Topic

Impact of ICT on Tourism and Hospitality

Industries.

Narrow Area: Effect on PMS system in Sri Lanka

hotel industry (Special reference to Colombo
city hotel)
TABLE OF CONTENT

Introduction……………………………………………………………………..03

Conceptual Framework………………………………………………………..05

Data Collection Criteria ………………………………………………………..06

Analysis of founding’s…………………………………………………………..08

Service Providers List and Evaluation Criteria……………………….08

The types of electronic commerce/business system used …………10

The impact of the e-commerce systems on the performance………14

Benefits and advantages of implementing a PMS……………………18

Recommendations to solve the problem identified……………………….…..19

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INTRODUCTION

This study concentrates on the development of ICT and its impact on hospitality
industry, giving preference to city hotel based in Colombo. Research is to make
findings on what benefits and advantages to take on implementing a property
management system for a city hotel.

Without any hesitation we could agree that ICT has made huge impact to the
development of hospitality and tourism industry. Due to the advancement in
technology, the fierce competition and also due to the vulnerability and complex nature
of the hospitality and tourism markets, Destination Management Companies (DMCs)
and hotels from all over the world now depend almost on the use of ICT to plan,
manage and market all of their services.

Generally a PMS – Hotel / Property management System is regarded as a tool, which

makes the everyday complex hotel front office tasks much more convenient and
efficient. It is a computerised platform to ease the pressure of handling, time
consuming, paper and spreadsheet based operation.

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PMS would allow hotels to manage front-office duties, such as booking reservations,
guest check-in/check-out, room allocation, handling room rates, and billing.

However with the technological advancement PMS systems has also developed into
a more comprehensive stage where it no longer a tool for the front office capabilities.
Now it is more critical operations system which could offer a seamless guest
experience. Modern PMS would combined with all other sectors to enhance guest’s
total experience at the hotel. Other than front office operations it contributes and
make an impact on all below sectors of a hotel operation, such as;

 Food and beverage operations

 Housekeeping and maintenance management
 Sales and catering execution for group bookings and event management
 Revenue management
 Distribution across multiple channels
 Spa management

When it comes to total guest experience it’s a process starting at the decision of
choosing a destination to travel. Parallel to that customers will look for the
accommodation options and eventually select the hotel which matches the
requirements. That online interaction of booking a hotel room, followed by the actual
in-house stay, engagement with staff, experience inside a sophisticated room, and
sharing of their experience in online platforms like social media after the stay are
considered as the total guest experience. It is a challenge to offer a personalized
service at all times and simultaneously operate an effective and profitable hotel
operation. PMS will be the tool, comes in handy to help hoteliers to make a delighted
customer experience and to handle the hotel business efficiently.

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CONCEPTUAL FRAMEWORK

PMS is a network of various hardware and software applications used to manage a

hotel’s sales & marketing, human resource management, guest handling,
reservations, food & beverage, electronic mails etc. Thus, it has become imperative to
explore right type of property management practices to use and to ensure more guest
wiz-a-wiz revenue. - Bardi and Hoboken (2003)

Murphy (2007) considered property management system (PMS) as “the single-most

important IT application” for hotels (Pucciani and Murphy 2011, 102). It works as a 15
host for a variety of important functions within any hotel such as check in and out
procedure, customer relationship management systems, house-keeping, inventory
management, security, and so on (Pizam 2012, 276). It was reported that there were
more than 228 PMS software in 2010 and the most preferred system was Fidelio
(Pucciani and Murphy 2011, 103)

Assessing the performance of SiteMinder Channel Manager as a distribution

management tool for a medium size hotel chain 2014

The proliferations of modern technologies coupled with sophisticated network

protocols have unveiled new avenues for organizations and the hospitality industry is
no exception in this context. Technology-based systems stand in a pivotal position to
offer better service to the tourists.

International Tourism and Hospitality in the Digital Age

PMS systems will definitely make the operational tasks much more convenient and
efficient. It will help hotel owners to make more profits and also to gain more reputation.
Seamless services for the clients would higher the number of repeat clients as well
and making them satisfied each and every time would certainly increase the good will
of the hotel which finally again contributes to the revenue generation. With that it is
critical to understand the importance of PMS to run a successful hospitality venture.

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DATA COLLECTION CRITERIA

We used personal interviews in order to find data for this research. The research
team divided into two groups and went to collect the necessary data and inspect the
hotels. We had focused question areas according to the size and the star category of
the hotel. The first 5 questions was about the demographical information. Questions
from thereafter were mainly focusing on knowledge and skill about the PMS system
and advantage and disadvantage they see using such system for hotel operations.

