Essential Features of a Hotel Property Management System (PMS)
Every hospitality business needs a scalable property management system (PMS). Yet, many leaders postpone such initiatives due to perceived complexity.
Sure, building a custom PMS is a major undertaking. It doesn't have to be complicated, though.
Fundamentally, you need three things for a successful project kick-off:
- Strong business case
- Reference system architecture
- Preliminary roadmap
In this post, we’ll walk you through the process of deciding which property management system features to include in your product, based on the latest operational and tech trends.
3 Factors to Consider Before Building a PMS
The benefits of custom property management system development include higher scalability, unrestricted extensibility, and the ability to differentiate through better technology.
But to capture these, you need to execute the project. To create a strong business case for PMS development, consider the following factors:
New technology adoption isn’t an end unto itself — it’s a means for achieving specific business goals (e.g., higher profitability or lower operating costs).
Your goal is to document the current “baseline” and then draw the desired to-be state — the extent to which the new PMS should help you solve current operating challenges.
It helps to think on three levels:
- Existing systems. Evaluate existing software systems. Which legacy systems can or can’t be refactored to integrate with the new solution? Which types of licenses can be consolidated and replaced with a custom solution?
- Missing and desired capabilities: What types of process flow automation could improve workforce efficiency? Which features could help your teams improve the operational KPIs?
- Must-have integrations with other business systems (e.g., accounting software, payment processors, marketing tools, etc.) and preferred selling channels (e.g., online travel agencies, metasearch engines, property management companies, etc.)
Formalize the above as a list of business requirements first — a set of clear objectives for initiating this project alongside measures for assessing its success. Then work with a business analysis (BA) team or a technology consulting partner to transcribe these into functional, non-functional, and technical system requirements.
To create a detailed list of features for a custom PMS, collect the requirements from end-users: Your front and back-office teams.
Schedule a series of interviews and requirement-gathering workshops, where you’ll survey your workforce on:
- Problems they face every day
- Functional issues with current technology
- Manual processes they’d like to automate
- System performance bottlenecks
- Other problems with current interfaces/workflows
Other helpful practices for requirements gathering include document analysis, team surveys, market analysis, and structured brainstorming sessions.
Securing user feedback is important to ensure an early product buy-in and subsequent fast adoption.
Return on investment (ROI)
Custom hotel property management system development may be hard to justify in the current economy. Unless you focus on estimating the possible monetary gains.
Start with a simple question: To what extent the new hotel management system will improve workforce productivity? Factor in the time currently spent on routine activities such as guest check-ins, housekeeping management, availability, and rate updates across multiple distribution channels.
Let’s take guest check-in management. Roughly 60% of hoteliers, surveyed by StayNTouch, use traditional check-in with front desk agents, while 40% use an assisted or fully assisted self-service model.
The same report has also found that new technologies like self-service check-in, mobile keys, and automated guest communication help operate the hotel with a smaller staff. Effectively, your agents can be more effective and service guests better by taking advantage of the new PMS.
In addition, hotel property management software also helps improve sales and revenue. For example, by increasing the volume of online bookings and occupancy rates through smarter channel distribution and real-time inventory updates.
Another key ROI factor to consider is loss reduction, including losses related to manual data entry, delayed room charges collection, as well as lower integration costs with third-party hardware and software.
Finally, estimate the total operating cost (TCO) of the new solution. With a cloud-native PMS, you can save on on-premises hardware costs and eliminate costly software licenses.
Essential Features of a Hotel Management System
Back in the day, a hotel management system was a fancier version of an Excel spreadsheet. It offered an interface for assigning rooms, tracking guest arrivals, and sometimes — issuing invoices.
Modern hotel property management systems, in contrast, do much more than baseline inventory planning. They include a wide range of front-desk and back-office process management features, ranging from self-check-in and keyless room access to dynamic pricing optimization tools and attribute-based selling.
Modern hotel PMS are full-stack solutions, enabling centralized hotel management from a single platform.
Effectively, hotels are moving away from relying on standalone systems for reservation, channel, and revenue management to developing unified, cloud-native property management systems with custom functionality.
Central Reservation System
A central reservation system (CRS) distributes data about availability, rates, and inventory to systems that consume it such as a booking engine and channel management module.
Traditionally, hotels opted for separate CRS and PMS solutions: CRS that handled ARI data distribution across channels and a PMS that helped streamline on-premises management tasks like check-in, guest management, and more.
Such fragmentation, however, wasn’t ideal. Oftentimes, hotels ended up with duplicate data across systems due to data sync issues or manual input errors. And these discrepancies in ARI data across systems directly impacted the revenue. At present, hotel leaders choose to converge the two systems into one unified platform with a shared database.
2 in 10 hotel leaders question the necessity of having a separate CRS since modern PMS offers convenient reservation and booking data storage modules. – h2c's Global Hospitality Distribution Study
Using a unified PMS/CRS system, rather than two standalone solutions has multiple benefits:
- Data standardization
- Real-time ARI visibility
- Faster account reconciliation
- Error elimination
- Extra guest intelligence
- Dynamic rate optimization
With a unified setup, every single piece of operational data becomes fully accessible through your PMS. Moreover, ARI data can be then securely shared with other sub-modules or third-party systems through application programming interfaces (APIs).
