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What is a hotel's survival strategy in a highly competitive market? Two things are required: a website that simplifies the booking process and outstanding customer service to ensure that returning visitors choose your hotel again. Automating administrative and daily tasks can help to provide a reliable service.
Hotel management is a complex process that involves many departments. Each operation must be recorded. Hoteliers use a variety of tools to accomplish this, including spreadsheets and paper forms.
This article will discuss property management systems, or PMSs, which handle reservations, front and back office operations, channel management and more. Learn about the functions of PMSs and compare the products offered by different suppliers. You will also receive advice on how to select the best system for your business.
What is a Hotel Property Management System?
Property management systems (PMS) are software programs that manage reservations and other administrative tasks for hotels. Front-desk operation, reservations, channel and occupancy management and payment processing are the most important functions. The PMS software is primarily used to control financial transactions and reservations, but it can also be used to manage human resources and housekeeping. PMS software facilitates internal and external processes within a hotel.
In the 1970s, the first hotel management systems were developed. Even today, not all hotels have one. Adam Harris, the CEO of Cloudbeds mentioned this low adoption rate during a recent interview with Skift. Harris stated that the average hotel industry spends on technology is a small fraction of what should be. Harris also explained this situation: "The main reason we don't get a new customer isn't because they switched to our competitor; it's that they are afraid of change."
Technology innovations have made their way to the hospitality industry. Software Advice's 2015 report, "Hotel Management Software buyerView", showed that only 34% of hotels were using special software. The remaining 25% still used pen and paper to manage their hotel, and the remaining 16% had no management system. According to the Stayntouch 2022 Technology Sentiment Report, 81.7 per cent have implemented technology at least once during the pandemic.
Hoteliers began to look for innovative solutions, such as mobile keys, self-service check-in, in-room control, and digital payment. Many large players have already adopted smart technologies that are based on Internet of Things infrastructure. There are still many legacy systems being used.
Legacy PMS may only perform one function, need additional modules or be difficult to integrate with the other hotel management software. Hotel owners are therefore looking for an all-in-one solution that can manage multiple processes. More than 80 per cent of the respondents to the Hotel Technology Survey 2022 said they wanted to learn more about tech.
Hotel property management systems, also known as HMS, are currently used by large hotel chains, hostels of all sizes, and even small hotels. These systems allow hotels to see and manage reservations, as well as the status of bookings. But their functionality does not end there. Hoteliers can track room occupancy and manage their back-office operations with PMS. Take a look at some of the most popular functions that PMS supports.
Property management system modules
Modern property management systems combine multiple working environments into a single software. The combination of modules and features can vary depending on the provider. Also, one module's functionality can differ slightly. Some vendors also sell their systems as separate modules which can be integrated into an existing hotel solution. The basic structure of the hotel PMS is shown below.
It is difficult to separate the PMS functions into those that are more important and those that are less so because they all have a role. Hotel property management systems, regardless of the type of property, must include a booking engine with a website and a front desk operations module. Essential modules include revenue management, channel management, housekeeping and customer data management. The back-office and point-of-sale services are essential for large hotels or resorts.
Reservation
Online bookings are the most common sales channel for a modern hotel. A property management system is not complete without the reservation module. It helps to manage online bookings. The central reservation system (CRS), or any other platform for reservations, can be implemented either as a separate PMS module or as an internal solution by the hotel.
The hotel reservation system will send all the inventory and date information to the front desk. The booking engine on the website and other distribution channels must be integrated into the reservation system. Chain hotels generally use a central reservation system to manage all their properties. Independent hotels typically have their own reservations systems. PMS should integrate with any existing reservation software that a hotel, or hotel chain, uses.
The reservation module has the following key functions:
Booking rooms. This system shows the availability of rooms and their status across all channels, including the website booking engine. This function allows for group reservations and monitors double bookings. It then schedules bookings and displays current and upcoming information on a dashboard.
E-payments processing. Software is used to collect online transactions and categorize them.
Room inventory management and allocation. Reservation tools can prevent double bookings and overbookings. This function may be part of the channel management module in some software.
Reservation emails. After guests have completed their booking, the system will send them a confirmation. This function may be part of the Front Desk Operations module in some PMSs.
Booking of activities. Some software systems allow guests to book both accommodation and activities.
Front desk operations and room management
Front-office modules allow a manager at the front desk to update and view room reservations, check-in and out guests, and process payment. A guest wants to check in as quickly as possible when they arrive at the hotel. In this situation, the receptionist's support is crucial. Front-desk staff must be able to assist guests efficiently.
