Look behind the IT curtain at most big brand hotels and you will see a technology stack that is often proprietary or at least is integrated under a single software provider. That means a property management system (PMS), a central reservation system (CRS), a revenue optimization system, a customer information (or relationship) system, business intelligence, F&B, group and meeting sales, point-of-sale, etc., all together within the same system. How did this come about? Well, when the pioneers of the hotel software business first rolled out their PMS, the next thing they thought was, “How do we own more of the hotel’s software business?” Now, of course, there is nothing wrong with that in principal, and when they began to build and integrate a CRS into their platform, some efficiencies were created, so everyone was happy. With that success, they moved on to Revenue Management, and all the other functions you see in these big software packages in many hotels.
From a sales standpoint, it was a great move as they could make one sale to cover many parts of the hotel business. Hotel IT managers loved the concept as well because, quite frankly, they really didn’t have to do as much. They simply called their service rep and bought more hours whenever anything broke down.
However, over time, a problem began to grow. Each one of these hotel companies wanted a little bit of custom programming to cover their unique business situation. So the big software company complied and added the functionality to the mix. This process kept repeating itself across all the software components. Plus, as time went on, and new technologies came available such as mobile and cloud, the big software companies had to keep investing in new software development. The result was that this single integrated software stack became huge, complex and cumbersome. It tried to be everything to everybody, but ended up not really the perfect fit for anyone. Now when hotels ask for a special feature to be built, it is like turning a battleship. Things take forever because of the size of the software. Service and support suffer and many of those created efficiencies become overshadowed by the complexity and service issues. To top it all off, hotels end up using only about 20% of the available functionality.
As this problem with the giant integrated stacks grew, some more nimble hotel software solutions began to spring up. These new firms began to look at just a single aspect of the hotel software stack and decided to be absolute experts and develop solutions that would be considered “best-of-breed.” Most notably, you have seen this in CRS solutions; essential to managing your online sales and marketing from a single point and making it easy to project up to date rates and room availability, and revenue optimization solutions; helping optimize revenue with intelligence that allows for forecasting and thus more accurate setting of room rates. These new, smaller companies have been able to spend the time to focus on their software segment and have been able to develop either highly configurable solutions that can easily fit many types of hotels, or have focused on a specific hotel type and have perfected it.
But for all this new specialty software to work, the pieces must be integrated with the backbone of the system – the PMS. Jeremy Kressman of Skift notes that, “PMS platforms serve as a crucial linchpin to help streamline all aspects of the hotel experience, from more cost-efficient operations to the delivery of guest services.” Seeing this trend in specialty software companies, the big battleship software companies started providing integration services with these new upstarts, but with their already full plate of new feature requests, these integrations took forever to get done.
But entering the picture was a new kind of PMS company. Built like the new specialty software firms, the new PMS company focuses on being best-of-breed for in-house operations, but is built on a open structure so that it can easily integrate with other best-of-breed 3rd party software via APIs. By “easily,” I mean using a minimal amount of code while still being able to handle the various business rules. The implication for hotels is enormous. Instead of buying a huge technology stack composed of complicated yet compromised features (and only using 20% of them), hotels can now select the perfect combination of software features to match their specific needs – and end up paying a lot less. Because these new pieces are specifically built to be easily integrated through APIs, building the perfect software stack happens in far less time than before.
So does that mean that our hotel IT manager has more work to do? Yes and no. Before this new trend in collecting best-of-breed systems, IT strategy was something like, “Buy what everyone else has and hope for the best.” Time was spent on managing hardware and service contracts and IT was never considered a lever to pull to make the hotel more profitable. Now, the CIO or IT manager can actually devise an IT strategy that improves efficiency and revenue and, thereby makes their hotel more competitive in the marketplace. Business imperatives now drive IT planning. So, yes, more work, but work that has a greater impact on the hotel’s success.
But it all starts with the selection of the correct PMS. A cloud-based, open platform will arm you with the flexibility you need to find the best solutions to optimize every aspect of your business.