operate more efficiently," he says.

Nowhere have these simple tenets been more applied than in Davis's approach to the web, an area close to his heart - his previous role with Hilton was senior vice-president for distribution and e-commerce.

Davis took up this mantle in 2000, just as the web had "developed critical mass and credibility". From his vantage point in Europe, he was able to see the trends unfolding in the USA, a market that was two years ahead of the rest of the world at the time. Third-party websites such as Expedia and Travelocity had stolen a march on the major hotel firms and were the online destinations consumers most associated with web-based hotel room sales.

"In the USA, the hotel companies were slow out of the gates in terms of developing branded websites," says Davis.

This led Davis and his team to develop a web strategy, and by 2004 the company had eight international websites, designed to be culturally-specific for markets such as Japan, Germany and the UK, but offering access to the company's full inventory of rooms worldwide. To achieve this, the company had to centralise its inventory and reservation systems. A huge task, and one that now sees the company's IT systems supported by a handful of data centres in Memphis, London, Asia and Australia.

"Centralising systems on this magnitude requires huge investment, and is one reason why international companies are getting bigger. Profitability is driven by scale," says Davis.

But with centralised systems, Hilton has been able to take global control of two vital areas: pricing and yield management. Davis says the early days of online hotel room sales "exposed the frailties of hotel pricing", with consumers able to see the same hotels available at different prices on numerous third-party websites.

Now with global control of pricing, the company is striving to ensure it offers the lowest rate available for any of its rooms through any of its websites. Since December 2004, Hilton has offered a guarantee that if a guest can find a lower rate for a Hilton room anywhere, the company will match it and give the guest an extra $50.

This, acknowledges Davis, is where marketing and technology overlap. Get the technology right and then get the message out to the public. "Which websites consumers visit has everything to do with confidence - today the pendulum is swinging away from third-party sites and back towards hotels," he says.

Davis backs this statement up with figures. Last year, he says, Hilton made about $2.5b (£1.32b) in room sales directly through its websites, and plans to be making a quarter of all its sales via the web by 2009.

The massive computational power Hilton uses to underpin its operations becomes apparent when Davis broaches the subject of yield management. All room pricing, he says, is determined by sophisticated software, which takes in a range of dynamics before coming up with a tariff.

Feeding into the pricing structure is data about current room demand, historical data about specific room bookings, pricing models on duration of stay and information on special events happening in the area and what prices competing hotels are offering.

The internet, he agrees, has revolutionised what global companies can now contemplate doing and is the enabler behind his latest major IT project.

Over the next two and a half years, Hilton will be rolling out a new property management system to all its properties. Called OnQ, the system has been developed in house and will replace the Micro Fidelio systems used at most Hilton sites. Where the internet comes in is that the OnQ system will be centrally hosted from the Hilton data centres, meaning each company needs only a web browser to access the system. Local differences in tax and legal requirements have been built into the system and can be configured accordingly.

The advantage of this, says Davis, is a huge saving in software licence fees and the cost of training staff. With all properties sharing the same standard technology, Hilton employees will be familiar with the property management system wherever they are.

As for the technology that appears in Hilton rooms, Davis is looking at three areas: entertainment, business services and communications. For Davis, this means conveniently placed broadband terminals for laptops rather than difficult-to-reach sockets behind wardrobes and TV sets. He also wants to introduce easy-to-use alarms clocks with a base for playing iPods. Rather than forcing guests to search for radio stations in a foreign destination, Hilton is rolling out alarm devices with music buttons labelled simply "jazz", "classical" or "pop".

"It's not about having the most sophisticated technology in rooms, it's about making it simple for people to use. How many times do you see technology for technology's sake?" he asks.

Techno-tips

• Will the technology investment help you grow the business?
• Will it deliver exemplary guest satisfaction?
• Will it help you to operate more efficiently?
• Where the web is concerned, marketing and technology go hand-in-hand.
• Technology is a vital enabler of commercial excellence.
• Don't invest in technology for technology's sake.