Independent variables

We hypothesized that the using PMS system would positively affect the whole
operation of a hotel. The question that represents this variable was,

Do you find using PMS system is useful for the hotel operation? The respondents
there by had the chance to explain themselves. This variable is analysed through the
information of the answers we had and afterwards the conclusions were drawn.

Next variable in the question was about the Problems faced by the organization
when they use such system, once again it was open ended question. We noticed
that a lot of respondents’ answers were the same or had the same problem.

Dependent variables

The dependent variable in the study was about the impact of electronic commerce /
business systems on the performance of the organization. It was measured by the
means of scores on 05 impact statements which we developed rated on five points
likert scale, where the answers of the respondents could vary from strongly agree to
strongly disagree.

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Descriptive Statistics

The number of the respondents that took part in the interviews was 24 from 6 city
hotels. Each hotel we interviewed the Manager in charge for Front office, Restaurant,
and IT departments as well as Accountant. All of the respondents were directly using
PMS system daily for their day to day operational activities. The oldest respondent
was at the age of 48 and the youngest was 24.

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ANALYSIS OF FOUNDING’S

Service Providers List and Evaluation Criteria

 List of Service providers

a. Oracle

b. Scienter

c. Accpack

d. Taurus

 Evaluation Criteria

1. Cost

The business systems are usually expensive, therefore the cost of designing,
implementation, infrastructure requirements, training costs are some of the
costs related to the system which will be considered by the management at
the initial project appraisal stage of system implementation. Further the
benefits or the system functions and the cost savings that could be achieved
with the system will be considered in evaluating a particular system.

2. Suitability

Some of the systems are too basic or complex for the organization, for
example one hotel that we interviewed is Fair View Hotel, which is a budget
hotel with only 50 rooms, therefore a highly complex system is not suitable for
such a small operation, also a very basic system would not provide the
necessary requirements of the management, therefore the system should be
evaluated with regard to the suitability for the business model, nature of
operations, scale of operations and management requirements.

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3. Security

The security of the confidential information of the business is another

important aspect of a system that will be considered in evaluating a system. In
a highly competitive industry, the confidential information of the business can
provide a critical competitive advantage to the competitors; therefore the
security is another key factor that will be considered in evaluating the system.

4. Services

After sales support, training on the system, 24/7 online services and
maintenance services are some of the important services that will be
considered in selecting the system.

5. Previous experience

The group has four other hotels and a tour operating company using different
systems, therefore the past experience with the systems and the service
providers were considered in selecting the system.

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The types of electronic commerce/business system used

The Hotels have implemented below modules of Hotel Management Systems in

order to enhance the efficiency and the effectiveness of the hotel operations.

 Front Office Management System

This system is used to automate the front office operations of the business. The
system facilitates the operational activities such as front office operations,
housekeeping operations, rooms division and revenue management. Many reports
and operation related to,

1. Occupancy

2. Night audit

3. Revenue Cut off

4. Billing/Invoicing

5. Guest Registration

6. Reservations

7. Front office collection/cash control

8. Vacant rooms/occupied rooms/ready rooms management.

9. Integration of POS systems located at the bar and restaurant.

10. Revenue recognition (divisional revenue such as Apartment sales,

Bar Sales, Food Sales, etc)

11. Daily Management are performed via the front office system.

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  Restaurant Based System

This is system is used to fully integrate the restaurant and the bar operation of the
hotel to the accounting and front office systems of the hotel. Multiple KOTs (Kitchen
Order Tickets) / BOTs (Bar Order Tickets) directing to specific kitchens are enabled
in the system. Further touch enabled kitchen monitoring, happy hour settings,
allocations to rooms, are some of the basic features of the system used by the hotel
to facilitate the lack of waiters/stewards at the restaurant and to facilitate the
efficiency and the effectiveness of the restaurant staff in handling multiple guests.

 Inventory Management System

The inventory management system is used for below functions of the hotel,

1. To design and implement IT controls of the inventory management

such as Purchase Orders, Goods Received Notes, Purchase
Requisitions and Stocks Requisition Notes.

2. Bin cards

3. Purchasing management.

4. Stock transfers inter-division

5. Inventory cost control

6. Identification of non-moving and slow moving stocks

7. Costing information.

 Accounts Receivable Module

Management of accounts receivables is an important part of any organization as

long outstanding debtors may result in bad debt, which is a direct loss to the
company. Therefore this system is used for below functions of the Hotel,

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 1. Timely follow up of debtors.

2. Determining and fixing room rates for different travel agents and FIT
guests, to ensure that different rates are not offered to guest unless
approved and authorize by the hotel management.

3. Periodic debtor’s statements such as aging reports.

4. Collection scheduling, reminders and receivable officer

management.

