The hospitality industry is seeing a shift from the licence based to the subscription based model. Especially in the small and mid-sized segment, a cloud based property management system is increasingly becoming a preferred choice with the main reason being the flexible payment options that it offers. This availability of quality enterprise property management systems at an affordable cost makes hoteliers more comfortable with Cloud PMS than being bound by annual licences.
Here are the top 5 reasons why the pay-as-you-go model of Cloud PMS scores over the licence based model of legacy PMS:
1. Shrinks IT Budgets
With the subscription model, the biggest advantage is the impact it has on the hotel’s IT budgets. The latest technology, which with the previous licencing model was only available to organizations with large IT budgets, is no longer unattainable for the small hotelier because of Software as a Service (SaaS). This is one of the reasons why economies like South Africa are seeing a shift in their technology preference to cloud.
2. Flexibility in Pricing Models
Subscription based models give a lot of flexibility to the hotelier. They can choose the features and modules that they require and pay subscription only for those features. This is in direct contrast to the licence based software that comes in a bundle with much less flexibility. Most cloud property management software also have pay-per-use subscription model which is most useful for small hoteliers where occupancy fluctuates due to various factors.
3. Better Customer Service
A subscription model ensures that the PMS provider has consistency in quality, upgrades and customer service. By virtue of being low barrier to enter and exit, a subscription based PMS will only be profitable to the provider if the customer is happy, ensuring higher recurring revenues. This is why cloud based PMS providers invest in providing the best customer service and customer relationship management, often providing 24 x 7 support which is rare with license based software.
4. Renting vs Owned
The question of ownership is one that has stopped getting raised over the years. Initially when the subscription model was new in the market this was the most important parameter for the hotelier. Hoteliers were comfortable with the sense of ownership that their in-house PMSs gave, and they found difficulty in adapting to cloud, which works like a rented model. But, after witnessing increasing benefits of cloud PMS like lower initial capital investment, more flexibility in operations and less cost of changing the technology in the future, this question is taking a backseat, especially for the SME segment.
5. One-Time Pay vs Subscriptions
Perpetual licences may be a one-time investment only, but to ensure good support and upgrades, a recurring cost of annual maintenance is required. Not to mention the monthly cost of hiring specialized IT Staff for maintaining both hardware and software.
In contrast, the benefits of a subscription model are many. With an all-in-one bundle of software, hardware, security and support packaged in an affordable and lucrative subscription pricing model, cloud is fast taking over the market share of software giants in both the emerging and developed economies.
Have you thought of switching to cloud? Take a free trial to see if it works for your hotel.