The cost and time invested in interfaces between legacy PMS and third-party systems have plagued the hospitality industry for years. It’s time to demand a better way.
NB: This is an article by Martin Reichenbach, Co-founder and COO at apaleo GmbH
Ask hoteliers and technology companies alike about their biggest pain points, and inevitably they will mention integrations. Building interfaces between systems proves to be costly and time consuming. Hoteliers want a simple way to connect all the software that is required to run their business, and technology companies want to focus on their products rather than moving personal and monetary resources to build integrations.
If the industry agrees that this shouldn’t be such a hassle, why is it still a pain? The reason lies with the legacy Property Management Systems (PMS) which still dominate the market. They are closed, monolithic, and often unwilling to work with third-party tools.
Barriers of legacy technology
Legacy PMS technology typically gets a bad reputation for being difficult to use, not user-friendly and slow. They are individually set up for each account, which means that the initial implementation and set up can take time thanks to server set up, installs and configuration. Once set up, all upgrades (including new integrations) must be done manually, since they are specific to each server – there is no common setup across accounts. So, before building any update or new integration, a legacy PMS provider must first evaluate the cost and benefit based on the expected return of a customer over its lifecycle. If building the interface can provide a return, it is added to the queue, where a hotel could wait months or even years for the new version.
Hidden fees stack up
Because PMS vendors control the timeline and acceptance of requests for interfaces, they can pick and choose if and when to work on them. When a request is accepted, it is often at such a high cost that the connection is not worthwhile for the hotel to pursue. Technology companies may have the opportunity to build their own integration to the PMS but face similar challenges – the integration comes with high certification fees and take months or even years to build.
The costs do not stop there. The PMS then starts charging their clients, the hotels and chains, with significant interface fees per hotel per interface. Often hotels only find out about these additional fees, which may add up to tens or hundreds of thousands of euros, only after the final integration is complete. And, on top of these fees, the PMS vendors again add additional fees for installation and support of the interface. These fees are lucrative for the PMS vendors. The interface fees are often significantly higher than the cost of the PMS software license itself.
No incentive to change the business model
In the current model, the only winners are legacy PMSs, which are reeling in fees from hotels and technology vendors and are dictating the speed at which technology can be adopted.
Both hotels and tech companies lose – hotels don’t have an easy way to connect their preferred tools and certainly don’t have the ability to test new products, and technology companies must allocate significant resources for building integrations.
The industry seems to have accepted this as the norm, without demanding change from PMS providers. It is time for hotels and technology companies to demand a better way, otherwise, legacy systems will continue to monopolize their influence and stifle innovation. So how can we as an industry put an end to costly PMS interface fees, long wait times, and siloed technology?
A better way with cloud PMS and open API
The first thing is simple. Hotels should look for next generation, cloud-based PMSs. Cloud-based PMSs come with many advantages. They can be setup quickly – sometimes even in a self-service style by the hotel itself – because they don’t require any on-premise installation. Once setup, hotels can begin using the PMS almost immediately. Cloud-based PMSs are also scalable and accessible anywhere, so hotels can grow and access their data from any device.
Because cloud-based PMSs are new compared to their legacy friends, they tend to have a more userfriendly user interface, saving hotels time and resources on training and onboarding new staff. Considering the high turnover rates at hotels, this can be a huge benefit.
Adding features, building integrations and setting up new hotels become simpler and faster with a cloud PMS. When an upgrade is made on a cloud-based PMS, it can be done once, for all customers. No queue, no wait times.
While cloud-based PMSs makes it easier to build new integrations, this alone will not solve the problem. The PMS should have a public, open API that allows any third-party software to connect to the PMS. This API must be 2-way, allowing apps to write data back to the PMS and vice versa. This open approach allows integrations to be completed within days and eliminates certification fees for third-party tech companies and interface license fees for the hotel or hotel group.
While many companies preach cloud-based PMSs and open APIs, most still come with hidden fees and workarounds. It is time to remove the barriers that traditional PMS providers have created and break the current business model of legacy PMS players.
It is time to claim once and for all that PMS interface fees are dead!
Martin Reichenbach is a Founder of apaleo and leads the company’s operations. He is specialized in B2B cloud software and has been working in the hospitality industry for many years, combining technical knowledge of computer science studies and a longstanding business experience in the field of marketing and pricing.