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Can Cloud Technology Play a Role in Improving an Independent Hotel's Revenue?

Prabhash Bhatnagar
Prabhash Bhatnagar


The constant evolution of computing technology has forged a highly expectant world in which even the most astounding breakthrough is in danger… danger of becoming obsolete in a few months. Of course this emphasis on pace is what powered the exponential growth of global industrialization – but in the IT industry, the blinding speed at which progress is made often clouds judgement and even organizations at the very top of the food chain can get carried away. This has happened on multiple occasions in the short history of IT technology – the crash of the dot-com bubble, and the rise and fall of Flooz and Beenz being just two of many examples.

While IT companies are now a lot more conscious of the risks associated with the lightning pace of innovation here, it may take longer for consumers at the other end to develop that level of awareness.

This is where cloud technology is reshaping the future of small and mid-sized enterprises (SMEs), particularly in hospitality.

We can better understand these repercussions within the industry by looking at the relationship between online travel agencies (OTAs) and hotels. Here, we consider the former to be service providers of a sort while hotels are the consumers. OTAs have built a rock-solid empire in first aviation and later hospitality, connecting hotels and airlines from around the world to millions of potential travelers. While paying commissions to these distributors seemed inevitable to get a spot on the global map, it is no longer as imperative as it once was. Cloud computing has largely reduced hospitality’s dependency on these channels, especially for the independent hotels. By enabling smaller hotels to generate more direct bookings and giving them accessibility to modern digital tools, the cloud has levelled the playing field. Today, independent hotels can utilize the same resources that were once exclusive to the large hotel groups.

But cloud technology has been generally beneficial to the whole of hospitality and tourism, not just SMEs. The legacy systems that were commonly being used in many properties involved outdated software with intense hardware and maintenance requirements. These systems were inefficient and curbed the hotels’ productivity, holding back progress within the hospitality network. An overdependence on these legacy systems could have led to havoc in the industry as they have none of the real-time operational or integrational abilities of modern systems. We’ll never know how bad things would have been though, because cloud technology nipped the issue before it could become a problem for the entire industry – a large number of hotels that used to employ legacy systems are now migrating to the cloud.

The sheer number of cloud based services available to hotels today means they can optimize almost any aspect of their business but the ones that really made a difference to the hospitality landscape are the systems that simplified core processes, from management and accounting to distribution.

Let’s take a look at some of these technologies:

1. Property Management System (PMS) –

Probably one of the most revolutionary tools to be freed by cloud computing, PMSs were once proprietary systems developed by only the large hotel groups for internal use. With the ability to automate and regulate most core operations of a hotel, PMSs saved these properties a lot of money while boosting productivity at the same time. The older systems had extensive hardware and server needs and also required an IT team to manage technical difficulties. Cloud computing has given rise to the cloud based PMS, a system with all the productive benefits sans any of the maintenance or hardware costs associated with the older systems. Any hotelier can now streamline their property’s daily routines and efficiently manage reservation management, housekeeping, restaurant operation and more, with just a laptop and internet connection.

2. Customer Relationship Management (CRM) –

Maintaining customer relationships is a crucial part of any business model, especially in today’s social media dominated age. Unsatisfied customer reviews can attract a lot of attention on online platforms but so can positive feedback, and hence hotels would greatly benefit from a tool that could mechanize the entire relationship management process. This is where CRM software have had a major impact on hospitality. By tracking intricate details of the guest’s experience through every phase of their stay and then building a repository of guest profiles, hotels can use the data to enhance the customer experience. Cloud technology has enabled CRM systems to share guest information across multiple properties, allowing hotel chains to obtain guest preferences and personalize their stay at any location.

3. Revenue Management System (RMS) –

Tweaking the rates of each room on a weekly, or even daily basis is a crucial factor in a competitive hotel’s success. Employing an RMS has tremendously helped hoteliers manage their revenue and room rates. The system evaluates a variety of information regarding various regional and global factors before coming up with a best available rate (BAR). The rates are dynamically calculated in real-time and can be updated as often as necessary. Some RMSs also provide hoteliers with detailed revenue reports and forecasts, allowing managers to plan long-term budgets better. Chains can also analyze each department of any branch, allowing the administration to pinpoint outlets that aren’t generating enough revenue. A cloud based RMS provides all hoteliers with an easily accessible and affordable solution.

Software as a service (SaaS) companies are thriving as global demand for these cloud related services continues to grow – Cisco revealed that 90% of the world’s mobile data traffic will be driven by cloud based applications within the next four years. By offering clients a subscription based model, hotels don’t need to pay massive upfront costs to invest in the system, allowing them to see a return on their investment much faster. In fact, most hotels investing in reliable cloud based solutions begin to see returns within months, even weeks.

Cloud computing is enabling hoteliers, big and small, to invest in powerful tools without having to bear the huge cost of infrastructure. These tools are enabling today’s hotels to simplify their processes and automate most operations, boosting their efficiency and improving the property’s bottom line.

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