How Do Cloud PMSs Offer Flexible Pricing?

2016 is here and promises to be an exciting year for hospitality. In addition to all the new-age technologies slated to be launched this year, cloud computing is expected to break new ground with independent hoteliers over the next four quarters. The platform has been around for many years now and has enabled the development of affordable management tools for small and mid-sized businesses.Hotel management is a complicated affair and businesses that have access to management tools have a clear advantage over those that don’t. However, investing in a property management system (PMS) required considerable investment before the cloud came into being, as the only systems in use were Legacy systems. These systems required onsite infrastructure, which in turn required significant investment.

With the onset of the cloud, independent hoteliers gradually began to implement cloud based management tools but the larger brands continued to stick with legacy systems for a number of reasons. If you’re planning on investing in a PMS, remember that both systems have their pros and cons and what works best for you depends entirely on the type of property you run and the solution you’re looking for. For instance, a large multi-group hotel employing tens of thousands of people may have much more extensive data management needs compared to smaller properties and in such an environment, a legacy system and a dedicated IT team would be more beneficial in the long run. But for smaller hotels with limited budgets, a cloud-based system works out to be the better solution:

1. Minimal Starting Capital –

Legacy systems require steep initial costs for setup and infrastructure, just to get the system up and running. The software will need to be specifically tailored for the property and it can take weeks for the PMS to become functional. Cloud based systems only require subscription costs and usually take only a few hours to setup. This is crucial for small hotels that can’t afford to pull money out of the business to invest in hardware and the pay-as-you-go contract can be terminated at anytime by the property.

2. No Overhead Costs –

In addition to the high cost of infrastructure, implementing a legacy system comes with a number of overhead costs that can’t be avoided. An IT team will have to be hired to keep the system running, extra space will have to be rented, and the hotel will need to invest further in cooling equipment to keep the hardware running smoothly. Any breakdown can also be extremely expensive to repair.

3. Better Options for Growth –

Cloud PMS providers usually offer a wide variety of plans that hoteliers can purchase, with pricing that increases with the number of rooms. This allows hoteliers to select the package that best fits their current phase of growth and also enables them to upgrade their subscription to include more features when they become necessary. The system basically grows with the hotel, permitting the administration to devote all their focus towards scaling.

4. Simple Integration –

Most legacy systems cannot integrate in real-time with other cloud-based tools, forcing the hotel to either carry out these tasks manually or spend money on software that can intermediate between the systems. With the growing number of hotel solutions such as revenue management, channel management and so on being hosted cheaply on the cloud, this is quickly becoming a serious problem for legacy systems, which may only be compatible with certain software.

Legacy systems were once the only solution available and although the cloud-based PMS is much more versatile for businesses, the Hiltons and the InterContinentals will continue to stick with their legacy systems – these organizations belong to the top 1% of hospitality companies that employ hundreds of thousands of people and are ‘too big’ for a cloud-based solution.

But for the rest, cloud computing is the way.