How to leverage cloud computing to reduce IT CAPEX at hotel chains
You are running a group of five hotels under the banner ABC Hospitality. One fine day, you decide to digitize operations across all your properties. But then, due to lack of proper research and groundwork, you implemented an on-premises solution, leading to a huge upfront capital expenditure (CAPEX) – buying the application, setting up servers and IT team for each property. Plus, there will be additional expenditure on data security, which is unavoidable. Even before going live with the application, you would have incurred an enormous CAPEX with all these investments. Then comes another concern – when will you see ROI with that on-premises solution? Not anytime soon. Why? Because the outdated solution you just adopted will never be able to support your growth strategy, forcing you to refresh your tech stack for a better and newer option – that is, CLOUD. This piece will explore ways to reduce IT capital expenses with the right set of cloud-based tech solutions at hotel chains.
Let’s take a deeper look at it –
Helps you avoid making long-term investments
Let’s assume that you decided to look at other successful international hotel groups or hotel chains before buying a Hotel PMS for your multi-property management. It convinced you that their accomplishments are fueled by cloud-based hotel software, which is more efficient, feature-rich, and scalable. And this prompts you to go for cloud solutions – your first concrete step towards saving on CAPEX.
Here is how it happens –
The point here is clear – like in other industries, the IT requirement in hotels tends to evolve faster with changing market dynamics. If you buy expensive hardware like multiple servers and all in line with a legacy system, very soon, they all will be outdated, and you will be stuck with them. Owing to the heavy upfront investment made on them, you neither can dump them nor can you get to see the desired return.
However, you are not bound to make such exorbitant long-term upfront investments with the cloud. For example, in most cases, you will have to sign an obligatory contract for a year or so when you implement legacy hotel systems. But you don’t have to worry about any such issues with a cloud Hotel PMS. They are available on a monthly subscription model and you can pay for each month – just for the application. You can cancel it whenever you want if it doesn’t fulfil your requirements.
Let’s look at another example – say you want to add one more property to your group. Just go ahead, talk to your IT partner, and start paying your new subscription amount for the new property. You are good to go, and your property is live! Similarly, suppose you plan to renovate one property that might take a year or so. No problem, remove it from your subscription. You can increase your subscription when you plan to scale your business. Likewise, you can scale down your subscription when your IT requirement decreases.
Expensive annual maintenance charge (AMC) is another primary concern with traditional legacy systems, which ultimately goes away when you migrate to the cloud. You just have to pay for the initial setup cost (for the Hotel PMS + other third-party interfaces) and staff training cost. There is no AMC that can increase your financial burden.
Other major benefits
- You don’t have to invest a penny on data security. This onus is on your Hotel PMS partner. For example, apart from being PCI compliant, we at Hotelogix have extensively invested in adding extra safety layers to ensure your data is safe with us.
- Being built on the cloud architecture, these new-age hotel solutions are more likely to offer almost 99.9% uptime. This helps your hotel business stay up and running all the time.
- You can count on the power of a cloud Hotel PMS when it comes to third-party interfaces. Being a cloud application, it seamlessly gets integrated with a host of other cloud solutions, including revenue management, channel management, online reputation management, and many more.
- You gain unprecedented mobility as you can access it on any device over the web and through a mobile app from wherever you want.
Only cloud-based hospitality technology solutions can help you reduce your IT-related CAPEX while allowing you to do more at your hotel chain. But the trick lies with selecting the right one with all the operationally essential features to address all your issues.