(Reuters) - Hilton Hotels Chief Executive Stephen Bollenbach has placed his faith in technology.
While rivals worry the Internet will reduce rooms to commodities, the head of the No. 2 U.S. hotel manager dreams of a supremely knowledgeable system that can offer rooms near a loud elevator for less than a quiet one down the hall.
Software systems in place and in the works will let Hilton and other brands it owns like Doubletree and Hampton Inn pull away from competitors owned by rivals Marriott International Inc. and Sheraton owner Starwood Hotels, Bollenbach said in an interview on Tuesday.
"I think we've won the race," he said. "It may be one of the very few ways that we can make ourselves more valuable relative to our big rivals."
Hotel business is bad. Revenue per available room, the key barometer of health, is expected to contract for the third year in a row, although Bollenbach, who sees signs of a recovery, is not overly concerned about when the turnaround comes.
"For a big, giant company like us it sort of doesn't matter whether it is one year or two years or three years or five years," he said. "When the good times come they last a long time."
In the interim, hotels have slashed costs. Hilton closed the restaurant at its prestigious Waldorf-Astoria in New York after Bollenbach and his wife found themselves dining alone one night, but the company has not skimped on technology.
BEARS AND BULLS
Many hoteliers view the Internet as an instrument for comparative-shopping consumers to take pricing power from hotels. "I am somewhat bearish about the future of the hospitality business, primarily because of technology," Henry Silverman, chief executive of Days Inn and travel Web site owner Cendant Corp said this week.
Bollenbach says the Web is a cheap way to book rooms and argues that as long as Hilton can keep prices relatively consistent across the Web it can beat sites like Expedia.
"People will shop at Expedia but when they are ready to book, they go to Hilton.com," he said.
Hilton and its franchisers will spend some $130 million on technology this year, including about $16 million to $17 million at the corporate level.
That includes a $50 million computer system that Hilton will roll out by the end of the year at front desks throughout the roughly 2,100 hotels in its system.
The computer links all Hilton brands and picks out guests that have stayed more than four times at any Hilton brand hotel, as well as members of its frequent guest loyalty plan.
Hilton can train new front deskers in a week, a quarter of the previous time and an enormous advantage for Hilton hotels, which have about 25 percent turnover in workers each year.
The new program gives clerks the information to chat with guests about recent stays and finds targets for Hilton's loyalty program, which the company says is key to its success.
Hilton does not calculate the return on its technology investment, but Bollenbach says franchisers would stop him if he went overboard.
"The best check on the value of the system and its cost is that we have to sell it to independent owners," he said.