Property Management Systems in Hospitality Industry

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Introduction

Property Management Systems (PMSs) are essential tools in the hospitality industry. Hospitality industry is complex and has numerous challenges. Reservations, customer care and administration of hotels and resorts offer challenges that the management must confront in order to attain customer satisfaction, productivity and profitability of the establishments (O’Connor, 2004).

For this reason, PMSs are devised to manage the operations that take place in the complex hotel and resort environments. Therefore, PMS is an investment option that firms in the hospitality industry must implement. Technological developments have made various types of PMSs available for hotels at low prices (Deakin, 2004).

This paper explores the functions, importance and structure of PMSs. In addition, it includes a SWOT analysis of the use of PMSs in the hospitality industry. Finally, it considers some of the financial considerations that firms in the hospitality industry should consider before they integrate PMS systems in the management of their establishments. The paper focuses on hotels and resorts.

Property Management Systems (PMSs)

A property management system is software that computerizes the operations of resorts, restaurants, hotels and casinos. The automation of operations in these establishments includes the integration of back and front office activities and applications to enable full control of the entire establishments.

A fully functional PMS system should be able to incorporate all value-chain parts within the establishment’s business network into one functional storage area (Ismail, 2002). Property Management Systems (PMSs) are significant components of business oversight mechanisms, and assist the management to oversee the operational activities of establishments (Bhattacharya, 2009).

A PMS is a vital component of a firm’s decision assembly process. It is a group of application programs that are related directly to front and back office activities of hotels. Notably, the main activities that PMS deals with in hotel management include revenue, guest relationships and reservation management. Others are check-in and checkout, room condition and folio management.

Consequently, PMS collects vital amounts of information that management can use to improve tactical, strategic and operational decisions. The management can also collect data from other sources due to the use of PMS. The management can obtain more data through customer relationships, electronic point of sales at outlets, the internet via hotels website or through loyalty programs (Karolin & Hilary, 2011).

Thus, PMS assist in data management. Data management is of significant importance to the customer who seeks services and to the management of the hotel. In the hospitality industry, it is crucial for the hotel to know its customers. Moreover, the knowledge of customers is crucial as it is expressly related to the responsiveness of the customers. The PMS is the core data infrastructure for hotels and resorts. The PMS handles the management of all guests in the hotel, their profiles and check-in.

Additionally, PMS handles the stay of customers in the hotel and the revenue generated in the hotel. Finally, PMS assists the management to coordinate the relationship the business has with clients and vendors. It enables the management to abide by laws and regulations that direct business and customers’ relationships (Berezina, 2010).

Currently, many hotels worldwide use property management systems. This shows that many organizations have recognized the benefits of property management systems (Hart, Barinedum & Benjamin, 2010). However, some organizations have not included the use of the software in management of their establishments.

Such organizations have not determined the benefits of data in the formulation of business strategies. They have not determined the amount of data, associated with customers and management, obtainable from PMS and applicable in improvement of profitability and efficiency of their hotels.

Structure and Complex Nature of Hotels and Resorts

The overall structure of a hotel determines the management’s capability, the integration of technology in management of the hotel and the distribution of data in the hotel. Therefore, the organizational structure has a significant impact on the successful use of technology and information.

The functional structures of many hotels are hierarchical. A full service hotel has numerous functional departments that include rooms, food preparation, sales and promotion, human resources, secretarial and public relations departments (Karolin & Hilary, 2011). Hence, a functional management system that promotes efficiency is necessary.

Efficient management of daily operational duties involved in management of a hotel is vital. Inefficient control of these daily operational activities can significantly affect services offered to guests and revenue collected by the hotel. Often, general managers have to invest much time and effort to gain functional control. However, business problems that hotels normally have in their daily operations usually have short lead periods.

These problems have to be solved within the shortest time possible. This presents problems to general managers. They cannot effectively address service-centered issues that occur spontaneously and at the same time focus on coordination of various departments of the hotel.

Attempts by the general managers to address all these issues leads to decline in quality of standards of service delivery (WebRezPro, 2012). Therefore, guest service and hotel’s revenue can be easily compromised due to inefficient control of daily operational duties.