Our team suggested a similar convergence approach for new PMS for our client — a global software provider for the hotel, retail, food service, and entertainment industries. With a fully integrated network of IT solutions, our client can support hundreds of clients globally without experiencing any system performance issues, plus easily deploy new competitive product features.
Centralized ARI data storage
Multi-property reservation screen
Group bookings management
Bulk reservations updates
Programmable room assignment strategies
With an integrated booking engine, hotels can process guest reservations via their website, mobile app, or social media properties. The booking engine receives ARI data from the PMS and dispatches the confirmation to the guest. Direct bookings don’t come with a hefty commission tag, plus allow hotels to capture guest data, which you can leverage to personalize pre-stay communication, on-site guest management, and future marketing efforts.
The more interesting hotel booking engine feature, however, is attribute-based selling (ABS).
Instead of pitching a standard roaster of “budget”, “deluxe,” and “premium”, empower guests to choose the preferred amenities — be it a standing desk or a walk-in shower — a la carte.
A study by the NYU SPS Jonathan M. Tisch Center of Hospitality found that most travelers (85%) are concerned that the booked room will not contain features that are most important to them. In comparison, ABS-based booking experiences result in higher guest satisfaction and higher profits for hotels. Over 60% of travelers who pay $250 or more per night and 48% of those who pay $150-$250 per night are willing to pay extra for preferred room features with ABS.
Based on the selected room features, an ABS booking engine will generate a custom price for the stay and then ensure the availability of the selected room configuration. Apart from marketing room features, hotels can also upsell various amenities and activities to the guests. These can be displayed as stand-alone offers or bundled into custom offers, based on previous guest purchases.
InterContinental Hotels Group (IHG) is one of the biggest proponents of ABS. The chain completed detailed inventory assessments of 95% of its properties in mid-2022 and began a phased rollout of an ABS-based solution. This strategic tech investment allowed IHG to recover room rates to pre-pandemic levels, with the amount IHG could charge per available room going up each quarter throughout 2022.
The common roadblock to ABS implementation, however, is the limitations of legacy systems (CRS in particular). Most were not designed to include custom, granular attributes for rooms, only categorizing the available inventory by one parameter (e.g., king-size bed). Meaning you cannot mark the same room as “king bed with city view” or “king bed with a kitchenette”. That’s another factor in favor of modernizing your CRS first, before considering other features of hotel management systems.
- Online booking and confirmation issuing
- Secure, multi-currency payment processing
- Attribute-based selling functionality
- Automatic check-in instructions dispatch
- Centralized guest communication
Channel manager software connects hotels to multiple distribution partners, online travel agencies (OTAs), metasearch engines, global distribution systems (GDS), and wholesalers among others. Its goal: help you sell most of your inventory at the right price to hit the target RevPar benchmark.
When done correctly, multi-channel distribution helps maximize occupancy rates and revenue yield. But when configured suboptimally, you lose profits to expensive OTAs or get hooked into unfavorable rate parity clauses (which may not even apply in a particular market).
Other challenges with subpar channel management software include:
- Overbooking due to unsynchronized data and staff errors
- Caps on the number of simultaneously manageable channels
- Over-reliances on high commission channels, resulting in profit erosion
- Interoperability issues due to different data exchange standards
- Inability to add custom restrictions on room distribution (e.g., minimum required stay)
- Lack of support for attribute-based selling
With a custom PMS, you can implement a channel management module that best supports your inventory management strategies and doesn’t limit your ability to add new channel partners.
For example, Marriott recently launched the Channel Connectivity Program for its Homes & Villas division. Using a dedicated API, property management companies and channel managers can directly integrate with Marriott's systems to promote their premium home rentals to Marriott Bonvoy members. With the new system in place, Marriott gained more exclusive properties to its growing collection, while its partners received access to customer data and analytics-driven listing tools for optimizing property presentation and marketing.
- Direct API connections to multiple channels
- Metasearch advertising integration
- Channel-specific pricing
- Dynamic base rate adjustment
- Custom restriction rules
- Channel performance analytics
Revenue management software helps hotels determine the right price for different hotel rooms, using demand forecasting, customer analytics, and supply data. Its goal is to replace the guesswork for factors like price, channel, and timing with data insights to help your hotel maximize profitability.
Most revenue management systems include tools for:
- Customer segmentation
- Demand forecasting
- Yield management
- Pricing optimization
And many of these today are powered by advanced data analytics and machine learning (ML).
Unlike legacy rule-based revenue management systems, ML solutions can model up to 100 million sales-related decisions across a large portfolio of properties. In particular, you can get insights on:
- Which channels perform best for different customer segments
- Regional demand trends and customer behaviors
- Price rates at which each room gets sold across channels
- Seasonality trends across channels
- Booking patterns for each room category
Prescriptive revenue management solutions can also issue suggestions on optimizing the prices or channel allocations to secure a target lift in sales. For example, you can dynamically optimize rates based on the analyzed data to maximize occupancy rates.