Some property management software also integrates with self-service kiosks and allows check-in or check-out via QR code. Check out how Marriott and other companies use digital self-services to automate check-in.
Room status. The front desk manager can view the room status, as well as current information, on all reservations. This module should allow room status to be updated rapidly. The Front Desk module automatically allocates rooms and facilitates room changes.
Key management. This module manages electronic key cards, processes payments, and issues guest receipts.
Daily audits. Users can also perform audits at night or during shifts using the front-office module.
In-room controls. Room management is becoming more important as hotels become more intelligent and tech-driven. This module helps to operate automated systems in rooms (e.g. lights, HVAC etc.). Remotely prepare the room for guests' arrival.
Channel management
The channel management software provides a single interface for controlling and distributing inventories to different channels, such as GDSs (Global Distribution Systems), OTAs (Online Travel Agencies), wholesalers (direct booking platforms), etc. A channel manager is connected directly to the central reservation system, which holds information on the availability and price of hotel rooms. This information is shared via distribution channels. The system makes the room inventory accessible to travellers looking to book online. It lists rooms from different sources. A channel management module is also available to facilitate booking transactions.
Diverse distribution channels make inventory available to different audiences. By connecting to OTAs or airline websites, you can reach a greater number of guests, especially those who plan their trips and book flights. Metasearch sites allow customers to compare prices from different channels and make the right decision. GDS connections help non-leisure travellers book as well as groups.
Direct distribution via booking engine
A hotel's website, which includes a booking engine, is an important distribution channel. A booking engine on a hotel's website allows guests to make reservations without the need for travel agents or OTAs.
Booking directly through the hotel's website is important for loyal guests. Booking engines must be integrated with hotel websites and central reservation systems, allowing them to act as an additional sales channel. This module usually processes payments through integrated payment gateways.
Booking engines also often offer upselling (such as room upgrades or complementary services) and package deals.
Revenue Management
A PMS is an important step in improving revenue management indicators for hotels, including occupancy, RevPAR, (Revenue Per Available Room) and ADR, (Average daily rate), which are all very important in assessing a hotel's success. Revenue management systems can help a hotel manager maximize rates. They also allow them to better control their finances.
Studies show that the majority of hoteliers understand the importance of revenue management. According to research conducted by Duetto in 2022, 67.6 % of respondents use a revenue-management system. 77.6 % expect their hotel technology investments to grow over the next three years.
The PMS revenue management module helps to increase total revenue by using machine learning and forecasting occupancy rates to decide whether or not to lower inventory prices.
This module also allows for dynamic pricing. This module uses algorithms to help hotels price rooms based on historical reservations, weather data and local events. This module improves pricing strategies and updates prices on all distribution channels to sell more rooms for the best price. Read our article about how machine learning redefines hotel revenue management to learn more.
Housekeeping
A housekeeping module in a PMS connects the housekeeping staff with the front desk. Front-office managers can create a list of tasks they want to assign and housekeepers update the status of rooms. Housekeepers who use a cloud-based system can update their status on rooms or assignments using a mobile app or tablet. This module also keeps a list of maintenance reports and tasks for users.
This module's main purpose is to manage housekeeping and maintain property. The housekeeping module includes the management of room status, maid assignments for cleaning rooms based on block or floor locations, and lists for housekeepers. Maintenance management records hotel interruptions and repairs, with an attendant assigned to fix the problem.
Customer data management and CRM
Hoteliers must collect and organize customer data to stay in touch with their customers, both current and former, during and after the check-out process. The CRM module should integrate with the front desk, reservation system and other sources to collect all information about guests. It allows for the storage of guest data in a format that is easily accessible. It also includes contact information for guests before and after their visit. If a hotel has its own CRM, then the PMS can be integrated with it.
The module can be used to automate services such as pre- and post-stay or organize marketing activities. The CRM module allows owners to personalize guest experiences with loyalty and membership programs. This is especially important for resorts and hotel chains.
Reports and Analytics
All business owners use analytics to monitor processes and analyze business performance. A PMS is a powerful business intelligence tool that can collect hotel data, and generate various automated reports. The software can produce night audit reports as well as room and tax reports. It may also generate departure/arrival, housekeeping, or other summaries.
