Benjamin Schmid, Apaleo co-founder and SVP product, explains why industry-agnostic tools and API-led platforms will “loom large on the hotel tech landscape”.
It used to be the case that property management systems had a limited shelf life because these all-in-one solutions evolved slowly and were inflexible.
This meant they weren’t future-proof, and so everything from CRS to PMS quickly became outdated. However, hoteliers are now being given the chance to finally leave that era behind thanks to a tech-wide revolution in software that has finally reached the world of hospitality.
Just as you may have a constellation of apps on your smartphone, hotel managers are increasingly swapping and adding tools to their property management platform just as easily. This heralds the age of API-powered tools, where industry-agnostic apps — powerful, user-friendly tools fit for any sector — can finally be adopted by operators that are no longer restricted to niche products.
Hoteliers had no access to anything like this five years ago, and behind it is the ability to combine what’s known as ‘vertical SaaS’ with ‘horizontal SaaS’. The first is industry-specific, the latter not. Both are only possible because modern tools and systems can talk to each other using APIs.
Why industry-agnostic tools are a game changer
Traditional PMS systems had to be one-stop-shops because this was the age before true connectivity, but they never quite cracked it. Even when all-in-one solutions moved to the cloud, providers didn’t fully capitalise on the opportunity to open up their APIs and realise the full potential of composable tech stacks. They remained siloed, with teams spread too thin across too many tools to reliably produce best-in-class solutions.
In contrast, API-led tools (both vertical and horizontal) are typically developed by teams dedicated to doing one thing really well. But due to reasons of scale, horizontal SaaS tools come with added advantages. Operators get quicker and better integrations from superior tech teams who are better funded and able to deliver faster (and more frequent) improvements. They aim to be both best-of-breed and the cheapest, with a feature-rich, slicker user experience.
Examples of horizontal SaaS include staff and customer communication, task management, automation and workflows, CRM or CMS. Think MessageBird or Twilio for omnichannel messaging, Notion or Trello for task management, Google Drive or OneDrive for file storage, Hubspot or Mailchimp for email marketing, Slack or Teams for internal comms, Xero for finance, and Contentful or Sanity for content management. The options are nearly endless and traditional hoteliers are already integrating these tools into their property management systems to become the hospitality world’s first API superusers. That is also largely down to the rise of no-code automation platforms like Make or Zapier, which allow users to integrate new tools without the need to code.
Best of both worlds
That’s not to say that vertical SaaS is dead. There’s a whole breed of excellent API-powered vertical tools that hoteliers value highly too. So, alongside those core industry-agnostic tools, you’ve got your niche, industry-specific tools. These vertical SaaS solutions are specifically developed to address the hotel industry’s pain points – for example inventory, rates, reservations, invoicing, distribution, benchmarking, digital guest companion and revenue management. Think IDeaS or Duetto for hotel revenue management, Hotelkit or Breezeway for operations and Duve or Straiv for guest apps. The result is a tech stack that is more flexible, customisable and tailored to a business’ specific needs.
Why industry-agnostic tools matter
There’s so much common ground between sectors. Businesses in all industries need client communication, accounting and CRM. Horizontal tools excel at tasks common to all businesses and ensure they are performed with world-leading efficiency, for far less cost than could be achieved by a vertical SaaS tool built for a specific market. They offer more modern tools with greater functionality, a better quality to price ratio, increased choice and, ultimately, a higher service level. This is why they will loom large on the hotel tech landscape, with the added bonus that staff will reward those companies that have the most user-friendly, advanced technology, making it easier to attract and retain talent.
Agnostic tools have already been widely adopted in other industries but the hotel sector is a late bloomer. We estimate that under five per cent of hotel operators fully capitalise on them. So why is the industry taking so long to catch up?
The short answer is the inertia that causes a drag on the overall transition from black box, traditional PMS solutions to API-first platforms. Historically, it has been hard for operators to swap all-in-one property management software (PMS) because property managers see it as a great upheaval. However, once you switch to the new breed of API-first foundation platforms, you won’t have to ever do it again because you can simply swap and replace tools at will. This realisation is gathering pace now.
The need to save money and avoid disruption is being overtaken by commercial pressures fuelled by guest expectations, as well as the highly developed tech-savviness of a new generation of staff. So many people today have grown up with mobile connectivity and technology-driven experiences, they’ve come to expect seamless experiences at the right price. All this will usher in the era when most hospitality businesses will leverage horizontal tools in their overall tech stack. They are the answer to the industry’s sluggish innovation curve that hindered progress in the past. Hoteliers should have the ability to evaluate their technology in sandboxes — in other words, to experiment with new technologies and test as they go. This is the great dividend of a cloud-native, API-led landscape.
Even 20 years ago, technology had very little part to play in the day-to-day operations of a hotel and the guest experience. Guests would receive a physical key to their room; booking data was stored on paper and sent from travel agents by fax; reservations were paid for with cash at the front desk or travel agent, and physical invoices handed out. The hospitality industry was notably late to ‘the cloud’ and has ever since been grappling with the fear that technology, particularly contactless solutions, would result in remote guest experiences.
What’s really happening is that new ways of adopting technology are allowing different brands to design and evolve their product and guest experience as a continual process — whether they want to keep the front desk or not.
Hoteliers need to reassess the guests and travellers they’re serving today but, whatever the product they want to offer, there’s a basket of tools that’s right for them that will remain at the cutting edge without them having to do anything. That’s more true of horizontal SaaS tools than anything else.