Kevin Hof, Data Scientist at RoomPriceGenie, shared an interesting case from the Swiss hospitality industry. A small hotel group, featuring nine properties, generated a 22% increase in revenue and a 4% average increase in average daily rates after adopting a dynamic price optimization tool.
- Dynamic price optimization
- Ancillary services recommendations
- Package rate management
- Competitor price tracking
- Instant pricing updates across channels
- Prescriptive price recommendations
Customer relationship management (CRM) software enables hotels to consolidate customer data and more effectively manage relationships with guests across multiple touchpoints.
CRM systems are widely used in many industries, but the hospitality industry lags behind.
Only 20% of hotels worldwide, representing an estimated 32% of hotel-room supply, currently use CRM tools to better manage guest interactions, a Skift 2023 Research Hotel Tech Benchmark found.
That’s a major oversight as guests come to expect personalized service levels. For 78% of travelers “high-quality service” is the top criterion for selecting a hotel. Apart from basic staff courtesy, guests also expect a greater selection of tailored services, from a personalized welcome package to curated selections of activities.
The challenge for hotels, however, is effectively capturing and acting upon those requests — and that’s where CRM software comes in. A CRM module helps collect data on customer behaviors, ranging from basics like “special requests” and loyalty status to more advanced insights on average spending, amenity preferences, and price sensitivity.
By channeling relevant data points from your CRS, booking engine, POS, PMS, and social media into a CRM solution, you can get a 360-degree view of each customer and then devise strategies for hyper-personalizing your marketing, upsell, and cross-sell campaigns. On average, personalization can drive up to 10%-15% revenue lift, driven by the company’s ability to execute.
That said, hotels often struggle to move forward with implementing effective personalization programs due to a lack of necessary data. Or more precisely — inability to obtain it.
Valuable customer insights are often siloed across multiple business systems (CRS, POS, etc) and communication channels (email, social media, chatbots). CRM software helps consolidate this intel and ensure its automatic acquisition from multiple channels. Moreover, a CRM module can help you procure even more valuable insights.
Take it from Virgin Hotels. The chain launched Lucy — a dedicated guest app for facilitating contactless check-in, dining reservations, and managing room service. The app provides Virgin Hotel with ample customer behavior data, which the company can then use to create differentiated experiences for their guests.
Using the obtained data, you can launch segmented campaigns to engage past guests with targeted offers. After consolidating its guest data, S Hotels & Resorts, for example, managed to launch a series of property-level campaigns for different customer segments, with each campaign bringing an average of $26,000 in revenue and over $710,000 in direct sales over 6 months.
In short, the CRM module can help automate guest data collection and automate various marketing activities from email campaigns to in-app upsells. It also helps hoteliers launch new membership and loyalty programs to improve customer retention and revenue yields.
For example, our team has helped The Rainmaker Group (now a Cendyn company) launch a new eLoyalty platform, powered by first-party customer data and advanced personalization tools. The solution enables hotels to create bespoke guest portals for rewarding loyal members with unique offers, special rates, and custom rewards to improve conversions and cultivate long-term relationships.
- Consolidated guest profiles
- Upsell/cross-sell management
- Customer segmentation tools
- Email marketing suite
- Loyalty program management
- Guest journey scheduler
The above four core systems are the building blocks of modern PMS solutions and power the must-have product features.
That said, not all PMS features have to be native. For instance, there’s no point in developing a custom payment processor when competitively-priced options are available off the shelf. Likewise, few hotels invest in custom accounting tools or digital experience management platforms.
The growth of cloud-based, API-driven PMS architectures now enables hotels to select best-of-breed tools for their technical portfolio.
With open APIs, developers gain access to data and the business logic of third-party systems and can create streamlined product usage experiences. For example, your PMS can include native modules for CRS and revenue management, but use a third-party CRM solution, which seamlessly integrates with the said systems.
As Jos Schaap, CEO at Roomdex, well sums it up: “The total effectiveness of each individual piece of software interacting with one another is greater together than when acting in isolation from one another”.
Third-party systems also provide a wealth of additional customer and operational data, which can be effectively channeled into your PMS to receive more detailed analytics.
Sample PMS integrations:
- POS systems
- Accounting apps
- Financial analytics
- Self-service BI tools
- Digital experience platforms
- In-room technology
- Self-service kiosks
Modern property management systems are modular solutions, meshing a number of features for reservation, revenue, channel, and guest management. The major advantage of custom PMS development is that you can prioritize the features your business needs, rather than settle for off-the-shelf propositions.
A custom PMS also has limitless scalability potential and can be strategically extended over time to include new properties, channel partners, and third-party software providers. Moreover, you can also monetize some of your native system’s components by distributing them as open APIs, while leveraging partners’ solutions to gain extra system capabilities at faster speeds.
Care to learn more? Contact our team to receive a preliminary consultation on custom PMS development.
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