How to choose the right PMS for your boutique hotel

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With so many property management system solutions on the market, choosing the right one for your hotel can be mind-boggling.

According to two tech experts, NFS Technology Group CEO Luis Desouza and CMS Hospitality’s Craig Dennington, many hoteliers make the wrong investment decision, often going for the most basic solution that doesn’t meet their property’s needs, or alternatively going all out for an unnecessarily glitzy solution that they just don’t need or know how to use.

“Many hotels seem to make do and use lower-end PMS applications that provide them with the bare essentials, and often with confusing and badly-designed user interfaces,” observes Dennington.

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“Old DOS-based systems are still prevalent — and would you believe hotels and hostels are still installing DOS-based software — including those that cannot connect to online travel agencies; do not offer a direct booking solution that can be embedded onto the hotel’s website; systems that have not offered updates in some time; and PMS that cannot integrate to other hotel systems such as revenue-management systems or media / internet and door-locking systems,” he adds.

Furthermore, those who do have adequate systems in place sometimes just use the essentials — check a guest in, check the guest out and then run a few reports of revenue taken and occupancy — without looking at any of the analytics designed to help them to maximise revenue.

“Hotels are unaware of the power that their PMS holds or don’t know how to use the information or data their PMS contains,” says Dennington. “While the smaller hotels understand and comprehend market segmentation and RevPAR / yield, the good PMS systems actually hold patterns of spending and guest behaviour that hotel operators simply do not have the time to analyse or investigate, or don’t even think about.

“A good PMS will provide business intelligence reporting even at a basic level to allow a hotel to make some good financial and revenue-maximising decisions,” says Dennington.

So it’s time to assess whether you are using your PMS to its full potential? If the answer is ‘yes’ and it’s the technology that isn’t giving you anything to take advantage of, it’s time for an upgrade. Here, Desouza and Dennington address some of the most common challenges in choosing the most suitable systems for your hotel.

Affordability
For boutique hotels, budget is the “biggest barrier” to the right technology. How much will upgrades cost and when will you make a return on investment?

Before splashing any cash, “firstly, look at where your revenue is coming from today and where you want it to come from in the future”, says Desouza.

Many basic systems in boutique hotels don’t connect to online travel agencies such as Booking.com, bookings through these channels maybe generated through fax, but this system leaves hoteliers to manage room inventory and rates manually — which can be time-consuming and, if neglected, costly. However, automation often means moving up to the next product level, which may not be an affordable option for smaller independent hotels.

“It may be that you decide that you can deal with a manual PMS online experience because that’s not going to cause any real pain, but your F&B offering is badly managed now so put your investment there,” says Desouza.

A new property management system is not necessarily the right decision for every hotel, he explains.

“Secondly, ask how integrated solutions are across the key areas — how integrated is food and beverage (F&B) with PMS, how integrated is events with PMS, can the provider offer a loyalty solution so you can take advantage of a single and integrated approach to customer rewards — a key way of driving business?”

Asked to give an idea of the cost of upgrading systems such as a simple PMS for a small-to-medium hotel with a few conference rooms, Desouza says you won’t get anything serious for less than £5000, excluding hardware. Choosing a reputable supplier is also crucial, seek out one that offers staff training on the system, a 24/7 customer service and a scalable solution that can be updated in due course.

Integration issues
A lot of smaller independent hotels will be running first-generation booking systems purchased five-to-10 years ago. Many of these systems are more of a reservation island than a connected PMS, typically covering reservations, front of house, billing, check-in, check-out and housekeeping.

“These hotels are running their web marketing and channels completely separately,” says Desouza.

“Remember a statistic, more than 50% of hotel reservations in today’s boutique hotel market come from online. So if you don’t have good integration with your online presence, you may not be maximising your occupancy and manually maintaining your room inventory separately for online leaves you prone to mistakes.”

In this situation, he says efficiently maintaining your room inventory and managing pricing dynamically is “virtually impossible”, which impacts negatively on your bottom line.

Dennington adds that integration with door-locking systems and in-room media may also be worth looking into, but connecting to online channels and being able to manage yield on the channel is “imperative”.

“Ensure that a new property management system offers a direct booking solution. Hotels should ideally be able to offer a unique booking experience for their guests and have it enabled for mobile devices also,” he says.

