Key Findings:

1. Hoteliers want to replace systems or automate daily duties: 34 percent are replacing a current HMS, while 25 percent seek new software to replace pen-and-paper methods.
 
2. Many buyers seek more advanced, integrated software: Those replacing a HMS primarily say it lacks functionality (13 percent) or doesn’t integrate with other systems (12 percent).
 
3. Hoteliers seek to maximize their exposure to online travelers: More than three-quarters (77 percent) of respondents ask for online booking functions.

Introduction

In response to increased demand for lodging, bolstered by a growing class of millennial travelers, the U.S. is in the midst of a hospitality construction boom. This boom began a few years ago, as the recession tapered off: New hotel construction jumped by nearly 50 percent between 2012 and 2013, increasing about 16 percent more in 2014.

Overall travel spending has slowed in the first quarter of 2015, but it’s still rising by 2 percent annually, according to the U.S. Department of Commerce. And U.S. business travel is expected to reach $295.7 billion in 2015—in due to the growth of millennial travelers, who take an average of three more trips each year than older age groups, and are 62 percent more likely to extend business trips into vacations.

This data paints a lucrative picture for hospitality companies—but without adequate software in place, they’ll be ill-prepared to handle the growth. Using a HMS can help:

• Streamline daily tasks, such as checking guests in;
• Manage reservations effectively; and,
• Facilitate online bookings.

In this report, we’ll explore these and other benefits by looking at the current methods, common pain points and most requested functionality among a sample of prospective HMS buyers.

34 Percent Use Software, One-Quarter Use Paper-Based Methods

When asked what methods they use to manage their hospitality business, the largest percentage of buyers (34 percent) say they already have a hotel management system. Another one-quarter use pen-and-paper methods, and 16 percent say they have no system in place at all.

Prospective Buyers’ Current Methods

Travelers today expect a certain degree of personalization when staying in a hotel. Many companies use software to handle daily tasks so they can focus on adding a human touch to guests’ stay. Software can streamline the check-in and check-out process, generate financial reports, manage housekeeping staff and more—freeing the general manager to greet guests and address their needs.

A HMS can also store and organize guest data to help hotel staff provide personal touches. A general manager might notice, for example, that a guest orders a particular wine during their stay. When that guest books another stay in the future—even if it’s at a different location of the same hotel brand—the manager can review the guest’s information and leave a bottle of the wine in their room.

Scott Sussman is the hotel and marketing director at The Peacock Inn; a 16-room independent luxury hotel with a fine dining restaurant in Princeton, New Jersey (part of the Ascend Hotel Collection by Choice Hotels). He says he’s surprised that so many buyers are using manual methods because software offers so much in terms of the “sheer organization” of reservations, guest information and distribution of hotel rates.

“[Software offers] organization not just for today and tomorrow, but for months ahead,” he explains. “It gives you the ability to handle rates and see what’s coming up.”

In this way, a HMS can help hoteliers prepare for the growth that’s expected to continue in the market.

Many Buyers From Independent Hotels Seeking Online Booking Engines

Among those replacing an existing HMS, the top response, at 14 percent, is that it’s missing necessary features and functionality.

Others say their system isn’t user-friendly (13 percent), or note that they would like an integrated system (12 percent)—meaning they want a comprehensive HMS that can perform all necessary functions, instead of using different systems for different tasks.

Top Reasons for Replacing Existing Hotel Management System

Of those who cite missing features, one-quarter say they would like a system with an online booking engine. Our demographic information may help explain why an online presence is so important: 34 percent of buyers in our sample are from independent hotels, while those from motels make up the second-largest percentage (16 percent). A combined majority of buyers’ properties also have fewer than 50 rooms. (Charts can be found in the Demographics section below.)

As we’ve noted in past reports, millennials are the travelers hotels want to attract most. According to data from the Pew Research Center, they also make up the largest age group in the U.S. workforce—and many of them have now reached a comfortable position in their careers, with more time and money to travel for both business and pleasure.

Boutique and independent hotels offer the type of authentic experience millennials seek, as opposed to the corporate luxury hotel offerings that dominated the hospitality industry decades ago. In response to this demand, the boutique hotel market is booming: It’s expected to grow by about 6 percent per year through 2019, according to a report by IBISWorld.

So, we can see that independent hotels are aware that having an online presence is important to attract new guests, especially millennials. They must maintain consistent rates across all online travel websites, where millennials are likely to read hotel reviews before booking. An HMS with functionality to add an online booking engine to the hotel’s website can help achieve these goals.

Aditya Sanghi, CEO of Hotelogix (which offers a hotel management system), says an online booking engine is crucial, since, on average, travelers read between six and 12 reviews before making a booking.

“The brand promise and expectation should be carried onto other travel websites, and it’s important for them to have a booking engine to maintain rate parity,” Sanghi says.

Rate parity—meaning a hotel’s rates are consistent across all distribution channels, such as Expedia and Orbitz—is especially important when competing with other hotels in the same area.

Majority of Buyers Seek Online Booking, Reservation and Housekeeping

Overall, more than three-quarters of buyers in our sample (both those with and without software) are looking for a HMS with online booking capabilities, while 75 percent request reservation management.

Housekeeping management (61 percent) and front desk management (58 percent) rank third and fourth in terms of desired functionality.

Top-Requested Hotel Management Software Functionality

Reservation, housekeeping and front desk management are all core applications every hotel needs to access on a daily basis. Hospitality staff must ensure that reservations are entered into the system, that housekeeping staff is organized and on-time and that guests are checked in quickly. Aside from pure organization, these HMS applications offer several additional benefits.