Selecting a property management system is one of the most strategic decisions a hotelier will make. The right PMS can streamline operations, enhance the guest experience, and boost revenue. But knowing what to budget for a hotel PMS can be a challenge. There’s a wide variance in pricing based on property size, system features, and deployment options. This guide outlines hotel PMS pricing models and provides some indicative costs you can expect to budget for over the next five years.
What Is a Hotel PMS and Why Does It Matter?
A Hotel Property Management System (Hotel PMS) is a technology hub that a property uses to manage their daily operations; room inventory, availability, and restrictions, check-in/outs, guest profiles, reportings, room assignments, billing etc. It’s how your property connects everything and everyone. A good hotel PMS should efficiently automate a lot of your manual day to day operations. A bad hotel PMS would not only hinder the performance it would also act as a barrier to keep the business from growing. The right hotel PMS will give you a real-time snapshot, all the insights you could ever want, and integration into all the other systems your hotel is using.
Cloud-based solutions can be up to 60% cheaper than on-premise installations. They are scalable, secure, and available anywhere while reducing the burden on internal IT resources. This brings long-term benefits like regular updates and new functionalities. Just like property management systems streamline internal operations, cloud technology streamlines IT. It reinforces business competitiveness which is particularly crucial for independent and boutique hotels.
Breaking Down Hotel PMS Pricing Models
Prices vary based on the vendor, property size, number of users, and level of support and training. Entry-level solutions are fairly affordable, ranging from $100 to $300 per month. However, for full-featured, large-property systems, costs can rise significantly. Many larger properties easily spend several thousand dollars each month. Small- to medium-sized properties frequently fall in the $200 to $500 per month range. Keep in mind that many vendors require multi-year contracts and charge for the full term upfront. Just as you wouldn’t switch your internet or phone provider mid-term, they’re counting on you not leaving them either. It’s easy to end up locked into outdated software with inflated yearly costs or face a hefty, untimely exit fee.
Some vendors also charge setup fees, training costs, and transaction fees for payment processing. Setup fees range from $500 to $5,000 depending on complexity and data migration needs. Training can add another $500 to $2,000 if you want on-site or customized sessions. Transaction fees typically run 1% to 3% per booking when using the vendor’s payment gateway. Smart buyers factor in these hidden costs when comparing quotes. A system with a low monthly fee might cost more overall if setup and training are expensive.
What Features Justify Higher PMS Costs?
There are basic PMSs that will get the job done, but they lack a range of features that can make life easier. Mid-tier PMS platforms start adding functionality like channel management, correspondence automation, and mobile check-in. Then, there’s the level of all-inclusive solutions that include revenue management to optimize payments, dynamic pricing to ensure the best achievable income, and guest relationship management for a more personalized stay. For this category, unlimited customer service is also included. The top PMS platforms offer 24/7 customer support and assign you a personal account manager.
How else can a PMS put a dent in operational costs? The time saved on check-ins and check-outs across a week, month, and year quickly adds up, but so do manual errors and double bookings, which can lead to refunds, last-minute relocations, and overbooked nights. Too-frequent rate parity and overbooking checks keep your availability and rates in sync, but they also require more manual work when the systems can’t update each other directly. So, while lower-cost products can reduce some expenses, they often shift the cost to direct or indirect labor, from your own pocket to the PMS vendor’s maintenance or custom development departments. Is sacrificing direct staff labor to spend more time on manual checks or double bookings really saving you any money?
How Much Should Small, Mid-Sized, and Large Hotels Pay?
Monthly subscription costs for cloud-based property management systems are the norm today. However, legacy on-premises and hybrid systems may still be available via one-time licenses plus support and updates, or via combination one-time licenses and ongoing subscriptions. Because costs and included features can vary greatly, hotel software purchases should always be guided by a careful needs analysis and discussion of all available pricing and service models.
Skimping on functions you need results in workarounds that reduce staff productivity, increase guest dissatisfaction, and lead to easily avoided errors. Managers spend a lot of time training or correcting these mistakes, reducing the value of their insights into how to improve the business. With the right tools to support staff and managers, the return on technology investment is quickly evident in small ways that add up to better guest reviews and repeat business. How can you ensure your hotel tech stack is optimized for 2022 and beyond?
Hidden Costs and Red Flags to Watch For
Besides the monthly subscription, can you trust there to be predictable prices or even all-inclusive ones? Watch for hidden costs that can seriously inflate your total investment. For example, some vendors charge you a per-user fee. This means that each additional staff member who needs access to the system can easily add around $10 to $50 per month to your bill. On top of that, integration is billed separately by some providers. This means you will need to access your pocket again if you want to connect your booking engine and/or channel manager. Data migration in case you are switching from your current system can amount to $1,000 to $5,000. Some providers will even make you pay for the app, synchronization engine or even for the channel manager itself. As it’s now common practice to increase prices on you every year, make sure to look out for possible escalation clauses in the contract.
Some red flags to watch out for include long-term contracts with steep cancellation penalties, pricing so vague you have to sit through a lengthy sales call to get any real information, and feature lists that seem to become more nebulous the harder you look at them. Instead, many of the most reputable PMS vendors will have their pricing front-and-center on their websites, they’ll offer both month-to-month and annual plans, and they’ll have some sort of trial or demo period for you to take advantage of to see if the system is a good fit for your property. If you get pushback on requesting these kinds of straightforward details, you probably want to start looking elsewhere. A good PMS provider should be looking to court you as a long-term, satisfied customer, not wrangle you in as a long-term revenue stream whether you’re happy with the product or not.
Making the Right Investment Decision
Make sure to contact the vendors during the selection process with any questions about functionality, support, or pricing. By the time you sign the contract, you should be certain you are getting what you need at a price you can afford. Look at the vendor’s customers. If a hotel PMS company customers are mostly large hotels, it’s unlikely to be a good fit for your small hotel. Conversely, a provider more commonly used by small independent hotels or B&Bs may not have the capability to scale with your hotel as you grow.
How much valuable front desk time is lost to your current PMS system? How often are guests kept waiting during check-in because of a sluggish PMS? How long do your managers spend comparing data, generating reports, and looking for inefficiencies that could more easily be spotted in a clean, integrated system? It’s no small decision to switch to a new system, but if you find yourself nodding in agreememnt, it’s only a matter of time.