Hotels require extraordinary level of interdepartmental cooperation to provide guest service of high quality. Organizational structures that many hotels use foster effectiveness within each unit of the hotel (Karadag & Dumanoglu, 2009). However, such functional structures are weak in coordination of activities between the departments. It can take general managers a lot of time to supervise all the daily operational activities.

In contrast, that should not be the case, since a resourceful administrator is also accountable for the profitability of the hotel. These complications necessitate the use of property management systems in hotels.

Technical Complications in Hotels and Resorts

Hotels are technological units. Guests in hotels expect services of high quality within a short time. Additionally, they expect to receive access to internet, computers, entertainment systems and other appliances that are of high technology. The lobbies of many hotels have self check-in features and point of sale systems.

Moreover, conference facilities are computerized and have projectors, computer stations, sound systems and technology that enable guests to hold video conferences (WebRezPro, 2012). Other technological features that modern hotels have include credit card terminals, customer management systems, online check-in systems and revenue management systems among others.

These systems must interrelate to ensure that efficiency in operations is attained. Thus, the central reservation system has to align walk-ins and online reservations with telephone orders automatically (WebRezPro, 2012).

Implementation of a technology that can accomplish all these tasks efficiently is expensive. However, the benefit that it offers to the hotel is greater than its cost. These benefits justify the need for property management systems in management of hotels and resorts.

A Comprehensive and Efficient Property Management System

The use of PMS in the hospitality industry should increase efficiency in operations. Originally, PMSs were used in management of guest check-ins and checkouts, room management and reserves. Through the provision of these tasks, PMSs have ensured that there is no disorganization, inefficiency and inaccuracy in management (Brooks, 1999). However, the hospitality industry continues to be more complex.

Therefore, a standard PMS must interface with other systems used by the management. It should have one platform that enables hotel staff to make updates and track changes and information (Bardi, 2011). Therefore, a standard PMS must have some basic properties or qualities. The PMS should be an intelligible, adaptable, strategic and a cutting-edge system.

An Intelligible System

The designs and functionality of PMSs have substantially improved, as they became fundamental parts of hotels. A PMS has to be user friendly. Hotel staff, including new staff, should be able to use the systems without difficulty. A standard PMS must have a logical navigation arrangement and a user interface that is streamlined (WebRezPro, 2012). A standard system used in the hospitality industry has to be flexible and accommodative.

Moreover, it must allow collection of comprehensive, accessible and accurate data (Amizawati, Nik & Muslim, 2010). Thus, it should allow staff to make accurate reports and manage accounts properly. Ultimately, a superior PMS system for the hospitality industry must improve guest service and increase revenue collection.

A Strategic System

PMSs enhance data collection and improve reports’ credibility and hotel’s relationship with customers. Furthermore, a PMS improves a hotel’s revenue control abilities. Reports are critical in the determination of appropriate strategies to be implemented in a hotel. A superior PMS has to be a strategic system (WebRezPro, 2012). It has to assist in the formulation of strategies such as channel supervision strategies.

At the same time, it must improve a guest’s experience in a facility. Thus, an appropriate PMS should customize the stay of a guest in a hotel. In addition, it should enable development of e-promotion strategies. E-promotion strategies can be developed through the use of business intelligence gear and analytics. This can be done based on information collected by the PMS.

An Adaptable System

Operational and management efficiency is essential in both small and large hotels and resorts. Therefore, a PMS must balance with the amenities and size of an establishment. A small establishment may require a PMS that covers room reservations and online orders only. On the other hand, a hotel that has worldwide operations needs a PMS that manages various activities.

Therefore, a PMS has to be adaptable to changes that take place in a business (WebRezPro, 2012). All businesses aim to grow. A small hotel must have a PMS that it adaptable to improvements in size, services and activities as it grows to become a large hotel. A property management system has to cater for hotels and resorts of different types and must not compromise efficiency (Amizawati, Nik & Muslim, 2010).

Finally, due to technological improvements, a PMS should enable centralized management of international hotels and resorts via a single database. This assists to smooth out activities across the entire group.

A Cutting-Edge System

Currently, the number of people who make online orders in hotels is high. Therefore, hotels and resorts must have websites. However, websites alone are not enough to improve efficiency. The websites must be linked to PMS to improve management and operations of hotels and resorts (Abhishek, 2008).

