Unlocking Hotels' PMS: Unleashing Strategic Value Beyond Operations
15 June 2023
Hotels possess a formidable resource known as the Property Management System (PMS), a tool designed to streamline operations and effectively manage guests and is integral to daily hotel functioning. However, the potential of this system often remains underutilized, with hotels primarily perceiving it as a means to handle operational tasks. But what if hotels could unlock the true power of their PMS? What if they recognized it as more than just a tool for operations and embraced it as a strategic asset?
The untapped benefits awaiting hotels that maximize the use of their PMS are transformative. By harnessing the wealth of data within the system, hotels can gain unparalleled insights into guest behavior, optimize revenue streams, elevate operational efficiency, and foster exceptional guest experiences. In this article, we delve into why hotels fall short in fully utilizing their PMS and explore the remarkable gains they stand to achieve by embracing their strategic potential.
Why do hoteliers not use the PMS correctly?
Hotels have invested in sophisticated Hotel Property Management Systems (PMS) to operate the hotels. Many hotels perceive their Property Management Systems (PMS) primarily as operational systems rather than recognizing the value of their guest data. This perception can stem from various factors.
- Operational Focus: Hotels primarily rely on their PMS for day-to-day operational tasks, such as managing reservations, check-ins, check-outs, and room assignments. The primary objective is to ensure smooth operations and guest satisfaction during their stay. As a result, the focus is often on immediate operational needs rather than long-term data utilization.
- Limited Data Visibility: While PMS platforms capture a wealth of guest data, the visibility and accessibility of that data within the organization may be limited. The data may only be accessible to specific departments or limited to basic operational reporting, which hinders the broader understanding of its value and potential.
- Lack of Data Integration: Hotels may operate with multiple systems, such as point-of-sale (POS) systems, customer relationship management (CRM) systems, and guest feedback platforms that store guest data in silos. These data silos can make integrating and analyzing data across different systems challenging, reducing the ability to gain comprehensive insights from the combined data.
- Limited Analytical Capabilities: Hotels may lack the necessary analytical tools and resources to effectively analyze and derive meaningful insights from the guest data within their PMS. Hotels may struggle to identify patterns, trends, and opportunities hidden within the data without proper analytics capabilities.
- Privacy and Security Concerns: As custodians of guest data, hotels are responsible for protecting guest privacy and complying with data protection regulations. This can result in a cautious approach to data utilization, with concerns about data sharing and potential breaches. Striking a balance between data utilization and privacy protection can be a delicate challenge.
To overcome these challenges, hotels must recognize the value of their guest data beyond immediate operations. By adopting a more strategic approach, hotels can unlock the potential of their PMS data. This involves investing in data analytics tools and resources, promoting cross-departmental collaboration to break down data silos, and fostering a data-driven culture throughout the organization.
Additionally, educating hotel management and staff about the benefits of leveraging guest data for strategic decision-making can help shift the perception of the PMS from a purely operational system to a valuable asset. By viewing the PMS as a source of precious guest insights, hotels can harness the power of their data to improve operational efficiency, enhance guest experiences, and drive profitability.
The day-to-day focus negatively impacts profitability
When hotels solely view their PMS as an operational tool and do not prioritize the quality of the data they collect, they are not managing the hotel at its full potential in terms of profitability. Here's why:
- Missed Revenue Opportunities: Dirty data, such as inaccurate or incomplete guest information, leads to missed revenue opportunities. Without accurate guest profiles, hotels struggle to personalize guest experiences, target marketing efforts effectively, and upsell additional services. This results in lost revenue potential and reduced profitability.
- Ineffective Pricing and Revenue Management: Data inconsistencies and outdated information hinder effective pricing and revenue management strategies. Without reliable data on demand patterns, guest preferences, and market trends, hotels struggle to optimize room rates, implement dynamic pricing, or adjust revenue management strategies accordingly. This leads to suboptimal pricing decisions and missed revenue potential.
- Inefficient Operations: Dirty data also impact operational efficiency. For example, duplicate or redundant guest records confuse and lead to inefficiencies in guest communication, room assignments, and billing. Data entry errors result in incorrect bookings or guest preferences, causing operational disruptions and potentially impacting guest satisfaction. These inefficiencies result in increased costs and decreased profitability.
- Inaccurate Forecasting and Planning: Data quality issues affect forecasting accuracy and planning processes. If hotels rely on outdated or inconsistent data for demand forecasting and resource allocation, they make inaccurate projections, resulting in overstaffing or understaffing, inventory imbalances, and suboptimal resource utilization. This leads to increased costs and missed revenue opportunities.
