Written by: Tim Henthorn
We all know what a property management system (PMS) is, but is it the same as it was five or 10 years ago when your property or corporate group implemented the solution you have now? Given there are hundreds of PMS solutions in the market today, it will quickly become evident how diverse the choice of systems is when you go shopping for what your property needs next. Each vendor has a unique set of features, functionalities, capabilities and ecosystems in which they reside. As a result, not all systems you find will be possibilities for your hotel. Many factors about your purchasing needs and the capabilities of each vendor will define the prospective vendors that are a potential fit for your project. It is important for you to define what a PMS is to your project team and be flexible when scouring the marketplace for options. Consider the functionality you need and then be open to finding it in the marketplace in any form, whether it be from one software provider or a combination of them.
The market of PMS vendors consists of about 400 companies providing this type of solution in one form or another. These companies and their products originate from every corner of the globe, cover the gamut when it comes to their range in pricing and have nearly every type of architecture, financial structure, pricing model and support capability you could imagine. I would venture to say that nearly every type of property in the accommodations industry has at least a handful of PMS solutions that are capable of meeting its current and future requirements. Not all solutions are created equal. Documenting a complete picture of what your hotel needs, what it may require in the future and how it meshes within the other systems your property has today is critical. Doing this will prepare your team for success when finding, evaluating and selecting key systems.
Pricing pressure has shifted in recent years due to multiple factors, but has slightly benefited buyers on average for a while. This is the result of numerous factors, including increasing amounts of competition, advancements in interfacing solutions and increased buying power in selected segments of the market. Understanding these considerations creates a reasonable starting point when it comes to negotiating an appropriate deal for your purchase.
Introduction to Key Findings
This PMS market analysis further highlights what combination of capabilities and modules exist in today’s marketplace. This data was then cross-tabulated with the most frequently occurring modules and capabilities giving buyers significantly better visibility into what’s possible with today’s innovative solutions. Analyzing the long tail of capabilities shows how dispersed features are in this category. This means that most PMS solutions are rather unique with respect to the compilation of features and capabilities they encompass, especially when you get into the details.
Most PMS solutions have a core set of functionalities that contains “reservation and rate management” features, combined with other common operational features, such as housekeeping and storing financial transactions to be ported to an accounting system. However, each vendor determines essential elements of the basis for their product line by making two key decisions. The first decision defines what additional modules of software they want to provide their hotel clients. The following table lists those complementary modules you will find most frequently across today’s hotel PMS marketplace. The second decision has to do with what interfaces they have or will put in place, thus defining their respective partner ecosystem. When considering all modules that may participate within the typical PMS operating environment, internet booking engines (IBE) are the most prominent. The table shows that nearly 80 percent of systems in this category actually built an IBE as natively connected software. However, it is important to note that most PMS solutions also interface with many of the well-known IBE solutions that exist in the marketplace.
|Module||Percent of PMS Solutions with this functionality|
|Internet Booking Engine (IBE)||79%|
|Channel Management (CM)||61%|
|Point of Sale (POS)||50%|
|Central Reservation System (CRS)||40%|
|Sales & Catering (S&C)||38%|
|Customer Relationship Management (CRM)||36%|
Building on these modules, it is important to note, 57 percent of the vendors in this category have designed their system to address both individual properties and hotel companies with multiple properties. 71 percent of them market themselves as part of an ecosystem of vendors resulting from collaboration and a network of interfaces interconnecting these software products for the benefit of hotels.
The actual features of each module across the vendors may be quite different and vary in both form and function. When purchasing software, especially in a category as centrally located as a PMS, performing comprehensive due diligence will ensure you understand all facets of how the new technology will satisfy your business needs and enable you to reach your goals and either remain competitive and possibly find operational advantages. It is important to note the variation of modules and features within and across these solutions is extensive. As an example, a given vendor’s POS product or module may be dramatically different when compared side by side to others. Similarly, a vendor’s collective portfolio of software modules may actually be a world apart from another vendor’s despite having checked all the same boxes.
Each combination of modules complementing the PMS is usually designed for certain segments of hotels. And most vendors partner with others in both categories they don’t have themselves and in those they do. As a result, it is possible to find multiple PMS solutions that will cover just about any set of desired functionalities you are seeking. However, given the aforementioned variation in solutions it is crucial to understand the details of your requirements, processes and workflows. This will allow you and your company to identify, evaluate and select the best option as you research your potential vendors and ensure any solution you select fits with your existing needs, future roadmap and budget.
Performing the proper due diligence is almost always completed at the corporate level of the industry, but not always when an individual property is making the purchase. It may not be done due to resource constraints or other factors, but will always increase the success of the project in terms of both value and capital efficiency. When a full set of user and system requirements are correctly gathered, it leads to optimization of the overall decision and often significantly increases the long-term viability of the purchased solution. Documenting requirements, creating a request for proposal (RFP) and completing a holistic evaluation of the leading solutions for a given hotel or hotel portfolio are the most common steps associated with system selection success. Making these decisions in the context of a technology roadmap will also drastically improve the end result by placing emphasis on planning and prioritization.
Multiple methodologies exist for performing solution evaluations that you could follow yourself as a company. Alternatively, services or consultants versed in evaluation practices will be able to guide you or perform the proper due diligence as a result of their experience. Credible services in this area are worth the money if they have the ability to stay informed of the market, its vendors and any changes that are occurring. Various services may even be able to provide tools for you to navigate the marketplace better and faster. However, you choose to gather requirements, define your current and future capabilities, find and implement the best technology for your property, be sure to understand the options in the marketplace. Your owners will appreciate the due diligence performed as a predecessor to the investment made in new or replacement technology and services.
Tim Henthorn is the President & CEO of Capsolve, a research and services company providing timely insights into marketing, operations and technology solutions for executives, marketers, technologists, agencies and consultancies across the hotel, restaurant and golf industries.