By Joe Vargas
Over the last couple of decades, hoteliers have been faced with two main options when upgrading hospitality management software: Acquire new point solutions that address specific challenges or adopt an integrated platform that manages multiple functions in one place. Another factor that hotels now must consider is whether to maintain legacy, on-premise systems or modernize software with the cloud. Tech-forward hoteliers know that moving to the cloud is inevitable to succeed in this competitive industry—it’s just a matter of when and how.
Still, many hotels struggle to progress past legacy property management systems. This is often due to disjointed internal priorities and operations, leaving hotels unsure of which technology investments will address their unique needs and deliver the greatest long-term value. A report from Dell estimates that organizations currently allocate 60-80 percent of their IT budget to maintaining existing on-site hardware and legacy apps, which leaves only 20-40 percent of the budget for everything else. This substantial cost can limit the funding available for initiatives that could lead to increased revenue.
And wherever there is legacy maintenance, you ultimately face the inevitability of technical debt—these expenses come hand in hand with the application of short-term technical fixes. Adding more code to a failing system is a recipe for disaster, as the compounding bugs and system errors soon trap you in a devastating cycle where you invest an increasing amount of effort and resources to triage the issue.
The key to getting past this uncertainty is to consider how hospitality management requirements have changed and understand software systems from different perspectives within the organization. From there, you can make smarter digital transformation decisions that will achieve org-wide buy-in and future-proof your hospitality property management tech strategy for years to come.
Hospitality management: A changed landscape
Hospitality management doesn’t look the same now as it did just a few years ago. Talent shortages have persisted even though travel has returned to pre-pandemic volumes, with around a third of US hoteliers expecting to wait until at least 2030 before staffing numbers normalize. The economic outlook is also modest, with occupancy levels forecast to remain flat throughout 2024 with the average daily rate (ADR) largely responsible for any revenue gains. According to PwC, factors like rising federal reserve rates and geopolitical tensions abroad are having an indirect impact on hotel demand, with moderate industry growth expected.
What’s more, traveler expectations are changing in the post-pandemic landscape. Guests are planning their trips around new experiences, with accommodation quality and loyalty program perks named in a recent Skift survey as top consumer priorities. There’s also a renewed interest in travel personalization, which three-quarters of hotel executives are now focusing on to improve customer loyalty.
To keep up with these demands, hospitality management solutions must enable more efficient and streamlined operations, helping reduce costs while bridging the labor gap. Hotels can also exceed customer expectations through solutions that leverage guest data to offer more bespoke experiences. Leading hotels are switching to cloud-based, integrated property management systems that offer a full suite of modules to achieve these goals and stay competitive.
For example, partnering with a unified hospitality solution provider enables hotels to easily access and scale infrastructure that would otherwise be highly resource-intensive and costly to build and maintain in-house. These systems also centralize data and operations, eliminating silos created by disparate point solutions. More intuitive workflows and AI-powered automation free up workers to focus on higher-value tasks like interacting with guests.
Leading hotels are seeing these digital transformation efforts pay off, too—PwC research shows that cloud-powered companies are 4x more likely to unlock greater value across functional areas, from improved decision-making to increased agility, stronger cyber posture, cost savings, and enhanced experiences.
Put simply, technology is key to achieving success, both now and in the years ahead. Thankfully, more hotel operators are realizing the urgent need to transition to more integrated, cloud-based hospitality management systems and prioritizing these transformation efforts.
5 key perspectives to consider when choosing a system
When pursuing new hospitality management software, hoteliers might be inclined to consider which solutions will drive the most fiscal value. However, it’s also important to consider how different systems will perform from different operational perspectives—not just from the business perspective but also from the perspective of end users, IT, future stakeholders, and perhaps most importantly, guests.
