The state of IT investment in hotels: What to expect and what needs to be done

Debiprasad Sarangi -

Like any other industry, hotels have realized that technology adoption is the only thing that will help them drive growth. And this has led to a slight yet encouraging increase in their IT investment. From what we gather from our interactions with hotels and industry experts, about 4% to 5% of hotel revenue was allocated toward IT in 2022. It is a tiny improvement from what it was in 2021. 

What are hotels doing in 2023?

According to our findings, around 52% of them believe that cloud migration will significantly impact the industry in 2023. As the hotel business is back on track globally, we expect them to spend at least 2% more on technology. Additionally, it is also to be noted that about 70% or more are planning to increase their IT budget.

Where does the Hotel Property Management System stand on their priority list?

When we say cloud migration, it primarily indicates adopting a cloud-based hotel property management system. As also referred to as hotel software or hotel management software, Hotel PMS is a crucial piece of a solution for handling day to day hotel operations. 

It’s all about adopting the right solution.

When automating and streamlining operations, properties of all sizes need Hotel PMS. But there is a slight difference here. It is mainly because their technological requirements vary to a great degree. While a small or independent hotel would need a solution with just a few basic modules, a hotel group would need something robust and comprehensive. Since they have multiple properties in a group, they need a multi-property management system. 

Here are some points to consider.

Costs

Be it a small or large hotel, saving costs is everyone’s priority. This is where cloud hotel software makes sense. It comes with flexible pricing and no upfront license or AMC fee. Then, hotels don’t have to spend more on setting up on-site servers and IT teams to manage them. Product upgrades are regular and free. All these lead to one thing – lower software ownership costs.

Operations

A small property can manage its operations with a Hotel PMS that has front desk, housekeeping, and PoS modules. If the management wants to sell more rooms online, they can use a channel manager and web booking engine integration. But they need to ensure that the PMS is offering them operational reports so that they know how their hotel is performing. 

However, a hotel group would need a multi-property management system. It enables them to gain centralized control over their group operations. 

For example, they can: 

  • Keep track of their property-level data from the central office or anywhere they want to. They will not have to waste time calling up a particular property when they need to know its real-time positions.
  • Check property-level availability from the central call center to accept guest bookings.
  • Access centralized guest history to know their past guests’ preferences. It helps them offer customized and similar hospitality to their repeat guests across all their properties.
  • Obtain several group-wide data on KPIs to make informed decisions.

Third-party integrations

Hotels in both segments would need to work with third-party solutions of their choice to leverage the power of digitization. 

Let’s talk about online distribution, which is essential for small and hotel groups to sell more. In this case, they must ensure the solution directly connects with leading channel managers and web booking engines. The channel manager ensures an automated, error-free, and real-time distribution of rates and availability across OTAs, ultimately leading to better visibility and sales. The booking engine generates more direct bookings via their websites. 

Similarly, they must see if the Hotel PM is integrated with multiple and widely used revenue management systems. It is very critical as it suggests to them the optimal room rate based on local demand, their occupancy rate, and competition rates. This is key to sell more rooms at the best rates to increase occupancy and revenue. 

The crux is that the right hotel property management system should integrate seamlessly with various best-in-class solutions, including accounting, CRM, loyalty programs, online reputation management, and materials management, etc. It helps hotels manage operations across departments. 

Hotels must consider several other aspects while selecting a hotel property management system—the PMS vendor’s credibility and ratings on software aggregator sites. Most importantly, they must pay special attention to what customers say about the Hotel PMS’s ease of use, business benefits, support, and training. Because, this will set the stage for them to drive rapid growth while meeting guest expectations.

This article was originally published in Hospitality Net.