Our recent study * on PMS available on the French market about their features, their interoperability and their security has confirmed an underlying trend: the world of PMS is a world that operates "as we have always done."
The world is changing fast, technology even faster. The PMS takes its time, the PMS imposes its deadlines, the PMS slows everyone down, the PMS is obsolete. If the PMS was only for its publishers, it would not matter. The problem is that an entire vertical economy furiously depends on the PMS, which is the operational IT root of the industry. In a hotel, there is no possibility of disconnecting technology: a hotel works 24/7, 365 days a year, and especially when others rest and unplug.
Reminder of the hotels IT architecture
Exception aside, hotel technology is primarily based on the PMS. Why is that? Because the billing system and then the planning were the first to be mechanized and thereafter to be computerized.
Step by step, the hotels asked their PMS partner to interface with other solutions that would help them in their daily operations. For simplicity and due to a lack of strategic vision, hotels have chosen this path. From a PMS perspective, this is a great opportunity not only to increase its average basket but above all to increase its customer dependency, which makes the divorce even more complicated. PMS' interest is THE top priority, the interest of its client only comes second. Don't you agree? Well, consider the PMS global leader's behavior.
Shall we throw out the baby with the bathwater (this is a typical French remark "Faut-il jeter le bébé avec l'eau du bain")? Today, NOT AT ALL. Why? Because otherwise how would hoteliers manage their daily management and suit their customers.
In this context, the strategy of CitizenM which really controls its technology and especially its data should guide other hoteliers to think and to act.
To change the ecosystem, a few solutions are emerging that put the PMS back to its true role: the PMS handles operational and only operational. Before confirming that this a the best available stragegy, best is to wait and see how smoothly the daily operations run.
Where are these PMS based?
89% are based in Europe, of which about 65% are in France.
A hyper-fragmented market
41% of companies make no more than half a million Euros annual sales, 50% less than one million, 61% less than two million ... With such a low turnover, it must be difficult to run a R & D department (Research & Development) with a real "R". Not a single thriving technology company can do without a strong or very strong "R". In this context, how can we hope for innovation?
Cloud is taking the lead
40% are cloud based, most of them with a SaaS model. 38% are privately installed, either on premise or on a private server with a Citrix-like bridge, or as a mix. The balance, 22%, are hybrid and can be instaled either on premise or in the cloud or both.
Connectivity makes no sense!
50% have 10 interfaces or less. How do we get to "10 interfaces" ? Take the two or three dominant channel managers in a market, one third party PCI partner, two or three customer reviews & marketing tools, two or three POS, and you'll get even more than 10!
Only 22,9% have more than 20 interfaces.
Conversely, 1 in 8 does not have a single interface!
What does it mean ? That the hotel is either locked into a short list of third-party solutions that do not necessarily suit him or he is sentenced to manually manage other tools.
Superman Syndrome? Of course not!
88% think they can meet the needs of Luxury Hotels, 69% of Palaces hotels. Yet they are only 50% to have more than 10 interfaces.
There is no worse blind man than the one who doesn't want to see
They are 90% confident about their own future and "only" 80% for their sector in general
Strangely this statistic does not reflect the other statistics: of those who make less than 500 k € of annual turnover, those who have little or no interfaces, those who do not know the cloud...
Standards are not for them
62% do not know HTNG (Hospitality Technology Next Generation), the association which has set up a large number of technological standards, for example the tokenization environment which allows PMS to delegate the storage of their customers' payment card data to a trusted third party, a "virtual safe".
PCI-DSS: 35% are not compliant
And many are in the process of becoming compliant by 31 December 2017, which means that the compliance rate at the beginning of September 2017 is closer to 50% than 65%.
Of those who are compliant, 21 do so using a trusted third party and 10 by themselves.
40% want to be paid double for each interface
When a third-party solution asks to interface with PMS, 40% of them ask for a financial counterpart, either a single "account opening" fee or a revenue share over time.
Don't forget that the hotel is already paying the PMS:
- A first time subscription to an interface to the PMS catalog
- Every month/quarter/semester for interface maintenance. It is not uncommon for the monthly interface maintenance cost to be higher than the third-party solution's itself.
Half only have written specifications ready
When a third-party solution wants to interface with a PMS, the classic rule is that the PMS provides its written and illustrated technical specifications. 50% of them are therefore not ready to interface.
In a context of globalization and acceleration of technology, it looks obvious that PMS are globally in total discrepancy with the present century. French hotels still have a long way to go before they become truly technologically agile.
Can we extend to Europe? The other European markets are different, of course, but the trend towards small PMS businesses and the "blocking" of connectivity are elements that can be noticed everywhere.
This means that there are real opportunities for bold entrepreneurs who are not afraid to come up against the reflexes of the last century. It's the future that counts!