Hotel Spending Out of Balance: Finding Equilibrium by Investing in PMS Technology to Drive Value Generation

Success is, in many respects, a product of continued investment. Professional athletes invest in the counsel and guidance of high-level coaches; the best in their industry, to ensure they are prepped for each game day. Race car drivers equip their cars with the latest and greatest technology and upgrades to ensure they are prepped for each race. Business owners seek out bright, innovative minds to help advance and improve their product offering, and ensure they construct a team of aligned, hard-working employees.  Ultimately, this represents the age-old sentiment: “Sometimes, you have to spend money to make money.”

In today’s climate, companies are implored to invest extensively in their business to ensure the longevity of their brand. The hospitality realm is no exception, and while it’s no secret that our industry is often slow to adopt technological reform, guest expectations are inspiring hoteliers to rise to the occasion. Hotels need software for all aspects of their complex businesses including: finance, revenue, operations, guest experience and sales. With enhanced guest personalization, convenience, and hyper-connectivity acting as the primary indicators of a memorable guest experience, hoteliers across the globe are realizing the importance of investing in new technology. Slowly releasing their tenured grip on legacy technology, we can finally imagine a future in which hoteliers understand the imperative value that new-age technological infrastructure offers their hotel – but is it happening fast enough?  

In previous articles, I have spoken at length about the responsibility hoteliers, and owners have to take the lead on investing in new technology. The modern guest expectation (or rather, demand) for a more engaging and personalized guest experience is not new information. A recent survey of travelers by  Phocuswright revealed that two-thirds said investment in hotel technology that enhances the guest experience is “very or extremely important.” So, what are hotels waiting for? If the technology exists – which it does – we can no longer blame our industry-wide resistance to innovation on a perceived lack of technology.

This brings me to my next question: If hotels are willing to spend $10 to upwards of $100 million on physical renovations to their property (and even more on new builds), why are they so reluctant to spend more than $10k on a PMS? After all, your PMS is the beating heart of your property, effectively managing your hotel on both a micro and macro level. So, what gives? Doesn’t that seem a little out of balance to you? Is a more efficient operational model – one which is equipped to meet and exceed current guest demands – not a worthy investment? Should the operational core of your hotel not have a greater financial priority?

While the legacy PMS platforms that ruled the last decade came with costly (and undeniably limited) upgrades, the cloud-based PMS technology we see today is rooted in flexibility. Not only that, but updates and training are conceptualized to a more streamlined model, helping to offset the operational load that training staff used to represent to hotels. With more affordable structures in place, hoteliers today can buy a PMS from $3 per room (per month) to about $15 per room. The range, while substantial, is largely affordable and built to scale according to the unique needs of each property. After all, hotels today require an entire system of platforms to support the demands of guests (suggestion: insert statistic here) which creates a demand for a unique ‘stack’ of platforms built into the infrastructure of each hotel. Fortunately, new-age PMS platforms are not only comprehensive and affordable, but they allow hoteliers the flexibility to seamlessly integrate with other vital applications. This, in itself, creates an operational environment that is collaborative and insight-driven.  

Now, let’s bring this discussion back to my initial query. Why are you content to trust your multi-million dollar real-estate investment (your hotel) to be supported by a technology system for which you are only prepared to pay $10k a year? While increasing your technology budget to invest in innovative hotel platforms may seem costly at first glance, ask yourself – what is the cost of running a hotel on an outdated system? How long can you reasonably, afford that?

The future of hotel PMS is exciting, with hoteliers now able to run their entire business from a tablet. This not only adheres to the emerging demands of guests - but empowers hotel staff with the opportunity to excel within their respective roles of providing authentic hospitality. Ultimately, with a next-generation PMS as the core of the property’s entire ecosystem, hoteliers can expect to increase revenue and guest satisfaction in tandem with continued innovation on behalf of technology visionaries and trailblazers.

Paul Peddrick