Why the Preferred Hotel Group is Moving to the Cloud

Crowded in by the slowdown, the Preferred Hotels Group moved its entire datacenter into the cloud. Why they took the risk is important, but the savings are more significant

Kevin Fogarty Feb 01st 2009


In a year in which the economics of the travel and hotel, in fact across the hospitality industries is at an all time low, may be a tad late for a time to put together a disaster recovery plan for the first time. Cloud computing technologies helped the Preferred Hotel group plan for spikes as well as furrows in demand and allowed them to .plan for contingencies, as well as good times


  • By moving the datacenter into the cloud Preffered Group has saved Rs. 97 lakh
  • And 20 percent of all hotels report that they’re both charging less and are renting fewer rooms than the same time in 2007
  • Travel-agency bookings dropped 11.6 percent during October in 2006
  • Smith Travel Research predicts demand for hotel rooms will drop slightly during 2009 and 2010

Reader ROI:

  • How moving your datacenter into the cloud saves costs
  • Benefits of configuring virtual servers
  • Why cloud computing is reliable and convenient

Chad Swartz, senior manager of IT operations at the Preferred Hotel Group, spent most of the year planning disaster recovery and ended up with a big cost-saving

strategy for the Chicago-based firm. Preferred, which specializes in group-travel sales, booking conventions, conferences and corporate outings into its network of luxury hotels, is moving its relatively tiny datacenter into the cloud. The company signed up in early 2008 for The Enterprise Cloud, a hosted server-and-software service from Terremark Worldwide. Under the plan, Terremark will  supply 10 virtual servers - seven on full-time duty and three in reserve for spikes in demand - each with a preconfigured amount of disk space, memory and processing power, as well as a set amount of bandwidth, Swartz says.


The need for disaster recovery - a mandate that came down after members of the board realized the privately held company had no backup plans - was the driving force behind the investigation into cloud computing service. But it was the cost that sold it, Swartz says. That's not surprising, given the currently dismal economics of the business and luxury-travel markets, both key parts of Preferred Hotel's business.

Swartz, was hired less than a year ago as part of an  expansion of Preferred Hotel's IT staff from one person to seven. He actually went into the cloud investigation assuming the company would shift over to VMware virtualization environment but continue to use a co-location service to house the physical servers themselves.

The ability to focus on IT functions unique and specifically beneficial to your own business is one of the biggest strategic benefits of cloud computing, says James Staten, principal analyst at Forrester Research. "The power of the cloud is that you're being offered these services by people who view datacenter operations as their business, not something they do as part of the rest of IT," Staten says.

The power of the cloud is that you’re being offered these services by people who view datacenter operations as their business, not something they do as part of the rest of IT

Being able to call up a configuration screen in a Web browser to raise or lower the amount of processing power, memory and disk space each virtual server gets, lets Swartz tune performance as much as necessary, to keep his users happy. The company uses Citrix software to virtualize its desktop applications onto Terremark's servers, so performance tuning can be a big deal. Putting Citrix on top of virtualized servers drags performance down a certain degree, because every request from the application has to go through two layers of control software to get to the processors. To compensate, Swartz increased the number of Citrix servers from five to seven when he set up the Terremark deal.

So far, there have been few problems, he says. All the company's standard commercial applications have run fine during the two months Preferred has been testing the cloud-based system. The company is gradually shifting all its homegrown legacy applications over to the new servers, even as it works on a Microsoft CRM implementation that will replace much of the legacy code, Swartz says. There are two more months of testing some functions of the legacy apps, to make sure they behave while running on virtual servers on a cloud far from the environment in which they were originally conceived.

"We hope to have everything fully tested and make the switchover by the end of the year," Swartz says. "Right now we're paying twice; once for the colo and once for the cloud, so we're eager to cut that out as soon as possible," Swartz says.