Ditch Your Legacy System: A Case for Making Your Hotel PMS a Strategic, Profit-Generating Asset — Photo by Above Property Services (APS)

You have to spend money to make money – this advice that most of us will encounter at some point in our lives, especially regarding business. But as any successful business owner can surely tell you, strategically spending money is only half of the equation. In fact, most books or experts that promise to provide an easy-to-follow blueprint to financial success will inevitably start with one critical suggestion: save money and avoid unnecessary spending and debt. Simply put, “you have to save money to make money.” This becomes even more imperative when we focus on industries that historically operate on razor-thin margins and a seasonal ebb and flow, such as hospitality. In this world, spending recklessly will eat away at a brand’s bottom line and, in some cases, eventually sink the whole ship.

From an operational perspective, the hospitality industry – specifically, the hotel industry – currently finds itself in a precarious landscape. On the one hand, the appetite for travel has been healthy – if not entirely ravenous – post-pandemic; travelers are increasingly taking a ‘carpe diem’ approach to travel to make up for lost time and canceled or postponed trips. At the same time, however, an economic storm has been brewing as global markets begin to feel the reckoning of runaway inflation and fiscal tightening. Rumors of an impending recession mirroring the 2008 financial crisis have been circulating for some time now. As interest rates continue to rise, the cost of everything has followed suit. Not only that, but these economic headwinds may cool consumer spending across the board, with many economists now warning that, after two years of “revenge spending” directed at travel and experiential expenses, cautious consumers may begin pulling back their spending in the so-called revenge categories.

Operating a hotel is a costly affair at the best of times, and, in the current market, those costs are fixed on an undeniably upward trajectory. At the same time, consumer sentiment is tested by fears of economic fallout and the hospitality industry at large continues to grapple with labor shortages. These challenges are not new but have become exacerbated in the wake of the pandemic. To this effect, reports indicate that U.S. hotel gross operating profit per available room, or GOPPAR, fell year over year for a second consecutive month in June. This decline has been largely attributed to labor costs, which have reportedly risen at nearly three times the rate of total revenue for some hotels.

Of course, I do not mean to paint a grim picture of the industry; despite significant setbacks and challenges over the period of the last three years, hospitality has proved incredibly resilient. However, these conditions point towards the need for a shift in perspective related to a hotel’s operational framework. Now, more than ever, a hotel’s core platforms – specifically, the property management system (PMS) – should be a profit center, not a cost center. As hotels leverage technology to unlock increased efficiency and streamline operations, they must also look to their PMS to unlock savings and generate revenue while enhancing the guest experience.

A Cost-Center vs. a Profit-Center

In hotel management, the distinction between a PMS that functions as a cost center and one that serves as a profit center can ultimately make or break a hotel’s success. The PMS is, after all, the heartbeat of a hotel’s technological ecosystem, which manages the full suite of front-office capabilities, including but not limited to guest bookings, guest check-in/checkout, room assignment, managing room rates, and billing. With this in mind, the PMS has long been viewed as a necessary expenditure. Still, the modern landscape of the hospitality industry now demands a paradigm shift, where the PMS becomes a strategic asset rather than a liability.

Embracing a modern, cloud-based PMS offers a multitude of benefits that transcend its conventional role. With efficiency as the guiding principle, new-age PMS systems place intuitive operational automation at the forefront, streamlining previously cumbersome touch-points and tasks such as guest check-in/out and administrative duties. This, in turn, minimizes errors attributed to manual processes, improves staff productivity, and, more importantly, empowers hotel staff to focus their attention on establishing more meaningful connections with guests. As you can imagine, such a guest-centric approach is increasingly pivotal in a hyper-competitive market where meaningful interactions translate into customer loyalty and positive reviews.

With built-in housekeeping and maintenance modules, hotels can rest assured that rooms are maintained and turned over on time. At the same time, the cloud-based infrastructure ensures that maintenance duties are systematically managed, preventing unexpected breakdowns of high-value property assets. Not only that, but the data-driven insights provided by a modern PMS system can inform better business decisions related to resources, staffing, and so on.

More Revenue: More Bookings

The modern PMS unlocks operational efficiencies that protect a hotel’s bottom and is also a catalyst for revenue generation. The power of meaningful guest interactions extends beyond mere satisfaction; it fuels direct bookings, guest loyalty, brand reputation, and word-of-mouth recommendations. In the hospitality industry, those are powerful, revenue-generating metrics.

In this age of personalization – and digitally enhanced convenience at every turn – hotels are expected to pull out all the stops for their guests with respect to hyper-personalized communications and touchpoints. This expectation materializes long before the guest steps foot on the property and remains long after they leave – hotels must leverage technology, such as a new-age PMS, to supercharge their online and offline touchpoints with data-backed personalization.

Moreover, data-driven insights, another hallmark of a cutting-edge PMS, transform the decision-making landscape. By analyzing guest preferences, behavior, and market trends, hotels can make informed choices that resonate with their target audience. The utility of these insights also extends to revenue management, where dynamic pricing strategies are informed (in real-time) by market trends, competitor analysis, and demand forecasts. The PMS also integrates fully and seamlessly with distribution and channel management, providing a centralized hub for managing bookings across various platforms. This integration ensures consistency and eliminates the risk of overbooking or mishandled reservations. Furthermore, the modern PMS doubles as a booking engine with built-in upselling and cross-selling functionality while allowing hotels to present tailored packages and add-ons to guests effortlessly throughout their booking journey. Group bookings, often a complex and time-consuming task, also find a simplified home within the capabilities of a modern PMS.

The best part? An open API microservice architecture ensures seamless, painless integration – without any system downtime, hidden integration fees, or extensive training required.

Ultimately, the challenges posed by the current market underscore the urgency for innovation in property management, and by shifting the way they view and utilize the property management system, hotels can finally better insulate their bottom line. What was once considered, at best, an unavoidable expense and, at worst, a liability now has the potential to become a profit center that reduces costs and generates revenue. By embracing a modern, cloud-based PMS with a full suite of comprehensive, cutting-edge modules, hotels can unlock new levels of efficiency, guest-centricity, and revenue optimization while positioning themselves for long-term success – of both the financial and reputational variety – in an ever-evolving industry.

As hotels navigate the crossroads of tradition and technology, one truth remains: a forward-looking PMS isn't an expenditure – it's an investment in a more profitable and scalable future.

About Above Property Services (APS™)

Above Property Services (APS™) is leading the charge to deliver innovative, scalable, and services-oriented platforms for the global travel industry and other related verticals. We think differently, and we are constantly innovating. APS offers the only platform that can evolve seamlessly in response to industry demands, with credit to a microservices architecture that empowers continuous development and refinement.

Built from the ground up, the APS ecosystem empowers continuous development and refinement of your critical business processes via a unique microservice architecture. Designed for performance, flexibility, security, and stability, the future-proof framework is up and running quickly, delivering a scalable, cost-effective solution that can work with or replace your existing tools and investments. APS is a platform that adapts to you – not the other way around.

Powering both large and small companies, we understand the industry's challenges in the past, and we have developed a platform that is suited for the future.

To learn more visit aboveproperty.com

Steve Lapekas
Above Property Services (APS)

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