1. Aligning with business objectives
The industry is evolving rapidly, with new property management challenges arising every day. While adopting specialized point solutions as needed to handle each problem may seem to be the most economical approach, relying on an extensive tech stack can quickly fragment hotel data and operations. Alternatively, consolidating solutions into a more integrated system with PMS, SCS, RMS, and POS makes implementing the automation needed to expedite operations and drive down costs easier.
From a business perspective, optimizing guest service, employee satisfaction, and profits requires data use and cross-functional processes. These two essential components remain intertwined. Consistent data usage throughout the operational chain ensures alignment and prevents errors. Issues such as data inconsistencies, increased processing time, and other failures could arise without a centralized source of information. Data also becomes more accessible and easier to leverage from an analytics perspective from a unified solution. This gives leadership better insights for strategic business decisions, while guest data analytics can deliver more personalized experiences to boost loyalty and revenue.
2. Appealing to end-user requirements
Property management systems should make employees’ jobs easier, not harder. Point solutions may work well at supporting workers for specific functions, but tasks become clunky and error-prone when users must toggle between different interfaces. Legacy and complicated systems just create frustrations.
End-user acceptance is primarily decided by the software’s ease of use. Users should navigate through the full suite smoothly and be able to access multiple modules from a single system, which directly aids in increasing their efficiency. Ease of use can also contribute to job satisfaction and reduce turnover while helping new hires learn and master the system quickly. Additionally, investing in a more sophisticated all-in-one suite that is mobile-friendly and intuitive appeals to the younger workforce, who expect more modern tech-forward platforms from their employers.
3. Building IT-friendly infrastructure
IT decisions heavily influence how new software is deployed in a hotel. Legacy on-premise systems and extensive tech stacks can significantly burden your IT department and cut into capital investment. The logistics of managing multiple contracts for point solutions can also get complex while upgrading and maintaining in-house infrastructure is expensive.
Some factors include license and implementation costs, customization, interfaces, costs for new releases and versions, hardware, hosting, data management, application management, technical management, end-user training, and support. Key decisions from an investment perspective revolve around lowering the total cost of ownership and maximizing return on investment. An effective hotel management suite should not just be a cost center but a catalyst for growth and efficiency improvement.
Partnering with a unified cloud solution makes more efficient use of your IT budget, ensuring that you only pay for the resources you need to maintain systems and data. Providers are responsible for keeping your software up-to-date and secure with the latest technology. Licensing models make sophisticated features, integrations, and scalability easier to implement and more affordable in the short and long term.
4. Considering future demands
The best property management infrastructure accounts for tomorrow’s challenges. Staying loyal to legacy systems, even if they appear to meet your property management needs right now, is not a forward-thinking mindset. In many cases, neither is adopting point solutions, which usually end up addressing short-term problems rather than long-term needs. Hoteliers must imagine what the industry will look like years ahead when making software upgrades. This perspective is best honored by the modern unified hospitality suite, which is designed to stay flexible and adapt to market changes, new guest demands, and technological advancements.
5. Recognizing the relationship between digital transformation and guest satisfaction
At its core, the hospitality industry is about serving guests. While your IT infrastructure may seem far removed from the guest experience, it’s crucial to consider how digital transformation will be experienced from a guest’s perspective. Adopting a new unified hotel suite is a significant step towards enhancing the guest journey by optimizing operations, personalizing interactions and improving communication. Offering a one-stop platform for managing the entire stay at every touchpoint, from reservation to check-out, provides a truly memorable and frictionless experience that keeps guests coming back.
Kickstart your cloud transformation
Many hoteliers have delayed updating legacy systems for years or even decades, often due to budgetary constraints, competing priorities, and a fear of disrupting operations.
On the other hand, savvy adopters are already seeing the benefits of cloud transformation and integrated systems for the guest experience and revenue. Technology partners with cloud hospitality management systems integrated PMS, SCS, RMS, and POS enable the best possible outcomes.
As the industry’s trends shift, these challenges evolve, which means that the strategies implemented to overcome them need to change accordingly. So why not start that journey now?