- Suboptimal Marketing and Guest Engagement: Without accurate guest data, hotels struggle to effectively target marketing campaigns and engage guests in a personalized manner. Inaccurate or outdated guest preferences and contact information lead to irrelevant offers, decreased response rates, and reduced conversion rates. This impacts the effectiveness of marketing initiatives and hinders customer acquisition and retention efforts, ultimately impacting profitability.
By neglecting the quality of the data they collect, hotels miss out on opportunities to enhance revenue generation, improve operational efficiency, and provide exceptional guest experiences. Hotels need to recognize the direct link between data quality and profitability and prioritize data cleansing and management practices to unlock the full potential of their operations and drive sustainable profitability.
Create a successful strategy based on guest data
To change the view on data from being seen as something only necessary for operations to something of strategic value, hotels can take several steps:
- Develop a Data-Driven Culture: Foster a culture within the organization that values data and its potential impact on business success. This involves educating employees at all levels about the benefits of data-driven decision-making, promoting data literacy, and encouraging a mindset that embraces data as a valuable asset.
- Create Awareness of Data Potential: Highlight success stories and case studies where data-driven insights have improved profitability or enhanced guest experiences. Sharing tangible examples of how data can drive strategic decision-making and deliver positive outcomes can help change perceptions and generate enthusiasm for data utilization.
- Establish Clear Data Objectives: Define clear objectives for utilizing guest data strategically. Align data objectives with the overall business goals of the hotel, such as revenue growth, guest satisfaction, or market differentiation. Having specific objectives provides a framework for how data can be leveraged to drive value and profitability.
- Invest in Data Analytics Capabilities: Provide the necessary resources and tools to support data analytics and insights generation. This includes investing in analytical software, hiring or training staff with data analytics skills, and establishing processes to extract, analyze, and visualize data effectively. By empowering teams with the means to extract insights from data, hotels can unlock their strategic potential.
- Break Down Data Silos: Integrate data from various sources, such as the PMS, CRM systems, and guest feedback platforms, to create a holistic view of guest information. Breaking down data silos and enabling cross-departmental collaboration can provide a comprehensive understanding of guest behavior and preferences, enabling more targeted strategies and personalized experiences.
- Prioritize Data Quality and Cleansing: Recognize the importance of data quality and invest in data cleansing practices. Implement processes to regularly clean and validate guest data, ensuring accuracy, completeness, and consistency. By prioritizing data quality, hotels can instill confidence in the data and increase its value as a strategic asset.
- Establish Data Governance: Implement data governance frameworks to ensure the proper management, privacy, and security of guest data. Establish policies, protocols, and guidelines for data usage, sharing, and protection to balance utilizing data for strategic purposes while safeguarding guest privacy.
- Measure and Communicate Data-Driven Success: Establish key performance indicators (KPIs) and metrics to measure the impact of data-driven initiatives. Regularly track and communicate the positive outcomes from data utilization to reinforce the value of data-driven decision-making across the organization.
By implementing these steps, hotels can shift their perspective on data from being operational-centric to recognizing its strategic value. With a data-driven mindset, hotels can unlock the full potential of their data, drive profitability, and deliver exceptional guest experiences based on insights derived from accurate and meaningful data.
Benefits of having all data in one system
Having vast data with high quality from many different systems stored in one easily accessible system can provide several significant benefits for management and the commercial team in a hotel. Here are five key advantages:
- Comprehensive Guest Insights: By consolidating data from various systems into a single repository, management and the commercial team gain a comprehensive view of guest behavior, preferences, and patterns. This enables a deeper understanding of guest segments, allowing for more targeted marketing campaigns, personalized experiences, and tailored offerings, including upselling and offers during the stay.
- Enhanced Revenue Management: Access to a centralized data system empowers revenue management teams to make more informed decisions. By analyzing historical booking data, market trends, and guest behavior, revenue managers can optimize pricing strategies, forecast demand accurately, and identify opportunities for revenue growth, leading to improved revenue performance.
- Improved Operational Efficiency: Centralized data allows for streamlined operational processes, such as letting accurate forecasts drive labor scheduling and purchasing. Operational teams can also identify areas for improvement and implement strategies to enhance operational efficiency based on data-driven insights.
- Data-Driven Decision-Making: High-quality data from multiple systems enables informed and data-driven decision-making across the organization. Management and the commercial team can leverage data insights to drive strategic initiatives, evaluate the effectiveness of marketing campaigns, and identify opportunities for cost savings or revenue generation. This promotes a culture of evidence-based decision-making throughout the hotel.
- Enhanced Performance Management: A centralized data system facilitates robust performance management capabilities. Through data analytics and reporting tools, management and the commercial team can extract actionable insights, visualize performance metrics, and monitor key performance indicators (KPIs) in real-time. This empowers data-driven performance monitoring, evaluation, and strategic planning to optimize business outcomes.
These benefits collectively contribute to improved profitability, guest satisfaction, and competitive advantage in the hospitality industry.