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Strategic, Tactical, Operational: Mission Critical Systems for Hotels

24 August 2023
What is the role of the different systems used in hotels? By clearly defining the system's role, hoteliers will understand what they can expect, how they can manage the system, what problem the system will solve, and the potential positive impact.
The history of the hotel PMS goes back to the 1920ties when guest accounting and bookkeeping began. The Uniform Systems of Accounts for the Lodging Industry (USALI) was first published in 1926 to standardize hotel accounting. The PMS was a pen-and-paper solution for many years, but the original intention was to set up a better way of getting the financials right. The next problem to solve, decades later, when the hotel industry started to grow, was to manage reservations. In the 1960s, it was possible to create the first computer-based PMS to automate some of the work to increase operational efficiency. The system kept track of transactions, both reservations and financial transactions. In the 1980s, hotels became more guest-focused, pressured by the rest of the world that had started to think about customers and keep track of customers in Customer Relationship Management (CRM) systems. In the 1990s, hotels began to implement revenue management based on successful implementation by the airlines. Today, these four core functions, financial, reservation, guest, and revenue management, are still the same but have evolved. There is no PMS that provides the perfect solution for all these core functions. Instead, complementary systems have emerged, such as hotel CRM and Revenue Management systems. Each system plays a specific role in a hotel. It would be helpful to clarify the role of each type of system to avoid disappointment over the lack of functionality in a PMS or other systems.

The role of the PMS - operational

If you talk to PMS vendors, their PMS is a superior solution with a little bit of everything that would solve all problems for a hotelier. This might be true for some categories of hotels, but for most hotels, no PMS has all the functions that a hotel needs to operate a hotel successfully. The PMS has a lead role in a hotel's operations and should be classified as an operational system. When buying a PMS, the objective is to become more efficient in operating the hotel and ensure that guests get the guest experience they booked. Thoroughly managing all guest transactions will also ensure that the financials will be correct when the automatic transfer occurs from the PMS to the accounting system.

Supporting operational roles

Most of the PMS on the market only manage rooms. Hence, a hotel with food & beverage, meetings & events, spas, golf, parking, etc., needs additional operational systems to manage the total operations efficiently. These are Point of Sales (POS), Sales and catering, Spa reservations, Parking systems, etc. All these systems have special features for managing specific functions. They all tend to interact with the hotel PMS, so the guest can get one bill to pay upon check-out. Various internal systems, such as labor scheduling, purchasing, housekeeping, and similar systems, make operations more efficient.

The role of the RMS - tactical

Maybe with a few exceptions, all hotel PMSs are inferior in revenue management functionality. Some PMS have decent rate structures but are often too complex and time-consuming to manage. The proof that this is a correct assessment is the install base of revenue management systems (RMS) that provide superior functionality for room revenue management compared to the PMS. The lack of revenue management functionality in the PMS means hotels need an RMS. The PMS makes decisions about distribution channels (updating rate and availability, opening, closing, setting restrictions). The RMS, therefore, also has a lead role in a hotel, and the job is to maximize occupancy at the highest possible rate to maximize total room revenue. The RMS should be classified as a tactical system where setting room rates is a pure tactical task based on demand variations between the days of the week, seasons, and destination events.

Supporting revenue roles

Systems for selling more to each guest, such as upsell systems pre-arrival, upon arrival, or during the stay, have a supporting role in maximizing revenue. Most revenue and pricing systems only focus on hotel rooms, so any additional systems optimizing revenue for meetings and events, food & beverage, spa, parking, golf, etc., have supporting roles for maximizing total revenue.

The missing role - strategic

The PMS and the RMS have no built-in strategic functions. Many hoteliers are happy to operate their hotels without a strategy with the help of the RMS, making automated tactical decisions. However, hotels that want to create a strategy struggle and must find and use other tools, such as pen and paper, Excel, a data warehouse with business intelligence systems, budgeting, and accounting systems. None of these disparate systems can be used to build, document, and execute the strategy, so hotel strategy tends to be more of a budget exercise and driven by the hotel CFO to ensure that the hotel makes a healthy profit to give the owner a reasonable return on investment.

Demand Calendar - a Profit-Oriented Strategic System

Demand Calendar wants to step into the missing role and play a lead role in a hotel focusing on maximizing profit. The starting point is understanding the market, guest/customer behavior, and spending patterns to find the most profitable market segments. This is done by collecting, compiling, and analyzing data from all systems and presenting actionable strategic business insights. Setting objectives, key results, and initiatives to focus on the right target audience for a hotel increases the likeliness to succeed in building financial success. While the PMS helps the hotel become efficient in operations, and the RMS brings in as much gross room revenue as possible, Demand Calendar focuses on maximizing profits from all revenue sources and managing the customer acquisition cost to maximize the total net revenue or contribution to profit and other expenses. In addition, Demand Calendar helps the commercial team to create a revenue mix that can produce the highest possible gross profit and gross profit margin. All information needed to develop, implement, execute, and monitor a strategy is readily available in Demand Calendar for all stakeholders. A hotel will collect and maintain all its knowledge in one place to perfect the strategy over time.

Making the systems work together

I have tried to give a comprehensive and insightful overview of different systems' roles in hotel management. I have effectively mapped out how Property Management Systems (PMS), Revenue Management Systems (RMS), and various supporting systems fit into a hotel's operations' strategic, tactical, and operational layers. Ideally, the three systems will be integrated and work closely together. Here are some additional points to consider.

Integration and Data Flow

The interconnectedness of these systems is crucial. Hotels must ensure seamless data flow between operational systems like PMS, tactical systems like RMS, and strategic systems like Demand Calendar. This improves decision-making and allows for a cohesive strategy across all hotel functions.
Hoteliers have to manage relationships with multiple vendors supplying these different systems. Managing these relationships effectively can impact the performance and integration capabilities of the systems involved. Hoteliers must be in the driver's seat to push for integrations between all the different systems.
Remember, with multiple systems operating in tandem, data security becomes a significant concern. Hotels must ensure all systems comply with regulations such as GDPR for data protection.

Scalability and Adaptability

It's important to note that as hotels grow or adapt to market changes, their systems must be scalable and adaptable. Systems that cannot scale could quickly become a bottleneck for growth or responsiveness. All systems must be fully multi-property to handle several hotels effectively.
In addition, systems need to be agile, and vendors must adapt systems to future needs. One example is the advent of cloud-based and AI-driven systems, making real-time decision-making more feasible. Whether adjusting room rates based on current demand or offering personalized upsells based on guest behavior, agility is increasingly important in hotel management systems.
Systems must also be accessible to all team members in a hotel since instantly available information and insights for operational and tactical decisions cannot be overstated.


Every hotel must cover all three levels - strategy, tactics, and operations - to become long-term financially sustainable to maximize the return on investment for the hotel owner. There is no single system that manages all three perspectives. Therefore, hotels need three categories of systems to successfully manage the hotel - one strategic system, one tactical, and one operational. As technology evolves, better integrations will make these categories more fluid and offer a cohesive, data-driven, guest-centric approach across strategic, tactical, and operational functions.