On-Premise to Cloud - Why is SaaS the future of Hospitality Tech?

Every industry is seeing an exponential boom of SaaS and SaaS cloud hardware and infrastructure software spending is projected to reach USD 300 Billion by 2026, from USD 150 Billion in 2020, at a CAGR of 11.7% during 2020-2026. Traditionally, hospitality technology has been legacy, difficult to use and very expensive but SaaS is making deep inroads into the hospitality industry. The economic impact of COVID-19 that the pandemic has unleashed on the hospitality sector is forcing hotel operators to realize the benefits of switching from on premises deployed enterprise software to cloud based systems.

On-Premise PMS comes with a few other challenges

• On-Premise is a system in your premises hence, any upgrades, installations also need to be done in your premises. One can expose terminals and other remote connectivity infrastructure but those have added costs. Cloud based PMS systems get auto upgrades frequently and are usually pre-integrated with other Cloud based services.
• Maintenance of OS Licenses and hardware is an additional cost.
• With the ever changing world, and decisions of different countries implementing new security requirements like GDPR, PCI trying to stay up to date with the latest developments is complex and time consuming. But Cloud based PMS systems are monitored over the cloud with dedicated teams, learning and implementing the latest requirements ensuring data safety every day.
• On-Premise PMS systems are inherently expensive. Along with hardware one needs to purchase One Time Software Licenses, OS Licenses. Instead Cloud based PMS systems have a pay per use subscription model and are only an OpEx and do not incur a CapEx.

The hospitality industry is a round the clock business which runs 24x7 for 365 days a year and is dependent on a large number of technological systems. SaaS has the ability easily link systems and offers substantial returns. Not only does SaaS create a lot of simplicity, ease of use, flexibility, efficiency, scalability, and improve guest experience but also it’s a much more cost effective alternative to traditional on-premise technology and replaces the need for hotels to maintain dozens of proprietary and legacy complex systems.

Let me give you an overview of key technological components which can easily be moved to the cloud.

PMS (Property Management System) - It is a local hotel administration system used for reservation, availability and occupancy management, check-in/out, images, guest profiles, report generation etc. This application is used in-house (in an individual hotel) to control the onsite property activities. Traditionally this was running on a desktop locally at the hotel but in the world of cloud computing is something which is easiest to move to the cloud. All then the hotel needs is a laptop/desktop/tablet with internet connection and it is ready to use a web based PMS.

CRS (Central Reservations System) - The CRS manages two categories of information for a set/quantity of hotels - brand, multiple brands, management group, destination etc.). Firstly is the cataloging information - hotel and room information as it relates to definition, features and amenities. This is fairly static information that is well defined by industry standards and includes information such as; hotel name, location, address, room type, room name, occupancy/capacity of room and hotel and room features and amenities. Second relates to availability, price and selling rules and restrictions. CRS is also responsible for room allocations and storing the booking when a booking arrives. It then manages the entire lifecycle of a booking.

Revenue Manager - Revenue management refers to the strategic distribution and pricing tactics you use to sell your property’s perishable inventory, F&B to the right guests at the right time, to boost revenue growth.  Revenue management revolves around measurement of what customers from different segments are willing to pay, and this can only be done by measuring and monitoring the supply and demand of your hotel rooms. This is where Machine Learning and Artificial Intelligence comes into play and we can look into past data to predict rates and inventory patterns - sell this room at what rate, sell this inventory to which distribution channel to maximize RevPAR (Revenue per available room). Basically every traveller has a maximum value that they can offer your hotel and revenue management products are all about capturing as much of this value as possible. Preferably you’ll do this by convincing the guest to book direct, purchase extensions, up-sells or extras, and become a return visitor.

Connectivity Manager - Any Hotel Management system needs to get connected to third party distribution sites - GDS and OTAs. A Connectivity Manager can manage all these integrations. It allows the hotel to control what is for sale at what price and terms by each channel. The CRS and PMS are the system of record, generate and honour the confirmation. The Connectivity Manager connects with other distribution channels and tries to maximize the sale of the hotel and get the best price based on the hotel(s) operator/owners objectives.

By moving these critical business systems to the cloud, hoteliers can create a flexible technology environment that is streamlined and has the ability to easily integrate and share data seamlessly across systems in a more cost effective manner.

This will also ensuring hoteliers are prepared for the post COVID era while allow them to remain competitive, improving productivity, capitalizing on revenue opportunities while simultaneously improving guest service.

The world is changing and Cloud-based PMS are soon becoming the new standard system for collaborative and flexible, hotel-led PMS’s worldwide.