How to Measure ROI for Hotel Software

Every technology investment needs to ultimately convert into positive financial outcomes. Otherwise, what’s the point? Aside from building or acquiring the hotel itself, obtaining hotel technology is one of the most expensive investment a hotelier has to make. Without efficient all-in-one hotel software, you will not be able to automate and streamline all hotel operations, boost revenue, ensure maximum output from hotel staff to attain guest satisfaction. 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).

Hotel software’s have a lot to make it easy for both guests and hoteliers. In order to get an estimated return on investment, the net gain from the investment and the total cost of investment needs to be measured.

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 amalgamating 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

Reduction in Losses & Human Errors

  • Elimination of losses due to errors in manual entering and updations
  • Elimination of losses due to mistakes in consolidations
  • Reduction in losses sustained due to guest denials
  • Reduction in revenue loss due to overbooking

Better Revenues

  • Increase in average daily rate through integrated revenue management systems
  • Increase in revenue due to report analysis and tools

Long Term Revenue generating factors

  • Repeated customers because of an improved guest experience
  • Increase in reservations due to positive guest feedback because of an enhanced guest experience
  • Savings due to easy integration with other hardware and software systems used by hotels
  • Savings due to the adaptability of hotel software to change in market trends eliminating the need for multiple future investments

The above points are some of the benefits from the hotel management software that can be used for measuring the profit from the investment. For getting a measure of the total cost of ownership both the direct and indirect costs need to be represented.

Cost of Purchase

Maintenance Cost

Cost of Staff required for the software

Cost of training staff on software

Cost of software upgrades and updates

Customer Support Cost

Cost of reengineering your hotel processes to adapt to the software system

Cost of data security, data backup and infrastructure for maintaining the software

 

The above list contains some of the primary expenses associated with the hotel software. Having a low cost of ownership verses the gains from the hotel software is one of the noteworthy measures for making an investment in hotel management software. This is one of the main reasons why Hybrid Cloud-based hotel management software are becoming popular with the small and mid-size hotel segment.

In all cases, it is important not to ignore the invisible benefits of having hotel software while calculating the ROI on hotel software to be able to achieve improved bottom line now and in the future. Stick to what works best for you and deliver what your guests seek from you.