Back office management
This PMS module allows for the management of hotel teams, back-office operations and administrative hotel operations. Back-office management modules may have functions such as
Catering and event management (conferences and receptions)
Management of spas and gyms (sometimes it is a separate module, optional),
Staff management (human resource management in the back and front offices: shift management, employee invoicing, etc. ),
Analysis of consumption costs and hotel expenditures
Inventory Analysis
Sales and marketing management of promotional campaigns and
Review management is a good example.
The back-office module is used to organize the staff and facilitate internal operations. It also includes financial functionality and accounting.
Point-of-sale services
Many hotels offer a restaurant on-site, and many also have gyms or spas. If there are several payment terminals, the point of sale (POS) system will be essential to accurately collect and handle all transactions. Hoteliers can add additional charges and discounts to the final bill of each customer with a POS module. These charges can include
Other activities such as spas, gyms and other sports;
Services of food and beverages (restaurants and cafes), and
You can choose from a TV, minibar, in-room service, and Wi-Fi.
A comprehensive POS module, in addition to automating payment processing, can also support inventory management, gather information about customer buying patterns, produce sales activity reports and keep all financial data together.
Choosing a PMS
A PMS is best suited to a specific hotel, based on its size and features. Each system has its core functions and modules. The majority of players on the market offer customized hotel management systems for different types and sizes of properties. Basic PMS components can also be supplemented with modules required for specific business types.
It is important that the PMS chosen can be integrated with third-party software. Many properties have their reservation platforms, CRSs, or use other business management tools. Functionality is the main factor in determining which property management system a hotel chooses.
The 2021 Smart Decision Guide for Hotel Property Management Systems from Oracle [1] offers a checklist of evaluation factors to help hoteliers make the best decision. Each factor is rated on a scale of 1 (absolutely unimportant) to 10(very important). This checklist can also be used to compare systems from different vendors. Consider the following, regardless of hotel type and size:
Check out integration options. Check integration options. You may also consider hiring an external technical consultant for integration services.
Consider a mobile-friendly cloud solution. Cloud solutions are usually less expensive than software installed on-premises, and owners don't have to pay for maintenance. Cloud software users pay a monthly subscription fee based on the number and type of modules that they require. Cloud software also integrates better with third-party systems like OTAs or GDSs.
Cloud-based systems are also constantly updated and have a mobile app. Mobile access allows for communication between departments (front office, management, housekeeping etc.). This improves customer service.
Easy-to-use systems are a priority. The UX of the system will influence your employees' learning curve. The more difficult and confusing the interface, the longer you will need to spend on staff training.
Attention to the level of customization provided by a service provider. The PMS needs of different properties may vary. If you want a front-office module that is based on beds instead of rooms, then make sure the PMS vendor offers this type of customization.
Customer support is important. Software can be affected by anything, but the service must not be affected. Technical support is needed by hoteliers 24/7. Look for reviews of customer service from other hoteliers when choosing a PMS or negotiate support terms in detail with your vendor to ensure that software outages will not have a drastic impact on your operation.
Calculate your ROI and expenditures. You need to determine how much money you are willing to spend, whether you plan to build a new property management system or update an old one. Consider these factors to ensure that your PMS is worth it.
Time spent now and the reduction in time due to automation
How distribution and revenue will be affected;
Cost of System Integration and Maintenance
Many vendors offer off-the-shelf PMSs, and others provide customization services. To reach a wider audience, large vendors customize and supplement the basic PMSs to make them usable by as many different types of properties as they can. We'll look at solutions in different categories.
Note that some of the tables below do not include these modules because most systems have already integrated channel management, reservations, and front-office functionality. Please note that our categorization is not 100% accurate, as most platforms are becoming universal.
Since we couldn't cover all the PMS solutions in depth in this article, we have compiled comparison charts and reviewed several solutions in order to give you an idea of what's to come.
What is the future of hotel PMSs?
The technology in the hospitality sector is constantly evolving, with new modules and functions to optimize daily operations and meet the emerging global digitalization requirements. What's happening with them?
API-first approach. Experts predict that property management systems will switch to cloud-based platforms and open APIs, which will improve data exchange speed and quality. For more information, check out our overview of the most popular hotel APIs.
AI-powered solutions. You can read more about how the hospitality industry is embracing AI and Data Science in our article. The hotel property management system is no exception. This is especially true when we discuss business intelligence, revenue management, and guest service.
Internet of Things. As we've mentioned, smart technologies are becoming more popular (like in-room control, facial recognition etc.). The majority of these are IoT-based and require sensors and smart devices to be implemented. They must also be connected to a hotel's PMS, the main operational centre.
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