How Today’s Hotels Can Operate at Unprecedented Levels of Efficiency and Effectiveness

The following is a brief excerpt from the just-released fifth edition of The 2019 Smart Decision Guide to Hotel Property Management Systems (now available for complimentary access). Smart Decision Guides are widely considered to be the most definitive and comprehensive resources for best practices in hotel technology.

In the United States, revenue per available room (RevPAR) increased 3.5 percent year-to-date through July 2018, according to research firm STR, compared to a 2.7 percent increase during the same period the year prior, putting 2018 on track to mark the industry’s ninth straight year of continuous RevPAR growth. Meanwhile, year-end average daily rate (ADR) growth was on track to reach an impressive 3 percent, according to Moody’s Investor Service. Hotels in other regions of the world — in particular, upscale properties in popular destinations — showed similar gains.

Yet, despite these glowing numbers, not everything is smooth sailing in the hotel industry. Significant challenges abound. Among these challenges are the hefty commission structures imposed by online travel agencies (OTAs) that continue to take a big bite out of hotel profits. While major hotel groups have begun to push back, investing in marketing campaigns that promote direct bookings with discounted loyalty member rates, the results of these efforts have been decidedly mixed. 

Another challenge is the rapid growth of Airbnb (and other, smaller online marketplaces operating in the so-called sharing economy), which already account for a 1.5 percent annual loss in hotel revenue. Perhaps the biggest challenge, however, lies in the fact that many hotels remain hampered by operational inefficiencies. 

These inefficiencies are often the result of legacy technology infrastructures and aging property management solutions. These solutions lack advanced features and functionality. Many also lack the ability to centrally connect with other hotel technologies and data sources.

Next-generation hotel property management systems (PMS) render these predecessors obsolete. The best of today’s solutions enable hoteliers to operate at unprecedented levels of efficiency and effectiveness. 

Fully-integrated platform capabilities make it possible to streamline operations across all departments, all properties and virtually all areas of functionality. These range from guest bookings, reservations, and group management to housekeeping, maintenance and front office tasks like assigning guests to rooms, maintaining guest folios, coordinating profile changes, posting room charges and conducting night audits. 

With next-generation systems, it becomes possible for the first time ever to seamlessly share data across all parts of the property — or properties, as the case may be — and across all of the various hospitality solutions that are utilized by the hotel on a day-to-day basis. Using PMS interface connections, hoteliers have the ability to centrally manage all crucial functions, from inbound reservation delivery from the central reservations system (CRS), or channel manager, to the revenue management solution to the point of sale (POS) system to the guest response platform to the CRM, marketing, loyalty and guest-facing applications.

The real magic lies in the fact that the PMS connects to the CRS in near real-time to provide accurate, up-to-date data from every transaction and interaction. The data can be made readily accessible to hotel staff across all parts of the organization on an anytime, anywhere basis. 

The ability to capture, integrate and store all data in a single place — by either physically migrating or virtually connecting it via APIs — is truly a breakthrough development in the annals of hospitality technology. Eliminating disparate data silos makes the system far more holistic — and, also, a whole lot smarter. Connectivity also opens the door to new innovations, such as real-time optimized pricing, which can have a direct material impact on RevPAR while setting the stage for capabilities not yet available or perhaps even imagined.

Another hallmark of a next-generation PMS is automation. Some systems have evolved to the point that virtually all operations now run automatically — and nearly flawlessly, with minimal risk of human error. Hoteliers everywhere, across all property sizes and categories, are reaping the benefits. In fact, according to The 2019 Smart Decision Guide to Hotel Property Management Systems81 percent of hoteliers at small and medium sized properties, and 91 percent of those at large, full-service properties, say that upgrading their PMS capabilities within the past 3 years has enabled them to improve overall performance and financial results by a “significant” or “dramatic” measure. 

For hoteliers who have not yet migrated to a next-generation solution, The 2019 Smart Decision Guide to Hotel Property Management Systems (now available for complimentary access) offers a roadmap to success. It includes insights for evaluating different PMS solutions — and, importantly, solution providers — and practical guidance for making the right selection. It also includes pointers for maximizing the value of the investment over time.