Integration between your PMS and online room-selling channels is one factor to consider, however, if rooms revenue is a relatively small part of your business compared to combined revenue from F&B, weddings, or spa and leisure for example — your money may be better invested in integrating these other revenue channels with your existing PMS.
“For boutique properties with up to 30 bedrooms and multiple revenue streams, unless you have at least some level of integration, it can be very difficult to understand where you are really making your money. That is a very important question one needs to ask,” asserts Desouza.

If your catering business is significant, “make sure you have a good F&B management solution that integrates with your PMS, because you’ll be surprised how important F&B management is to your profitability”.

Managing F&B
If you’ve established that the key revenue stream in your boutique hotel isn’t the bedroom, there’s a great opportunity to look beyond the PMS for the right technology to maximise this other revenue channel.

“Most smaller property management systems do not have a great F&B offering,” says Desouza.

The F&B solution required by a hotel may not be radically different to that used in a standalone restaurant.

“The hotelier could be missing great opportunities to manage restaurant reservations, implement table-side ordering and to capture dining information such as average spend and put lucrative loyalty programmes in place,” he explains.

Across the hotel market, Desouza says there’s a lack of understanding how best to organise, manage and monetise non-bedroom revenue.

“There’s a big gap in technology for this side of the hotel market because getting the discussion going about F&B and leisure potential can be a challenge.

“The smarter operators in the boutique segment are getting very good at doing that, they see the bedroom as the way of attracting a client to the hotel, and they will then get a lot more money from that client once they’re in the property,” says Desouza.

Cloud versus premise
Once you’ve considered integration and whether your approach should be to invest in your PMS and align the online booking channels, or to maximise other revenue channels with a dedicated system that can connect to your PMS, you’re ready to compare the kind of solutions available.

Generally speaking, a cloud solution will have good integration with online booking channels and the global distribution system (GDS).

The downside of cloud-based systems, according to Desouza, is that they “tend to be expensive”.

If you subscribe to a cloud solution, you could be paying around £200 a month, which equates to around £12,000 over five years.

He recommends a cloud solution for those looking to minimise capital spend on the “big back-end systems”, such as servers. So if you’re converting a building into a hotel and don’t have any of the IT infrastructure in place already — cloud could be a good option.

Cloud is also convenient, as you don’t have to worry about managing IT infrastructure, you simply have the solution and the front-facing hardware such as PCs to look after.

If you already have IT infrastructure and you’re simply looking to upgrade this, then on-premise is more likely to be a cost-effective solution.

“Over five years, a premise-based software could typically cost 40-50% less than cloud, not including installation. If you’re working with the right company you will get the latest updates,” says Desouza.

“So there isn’t a right or wrong solution here, the big challenge is affordability and the second big challenge is integration. How do I bring the different areas of my business together for increased revenue?” he adds.

The deciding factor
Both experts agree that your technological decisions shouldn’t be based on capital costs alone as the right solution will generate significant return on investment in the long run.

“If you don’t want to find the money upfront, put the right finance in place, but don’t make the wrong technology decisions because you don’t want to pay upfront, some small clients do that and it can be a big mistake to make,” says Desouza.

Dennington adds: “My advice on taking on a new PMS is to properly evaluate what is needed and then stick to that requirements analysis”.

Hotels often have a good understanding of what they need a PMS to do, however the accountant often has the last say. Weigh up the benefits that a better system will bring. Don’t always let cost be the deciding factor.


SAMPLE SOLUTIONS

Company: CMS
PMS: GuestCentrix
Key features:
• Suitable for small hotels through to multi-property portfolios
• Complete cloud/on-premise solution with point of sale, conference and banqueting, tour desk and repairs, as well as maintenance functions
• Direct connection with leading channel manager systems
• Mobile housekeeping and mini-bar apps (via Android devices) and business intelligence
tools available
Web: Cmshospitality.com

Company: NFS
PMS: RoomMaster 2000
Key features:
• Suitable for small hotels through to multi-property portfolios
• Powerful sales and marketing functionality
• Commission-free internet bookings
• Interfaces to various web-booking systems
• Better decisions through accurate management reporting
Web: Nfs-hospitality.com

 

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