Therefore, online orders made by customers must be automatically recorded in a hotel reservation records. The PMS should also be connected to third party service providers like tour agencies. Moreover, it should allow the use of mobile phones to make reservations.

Integration of PMS with Property Management Enablers

Integration of PMS with property-based applications in the hospitality industry is vital in improvement of functionality and benefits of PMS. Many organizations that have not integrated the PMS systems with essential applications suffer from misalignment hence inefficiency in management of the properties.

Hotels can use Service Oriented Architecture (SOA) or standard-based integration to improve integration of PMSs and property-based applications (Cunnane, 2010). These two methods can assist hotels to integrate PMSs and management applications while at the same time reduce information technology related complexities.

Integration of PMSs with customer touch-points and operational modules is essential to operational and customer success in the industry. The major applications that hotels should integrate with the PMSs include revenue management systems, central reservation systems, customer relationship systems and inventory management systems among others.

The integration of PMSs with these management applications indicate that focus in the hospitality industry shifts towards customer satisfaction (O’Connor, 2004). This further shows that PMSs are vital in attainment of customer satisfaction in the hospitality industry.

Revenue Management

Revenue Management Applications enable hotels to determine the suitable rates after the hotels have managed numerous occupancy scenarios. Integration of revenue management applications in the PMS enables hotels to increase gross margins.

In addition, integration of revenue management applications in PMSs enables hotels to determine the proper pricing strategies. PMSs must enable formulation of pricing strategies that are based on customer trends, demand and competitive tactics (Cunnane, 2010). This is only possible if revenue management applications are integrated in the PMSs.

Inventory Management

Resorts and hotels must combine demand sensitivity analysis and inventory visibility. This assists them to maintain a balance in diversely priced inventory. Balance in diversely priced inventory enables hotels to offer discounts in overstock circumstances or charge higher prices when demand increases. Therefore, it is essential to integrate inventory management applications in PMSs.

Through integration of an inventory management application into a PMS, a hotel can monitor and manage inventory levels effectively. The management can then use the PMS to forecast demand and make replenishments.

Inventory management in hotels through PMS enables management of room availability. Moreover, a PMS that incorporates inventory management application optimizes other activities done in the hotel like food and beverage activities and tidiness (Cunnane, 2010).

Customer Loyalty

Hotels and resorts must integrate customer fidelity applications into PMSs. Loyalty applications allow hotels to utilize customer information to cross-sell services and goods based on the behavior of customers.

Integration of loyalty applications in PMSs enables hotel employees to determine the expectations of customers since they access information on customers. This assists hotels to reduce costs associated with implementation of customer acquisition strategies (Cunnane, 2010).

Customer Relationship Management

Integration of customer relationship applications into PMSs is highly essential. The integration of customer fidelity applications into PMSs enables hotels to use PMSs to develop personalized direct promotions strategies (Cunnane, 2010).

Thus, hotels are able to use PMSs to send emails and make SMS offers to customers. The integration of customer relationship applications into the PMSs enables a hotel to use one record of a customer across the entire hotel. Furthermore, it allows the hotel to update a customer’s profile based on behavior patterns.

SWOT Analysis of Property Management Systems in Hospitality Industry

A SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis is a framework with which an organization can use to formulate a promotion strategy. It entails the establishment of strengths and weaknesses that an organization has.

Additionally, in entails establishment of opportunities and threats that the same organization faces. Therefore, SWOT analysis reveals opportunities for development and vulnerabilities. It considers both internal and external changes in the environment of an organization.

Strength is an organization’s resource or capacity that can be used to enable the organization to attain its objectives. Strength denotes the capacities that an organization has over its competitors. The use of property management systems in a hotel provides the hotel with added advantages over competitors.

Hotels that use property management systems are more efficient in their operational and management activities (Ljubica, 2012). Property management systems enable hotels to manage efficiently activities such as reservations, check-ins and checkouts, online orders and maintenance.

Moreover, the use of PMS in a hotel improves collection of data on customers. The information can then be used to develop promotional strategies. The integration of management applications such as revenue, inventory and customer fidelity applications into the PMSs improves operational and management efficiency in hotels.

Therefore, an organization that uses PMS in management of the entire establishment has competitive advantages over an organization that does not use a PMS (Bilgihan, Okumus, Khaldoon & David, 2011).

