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Red Roof Outsources Tech Stack to HotelKey to Help Combat Labor Shortage



When George Limbert began as president of Red Roof, he met with franchise operators of the hotel brand to better understand what was going well — and what was not. 

He became interim president of the Ohio-based company in late 2020 and took the role fully in August 2021. During that time, of course, the industry was struggling. 

The Red Roof portfolio includes 682 hotels across four brands. More than 100 of those are operated by two franchises affiliated with the corporate Red Roof company. The rest are operated by independent franchise owners. 

One of the top issues was the lack of hospitality workers in the current labor shortage. Franchises needed to reduce their dependence on workers, and technology is a big piece to solving that puzzle. 

“Innovating to help with the labor shortage is an imperative for us from a brand level,” Limbert said. 

That’s why Red Roof on Friday night announced that it is partnering with Texas-based HotelKey as the official property management system for the company. 

All Red Roof franchise owners are required to use the official corporate tech system, which historically had been developed, hosted and supported in-house. It had been clear that Red Roof was limited in what it could invest, which is why it needed to outsource, said Ted Hutchins, chief information officer for Red Roof. 

The platform’s simple interface will be a big help for owner-operators with worker training, he said.

“As you can imagine, they have a huge amount of turnover in this labor market. One of the biggest problems is if you have an old creaky interface, it takes too long to train,” Hutchins said. 

The HotelKey platform will streamline a number of Red Roof operations, including property management, guest management, central reservation, point of sale, connectivity to third-party booking platforms, and a loyalty program. Owner-operators will also have access to tech, like housekeeping and preventative maintenance apps and electronic signatures, that Red Roof had not been able to invest in prior because of lack of resources. 

Franchise owners pay a fee to the Red Roof corporation for the tech it provides. That fee had been used to run the in-house software system, and now it will be used to operate the HotelKey system instead. 

“We came from an internal system, where we put $1 in and get maybe 10, 20 cents of innovation out of it,” Hutchins said. “The community model lets me put $1 in and get two, three, four dollars back.” 

It’s unclear at this point how well the tech will lead to more guest sales. 

“It’s hard for us to forecast that … but there’s indications that better connectivity with some [online travel agencies] and less complexity in booking leads to better conversion,” Hutchins said.

Is it Better to Contract a New Company or Legacy Player?

HotelKey is a part of a newer generation of hotel tech, similar to products offered by Canary Technologies, which just raised $30 million, and Stayntouch, the system owned by MCR.

The biggest competition for new platforms are those made by older industry players, like Oracle and Sabre and Amadeus. The older companies have been investing a lot lately on upgrading tech and moving to the cloud. 

Whether a hotel operator outsources tech from newer or older companies is basically a matter of taste, said Klaus Kohlmayr, chief evangelist and development officer at IDeaS, a maker of revenue management software.

Most large brands have gone with legacy companies so far particularly for central reservation systems, he said. And the portfolios of most hotel tech startups backed by venture capital consist mostly of independent hotels. 

“When you’re a very large brand, you want stability and you want to minimize risk, and you want to make sure the technology you’re spending up for works. If you go with a legacy player or a larger company, the risk is somewhat minimized, but at the same time, you don’t have probably the same kind of future or next generation capabilities,” Kohlmayr said. 

“If you work with a smaller company, you have a bigger influence on their roadmap and development and can become a key partner with them. And smaller companies are more nimble and more flexible and more agile than some of the larger players.”

Regardless, Kohlmayr is confident the investment will continue all-around. 

A survey early this year of 210 hospitality industry professionals worldwide by travel technology firm Duetto found that 77.6 percent plan to increase their hotel tech investment in the next three years.

“Innovation or investment is definitely accelerating. Covid has contributed to that,” Kohlmayr said. “We’re kind of at this cusp of a wave of innovation in the industry, which is just starting to appear. I’m quite optimistic about the next few years.”

HotelKey

HotelKey supports roughly 400,000 rooms for 3,500 hotels, including 500 independent hotels, mostly in the U.S. The company plans to reach 600,000 rooms for 6,000 hotels by the end of 2023, according to Aditya Thyagarajan, co-founder and president of HotelKey.

The company provides the tech for all Motel 6 properties through a partnership with G6 Hospitality, as well as all properties for Extended Stay America. 

While the company started with a focus on the economy hotel segment, Thyagarajan said it’s been expanding to higher quality segments. The 10,000-room Evermore Orlando Resort in Disney World uses HotelKey, he said. 

This February, HotelKey is announcing a partnership with a company he says is one of the largest global brands, with properties ranging from economy to luxury. HotelKey is being used in more than 500 of that company’s hotels right now.

As a smaller company, Thyagarajan said HotelKey has taken the path of developing in collaboration with partners. 

“For us, being just seven years old, look at it as an amazing opportunity to learn from brands like Red Roof, and that is how we typically shape our roadmap,” Thyagarajan said. “And then the entire community can utilize that.”

HotelKey has more than 300 employees, with more than 100 openings.



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