Thursday, February 16, 2017

Do most hotels use a specific POS system at the front desk or a larger computer system?

Eighty to eighty-five percent of the hotel POS systems out there are either 

  • so exorbitantly priced that the only reason anyone will buy it and put up with the astronomical monthly support costs is because it's a franchise organization's required purchase (Micros-Opera), or
  • such an absolute piece of crap that the only reason anyone will put up with it, period, is because it's some franchise organization's required purchase (ChoiceAdvantage, HSS in its day)
The only reason the percentage isn't higher is because

  • I have no experience with Marriott's FOSSE and don't expect to (Beechmont isn't a Marriott developer and does not aspire to become one, and FOSSE is Marriott's proprietary system: only Marriott-branded hotels have it.) For all I know, it may be a good system (Marriott owns, or at least itself manages, a lot of their hotels so, like me, they'd have limited patience with such a disease such as Choice Hotels' ChoiceAdvantage, and Marriott would have the size and the clout to insist on the best, and be sure they're getting it); and
  • Most Best Western member hotels - whose owners actually have a choice as to which one to go with - use a good one (Visual Matrix) that I actually like.
Someone got me started on hotel property management systems a few months back (What are the best property management systems for small hotels? ), so I evaluated several systems and called out what I like to see in them.

Image result for open hotel

Get the franchise organizations out of it, and hotel POS systems will get better overnight: the free market and competition would do its power and magic. (I'm going to repost this under 'law' and 'anti-trust law' categories, hoping some ambitious young lawyer who's into anti-trust and mass tort law will get ideas . . . :-) ) Until that day comes, however, hotel POS systems remain in the Ma Bell era. 

  • Monthly support costs to compensate for the unreliability of the manufactured product will continue to be taken for granted and considered normal.
  • A long learning curve for your front desk people will continue to be taken for granted and considered normal.
  • High costs will continue to be taken for granted and considered normal.
  • Misallocated priorities will continue to be taken for granted and considered normal. (Proprietary systems serve the franchise organization, not the hotel. ChoiceAdvantage exists only to support Choice Privileges, doesn't do a very good job of even that, does a poor job of doing anything else; and Choice has it that, why shouldn't it? If everyone in the world doesn't have a Choice Privileges card, it's our fault for not pushing the program, so we can just suffer. A Micros-Opera system installed in a Days Inn or other Wyndham-franchised hotel will be configured as Wyndham dictates.)
  • Having to change the system completely every ten years or so will continue to be taken for granted . . .
This, too, shall pass. Things are changing. Hotel franchises - which are not all created equal to begin with - are declining in value, and will continue to do so.

  • The value of any hotel franchise is the number of people in its loyalty program (who actively use the loyalty program, of course: just mailing everyone a loyalty card doesn't quite turn the trick), divided by the number of properties it has franchised. Choice Privileges, for example, is one of the largest. But because Choice Hotels' franchises are oversold in so many markets (Winston-Salem, North Carolina, has nine - way too many - and only five out of eleven Choice brands are represented: there are four Quality Inns, for example . . .), they give up that point. Active participants in the loyalty program call the hotel chain, first, so they can get the points on their HHonors, or Wyndham Rewards, or Best Western Rewards, or Priority Club card. This translates into reservation contribution for the hotel franchisee.
  • Just about anyone else is going to call Expedia, or Travelocity, or Priceline, or Hotwire. And the number of people who do that is growing.
  • The only exceptions will be people who have a preference for an individual hotel - something that, as a hotel operator, you don't even have to have a franchise to achieve, if you're any good at achieving it.
The magic number is 8.5%. Note all the revenue from rooms you rented last month that were referred by the franchise organization. Subtract the revenue from referrals that originated at Expedia, Priceline, and Hotwire (and any other online travel agency - any hotel can get those, you don't need a franchise to get them, so it shouldn't count as res contribution, even if it did come through the chain's central reservations system . . .). Take the number you have left, and calculate it as a percentage of your total room revenue, altogether.

If that number is 8.5%, your franchise affiliation is worthless. You pay that much - 8.5% of your total room revenue - in fees and royalties to your franchise organization, so if they're only sending you 8.5% of your business, it's like having 14.7 pounds of air in your tire. If that number is less than 8.5%, your franchise is worse than useless: it's a hungry mouth to feed that's giving you nothing in return, not pulling its weight. (Royalties and fees on a Starwood franchise - Sheraton, Four Points, W Hotels, aloft and element - are even higher, closer to 12%. Best Western is a membership organization, not a franchise: the fees on that run at 2.5%, which is why I like it.)  

Why pay eight and a half percent of your total revenue for six percent or less of your business? (And that's before you get into it with the franchise rules and requirements. Those wouldn't be so bad if the people who sit behind a desk and make them up really know more than you do about what's best for your hotel, as they would have you believe. But what if they obviously don't?)  Because banks who carry mortgages on hotels require them to maintain a franchise affiliation. On the surface, that makes sense. Out of 32 hotels in California that went into foreclosure in 2009-2010, only one had a franchise affiliation. But since half of those franchise affiliations are no help, the cause and effect relationship is questionable. As hotel franchises continue to decline in value, the cause and effect relationship will become even more questionable. More hotel owners will notice it. The banks will start to notice it. The franchise organizations will lean more and more heavily on their ten-to-twenty year contract terms and the threat of liquidated damages to hotel owners that terminate the franchise early: besides marketing loyalty cards and mindlessly making more new rules that implement new gimmicks that amount to pulling straws, it's the only thing they know, and their survival is at stake.

So as more hotels go independent (and have to give up the franchise organization's proprietary POS system and replace it with a cheaper one that probably works better), you'll see more POS systems that work better for the hotel - and thus, more likely, work better for the guest (storing your room preferences, for example, and individualized service needs, like a late check out if you need one each time you come to town . . . lots of little things about you that are more important than your Rewards card number . . .) 

I'd expect Visual Matrix would end up on top for a time, others would catch up. 

Most of the ones now in use would disappear. And good riddance.

For now, Micros-Opera seems to be the most prevalent, and the most unjustifiably expensive, but not so as a result of merit, or value for price; as it is a result of their worming their way into agreements with franchise organizations that, in turn, coerce and lock in franchisees - what passes in this business as marketing savvy and technological prowess  . . . Their apparent dominance - like that of the old Bell System back in its day -  is a manifestation of the famous Winston Churchill quote that dictators ride to and fro on upon tigers which they dare not dismount.

Originally appeared on Quora

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