Weaknesses refer to limitations, faults or defects that an organization has, and that limit an organization’s ability to attain set objectives. They are the factors that the organization must overcome to be ahead of competitors. The organization must hide these defects and limitations from competitors. The use of PMS in hotels has certain limitations.

Virus attack on computers can adversely affect the performance of property management systems. A virus attack on a hotel’s property management system can lead to loss of vital data. This can lead to rise of inefficiency in management of the hotel. Additionally, power failure may make staff to retype information previously typed.

The same can affect a customer who was in the process of making an online reservation. This can demoralize the staff and irritate the customer. Finally, the other weakness is that some hotel employees do not know how to use the systems. The hotel also has to spend so much money to train staff on how to use the PMS.

An opportunity in SWOT analysis is a favorable condition in an organization’s environment. An opportunity is normally a change or trend that can result into increased demand of an organization’s services or products. Opportunities enhance an organization’s position in the market or industry.

The use of PMS enhances the position of hotels in the hospitality industry. Technological improvements like mobile technology can improve the position that a hotel holds in the hospitality industry. Such technological improvements can enhance the functionality of PMS. Hotels that use PMSs can take advantage of technological improvements to increase competitiveness (Bhattacharya, 2009).

Moreover, technologically improved PMS assists hotels to reduce operational costs, increase revenue collection, monitor customer loyalty and devise promotion strategies. Cloud computing also presents an opportunity to hotels that use PMS.

In SWOT analysis, threats are unfavorable conditions in an organization’s environment. Threats are conditions that can damage the strategies that the organization had adopted. They are constraints, barriers or external conditions that have the capacity to hamper an organization’s business activity. The use of PMS in management of hotels faces some threats.

The competitors of a hotel can present stiff competition through implementation of hi-tech PMS. This can result into a reduction in the number of customers of a hotel. The hotel may not be able to acquire such hi-tech PMS hence the competitor’s PMS is a threat.

Another threat can be the high cost required to train staff on how to use PMS system. A hotel can install a PMS to enhance the management of the hotel. However, it can be extremely costly to train the entire staff on usage of the system. Therefore, it brings about financial threat to the hotel.

Considerations to Make In Installation of PMS

Backup Power Sources Considerations

Blackouts and loss of electricity supply are occurrences that can adversely affect operations of hotels and PMS. The management of a hotel that uses PMS must ensure that backup power supply is available. This can assist to minimize the possibility of data loss in case of sudden loss of electric power supply.

Maintenance Agreement Considerations

The management of a hotel must ensure that there exists a maintenance agreement before adoption of a PMS system. The agreement must inform the management of the hotel the costs associated with maintenance and repair of the acquired PMS.

Financial Considerations

The management of a hotel must consider the financial requirements associated with the use of a PMS. The decision to use a PMS in a hotel is an expensive investment decision (Deakin, 2004). The management must carry out a cost and benefit analysis to determine the feasibility of use of the system. The management must first determine the need for a PMS in the hotel.

Secondly, the management must determine whether the applications in the PMS match the needs of the hotel. The management must then prepare a budget that concentrates on the administration of all the units of the hotel. In this way, it is feasible to establish the costs associated with management of each department. Hence, it is possible to establish how much capital can be saved through the introduction of a PMS.

The amount that can be saved must equal or be greater than the acquisition costs (Deakin, 2004). Additionally, depreciation rates and maintenance costs must be considered. Finally, a hotel must consider the payback period of the amount spent in the acquisition and installation of PMS.

Conclusions

Hospitality industry places much focus of daily operational activities on customers. The expectations of guests and their preferences evolve and this presents challenge to hotels and resorts.

Therefore, it is critical to include technology in management of hotels and resorts. PMSs enable efficiency in management of hotels and resorts. Hotels and resorts have complex structures and uses of PMSs are essential. A superior PMS must include management applications like revenue management applications.

The inclusion of these applications in PMSs improves guest experience, revenue collection and operation efficiency. Additionally, a hotel that seeks to install a PMS must conduct a SWOT analysis.

The hotel must also consider other factors such as maintenance costs of the system and the financial implications that the system has on the hotel’s finances. Finally, a PMS that a hotel acquires should be a system that is strategic, adaptable and intelligible.

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