ROI for Hotel Software

ROI for hotelHotel Technology purchases account for a major chunk of investment made by Hoteliers. Technology plays a very important role in ensuring smooth operations, improving staff productivity and enhanced guest experience. Hotel Management Software plays a big role in all the above. After evaluating the hotel software on cost effectiveness and features, the next big factor in selecting the right hotel software is its Return on Investment (ROI) {READ: Budget City Hotels – How They Can Achieve Quick ROI with Minimum IT Expertise)

Calculating the ROI for hotel software requires taking into account both the quantifiable factors and the more imperceptible factors. The gain from the investment and the total cost of investment needs to be measured to get an estimate on the return on investment.

The gains from a hotel property management system can be calculated by answering the following questions

Reduction in Cost of Staff

–          Reduction in man hours spent on the front desk for check ins and check outs

–          Reduction in man hours spent on consolidating the accounts for rooms and other POS terminals like restaurant etc

–          Reduction in man hours and number of staff required for managing rates and availability across multiple distribution channels(OTA, GDS, Web, Travel Agents etc)

Improved Sales Numbers

–          Increase in number of bookings through Web Booking Engine

–          Increase in occupancy through no blocking

–          Increase in occupancy through real time updation of inventory across multiple distribution channels (OTA, GDS, Web, Travel Agents etc)

Better Revenues

–          Increase in average daily rate through integrated revenue management systems

–          Increase in revenue because of forecasting reports and tools

Reduction in Losses

–          Elimination of losses due to error in manual entering and  updations

–          Elimination of losses due to mistakes in consolidations

–          Reduction in losses sustained due to guest denials

Long Term Revenue generating Factors

–          Number of repeat guests because of improved Guest Experience

–          Increase in reservations due to guest feedback because of enhanced guest experience

–          Savings due to easy integration with other hardware and software systems used by hotels

–          Savings due to adaptability of hotel software to change in market trends eliminating need for multiple future investments

The above are few of the tangible and intangible benefits from a hotel management software that can be used for measuring the gain from investment. For getting a measure of the total cost of ownership both the direct and indirect costs need to be accounted for.

  1. Cost of Purchase
  2. Maintenance Cost
  3. Cost of Staff required for the Software
  4. Cost of training staff on software
  5. Cost of software upgrades and updates
  6. Customer Support Cost
  7. Cost of reengineering your hotel processes to adapt to the software system.
  8. Cost of data security, data backup and infrastructure cost for maintaining the software.

The above list has some of the main costs associated with hotel software. Having a lower total cost of ownership verses the Gains from the hotel software is one of the significant criterions for making an investment in hotel software. This is one of the main reasons why cloud based hotel property management systems are becoming popular with the small and mid size hotel segment. The cost of ownership is very less with cloud based PMS, while the gains are many, especially in minimal initial investment, training costs, easy integrations and market readiness.

It is important to not ignore the imperceptible benefits of having hotel software like improved guest experience and staff efficiency while calculating ROI on hotel software to be able to achieve improved bottom line now and in the future.