What is Hotel Management System?


Technology is making deep inroads into the hospitality industry, and hotels across the world are looking to use technology to make operation smooth and efficient.

The quest for performance and efficiency in the hospitality industry has given rise to the development of a host of hotel management systems. These are also popularly known as Property Management System (PMS), and Hotel ERP (Enterprise Resource Planning) – if you are looking at a larger, more comprehensive management system.

In the early 90s Gartner, an information technology research and advisory firm, came up with the term ERP to denote enterprise management software which automates a large number of business function such as human resource, finance, accounting, supply chain management etc. This software incorporates best practices in all the automated departments so as to facilitate rapid decision making and cost reduction. Over the recent past, many hospitality properties especially those that are growing chains or planning a global presence, have upgraded from smaller, simpler property management systems to the larger hotel ERP. A hotel ERP is a solution that is especially designed for the niche needs of large hotel operations.

What is a Hotel Management System?

A hotel is a hive of numerous operations such as front office, booking and reservation, banquet, finance, HR, inventory, material management, quality management, security, energy management, housekeeping, CRM and more. All these activities take place simultaneously and managing these diverse activities manually can be a difficult process. This led to the introduction of property management systems or hotel ERP that automates a host of repetitive functions. Integrated, automated software also means management can optimize hotel operations, gather business intelligence as I wrote in my last blog Technology for Better Business Intelligence and thus keep a tight control on costs.

With growing competition in the industry it’s important for a hotel to understand the needs of their guest, for example, things like what gets sold most, what guests demand for most, what food material get used least and results in loss, a good hotel management software, allows hotels to do just that.

Difference Between a Property Management System and ERP

There is one question which I frequently come across when interacting with hoteliers, irrespective of hotel size or market segment. What is the difference between property management system (PMS) & enterprise resource planning (ERP), if at all there is? Well with hotel ERPs only just coming in and technology rapidly changing, this is a rather pertinent question. The answer is yes there is quite a lot of difference between a PMS and an ERP.

A property management system (PMS) usually consists of front office software and other best of breed solutions. The PMS served hotels well for a reasonable among of time until now, when hotel operations have grown in complexity. Hotel and restaurant chains are the new trend and global chains are making their way into India. As complexity of hotel operations increases, a PMS is woefully inadequate and often results in integration issues too. Additionally, since solutions like telephone, finance, front office software may be purchased from different vendors, licensing can add up to costs.

Things are different for an ERP which is usually a comprehensive solution from a single vendor. Although the concept of an ERP in the hospitality industry is still new, it offers numerous advantages in terms of smooth seamless use of technology, greater automation, greater visibility into hotel operations, optimized use of manpower, reduced revenue leakages and higher resultant profits.

How to Choose the Right Hotel Management System for Your Hotel?

When a hotel is looking to upgrade their software the natural question that comes to mind is which Hotel Management System should I choose? As installing a hotel management system is an expensive affair, hoteliers need to make a choice with care. The first thing to do is

  • Look at your hotel needs and areas of operation you want to simplify. You may also want to plot your future needs to ensure the software can scale up as and when you need it to

  • Make a list of the features you are looking for. One of the main deliverables of a hotel ERP is its business intelligence. Does the ERP you are evaluating give you a bunch of in-depth reports that assist decision making?

  • Always check if the hotel ERP provider has been in the business for a considerable amount of time, has tested the solution across market segment and geographies if possible. A hotel cannot afford downtime, and so ensure your ERP provider also delivers high quality customer support

  • Take help of a qualified consultant or delegate someone from within the hotel with exposure to technology to access your needs before you opt for an ERP. This helps you understand you requirements more precisely

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About hospitalitytechnology

Technology is making greater and greater inroads into our lives. Right from when we walk up in the morning to when we head to sleep – we cannot imagine a life without the gadgets and gizmos that make life easy and interesting. When we travel and stay in hotels, our expectations are no different. We expect all the technological amenities we easily access at home if not more. The hospitality industry in increasingly accessing technology to wow guests, optimize their use of manpower, control hotel functions in an integrated manner and on the whole reduce costs while increasing efficiency. This blog is meant to track these technological changes happening in the hospitality sector. The growing move towards sophisticated hotel ERP, the growing use of cloud computing, the rapidly changing customer facing devices – smart phones and iPads, the increasing security concerns and more. Expect to find interesting articles, whitepapers, thoughts, and observations. Feel free to comment and even mail us content that you don’t mind posted here. Happy reading!
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5 Responses to What is Hotel Management System?

  1. Sreeja says:

    Nice article. Very nicely written :)

  2. Hotel management System says:

    Excellent article. I like this article very much.

  3. Hotel Management System with Hotel Perfect says:

    You’ve clearly set out the definition of a Hotel Management System to the unknown!

    Good job! It’s pretty hard getting the point across as you did :-)

  4. Tony says:

    Great explanation and Easy to read, concise, and very informative. Thanks!

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