Solving the Property Management System Value Conundrum: Invest in the Future, Not the Past
November 10, 2016 9:35am
By Jos Schaap
There are those unenlightened people in the hotel industry that will say that a property management system is nothing more than a grandiose cash register. That its only function is to account for the spend that a guest incurs during their stay and produce a folio upon departure. In fact, that claim could not be further from the truth. Yes, it connects to a myriad of systems to track guest charges such as a point of sale system, call accounting, sales and catering system, and so on, but increasingly there is an obligation for the hotel PMS to do so much more.
As pressure is placed upon the PMS to go beyond the scope of a simple transactional tool, there needs to be a strategic shift in the technological deployment of the system the includes increased agility and responsiveness in the platform itself. Software as a Service (SaaS) or cloud-based PMS within the hotel industry is the next frontier as more systems can now be facilitated via the Internet to whatever device the user chooses to conduct their business. The pricing and delivery models of SaaS PMS allows organizations to meet the specificity and intricacies of its needs.
SaaS PMS, faster, better, cheaper
In a special report, respected analyst firm Gartner states that as cloud-based alternatives to monolithic, on-premises ERP and enterprise applications continue to mature, on-premise ERP systems are quickly becoming known as ‘legacy’ software. The report also warns that CIOs and application leaders must take action to address the fast-approaching reality of "legacy ERP."
We hear the word “Cloud” being used within every industry today but this is just a method of storing and managing data without using on-premise machines. The real trick is how to deliver this technology to the hotelier in a cost-effective manner and also offer all the services they received when the PMS was on the property. The benefits of a SaaS PMS are certainly plenty, but at a fundamental level they come down to:
The Economist, in an article published in 2015, stated that 80% of customers are now demanding new technology consumption models and SaaS is the right way to deliver cloud technology. In fact, demand for SaaS enterprise applications is accelerating and exceeding the demand for on-premise applications by five times according to an IDC report. SaaS business applications have doubled since 2011 and are forecast to climb at a compound annual growth rate (CAGR) of 19.5% through 2016.
All of this shows that the move is well underway and the hotel industry needs to get on board.
Justification for a new PMS
There are a number of arguments to be made concerning a shift from on-premise solutions to SaaS.
The PMS is truly the “beating heart” of your hotel and as such it needs to be able to be highly stable, have the functionality you need to run your operations smoothly and effectively, run quickly and be able to integrate and talk to all of the current systems in place as well the plethora of new platforms that will require connectivity in the future. Ultimately, you want your new SaaS PMS to run like a BMW M5 but be easy to manage and have the affordable price point of a Honda Civic.
By implementing a SaaS PMS, hotels see substantial soft and hard cost savings. Within the SaaS model, everything is combined into an all-inclusive fee per room per month. No more maintenance fee surprises or extra support charges. The investment is also highly manageable from a budgetary standpoint due to the predictable nature of the cost structure.
Data compiled by StayNTouch shows that with the implementation of an on-premise solution, the percentage spent on the PMS can be relatively high related to RevPAR. The proper benchmark for the operating budget of a hotel directly related to a SaaS PMS should fall between 0.35% and 0,75% of RevPAR. The investment in the “heart” of your hotel is definitely a tiny percentage of your overall RevPAR, especially since it is the most essential tool you have in optimizing operational requirements and making sure your guest's needs are met.
SaaS, the enabler
SaaS will not be ignored. There is just too much value to be achieved from point solutions that provide needs-specific functionality, for a relatively low cost, that can be implemented rapidly and will scale with the needs of the business. As the adoption of SaaS property management systems becomes more mainstream, the effects of an implementation can be widely felt. The hotel operations can now empower employees to increase productivity and service as they are no longer hindered by restrictive, static platforms. Any platform can now be used such as tablets, smartphones and yes, the old PC if required. They can now move about the hotel meeting and greeting guests, facilitating guest requests right from the housekeeping trolley and most importantly, creating an authentic relationship with the guest. No longer is a huge screen a barrier to connecting with the guest.
SaaS also empowers the guest to choose how they would like to be serviced. Today’s guest are looking for new ways to engage with their respective hotels. High touch guests will still be able to maintain that high level of service to which they have been accustomed to, and low contact guests can bypass the front desk, use their phone to check into their room and order room service, once again using their smartphone. Today’s guests want to be in charge of their travel destiny.
A property management system is today, a truly wondrous technological platform that has grown with the hotel industry but at times it has not been fast enough. Now, with the introduction of a SaaS PMS, hoteliers now have the chance to grow at the cadence that the industry and guests require but also be able to be flexible to handle new technologies as they arise. The initial financial benefits for a SaaS PMS are inescapable in comparison to the time, effort and cost involved in implementing and supporting a new on-premise application So what is your PMS worth? It is worth a great deal, and it should be at the top of your technological priority list. The inevitable conclusion: if you’re in the market for a better PMS to run your hotel, then buy the future of with a SaaS PMS, not the past.
cloud based pms,
hotel property management system,
Jos has a 20+ year track record in hotel software technology. He began StayNTouch with the vision of re-inventing the hotel PMS technology; making it simple, mobile and transitioning the software to the cloud. Prior to StayNTouch, Jos spent 17 years at MICROS Systems Inc. (Now Oracle Hospitality), as a Senior Vice President in charge of global product development and strategy for the Lodging and eCommerce divisions. During his tenure, MICROS’ hospitality products became the global market leader growing the company’s revenues from less than $300 million to $1.1 billion. Jos was responsible for introducing a number of new products enabling MICROS to enter all hospitality segments from limited to full-service hotels. Connect with Jos on linkedin.com/in/josschaap.
Contact: Ivana Johnston
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