 Account Payable Module

This system is used to facilitate the supplier management activities of the hotels
such as, authorization and registration of suppliers, determination of credit periods,
printing of cheques and generation of payment vouchers.

 General Ledger and Cash Book System

This system facilitates the entire accounting and financial management function of
the hotel, in addition to the performance reporting. This system is used for below
operations of the business.

1. Management of all ledger accounts and control accounts.

2. Preparation of financial statements such as Income Statement,

Balance sheet etc.

3. Financial management functions such as cash flow management.

4. Analysis of Key Performance Indicators.

5. Consolidation of financial statements related to different entities.

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  Fixed Asset Register

One of the hotel we collected data from moved a one step forward from the other
hotels in the group when it comes to fixed asset management. The hotel recently
completed an assignment of bar coding all the fixed assets of the hotel premises and
using the above system to feed automatically the physically available fixed assets of
the entity to the fixed assets register. With the bar code system the management will
be able to identify the location, movement, purchase date, type and category of the
asset and other details such as repairs and disposals via the system. Further above
system has been used for functions such as,

1. Maintenance of the fixed assets register.

2. Computation of depreciation.

3. Vendor details and service history identification.

3. The impact of electronic commerce / business systems on the

performance of the organization

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The impact of the e-commerce/business systems on the performance

1. Improved in efficiency

The introduction of the business systems mentioned above has greatly

improved the efficiency of the staff. Further it has resulted in less human
errors during the operational activities and has facilitated in achieving the
service excellence, which is the competitive advantage that hotels focus to
capitalize on, in overcoming the competition.

2. Facilitates the business model

Especially with the number of staff the employees must be highly efficient and
multi-tasking, therefore business systems were essential for this modern
concept of hotel/business model that has been implemented in Hotels. From
the initial planning stage its self the management was keen on equipping the
hotel with high tech systems to ensure the smooth flow of operations.

3. Cost saving/minimization

The main target market of the hotels we interviewed do not target neither
luxurious travellers nor the budget tourist but all the tourist who wish to stay,
therefore the hotels is faced with a challenge in maximizing its profits without
increasing the price/room rates, hence the other option for profit maximization
is the cost minimization and the business systems facilitates this strategy of
the business as it results in less time, less paper work, lesser number of
mistakes, streamline of processes, less labour cost and other administrative
expenses resulting an overall cost reduction in the operations.

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4. Internal controls/Risk Management

Risk management and internal controls are two important aspects of any
business. A business is always exposed to risk of fraud, misuse of its assets,
fraudulent financial reporting, operational risk, and many more risks that exits
in its internal and external environment and as a result the internal controls
and risk management has become extremely important for the sustainable
development of a business. Above business systems have facilitated the hotel
to design and implement such internal controls and risk mitigation initiatives
via the system controls (IT application controls and IT general control). The
hotel uses passwords, login authorization levels, documentation, system
approvals, fixed rates, and other system controls as internal controls for risk
management.

5. Service excellence

The competitive edge of hotels are its service excellence, advance high tech
equipment and systems facilitates this strategy. Usually the guests prefer high
tech equipment and systems than the ordinary manual procedures (e.g.
guests prefer to order meals online by selecting them from the room
television, which has photos of the dishes as well compared to selecting from
ordinary menu cards and calling the restaurant to make and order). Also the
business systems involves in providing quick services to the guests as
manual operations consume more time. (e.g. when the guests order food from
the restaurant all the systems gets updated such as the front office for billing,
kitchen for preparation of food, accounts for capturing the cost and the
revenue, stores etc. via the system integration which enables the separate
departments to perform their work without delay.)

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4. Problems faced by the organization

1. Inability to import old data to the system.

Systems were implemented few months ago and the ability to upload previous
data is limited to few months prior to the date of implementation. Also it takes
a long time import the data to the system manually; therefore hotel is faced
with an issue to make comparisons with the previous data as the system does
not contain previous data. The historical data analysis is limited to few months
as a result of this, which is a temporary problem faced by the company.

2. Lack of training and knowledge in using the business system.

The introduction of a new system creates confusion, resistance and stress

among the employees due to the lack of knowledge and familiarity about the
system, hence training and change management plays an important role
during an introduction of such a system. However due to the heavy load of
routine work performed by each employee (limited employees), the time that
can be allocated for training is limited, which may lead to errors and delay of
work.

3. Remote access difficulty

The hotel is in Wellawatte, but the accounting, preparation of payroll, taxation,

IT, and purchasing functions are centralized at the head office. The system is
implemented at the hotel premises, therefore in order to perform above
centralized activities at the head office requires remote login facility to the
head office staff. Several options have been consider for remote access;
however with remote access there is always a risk of competitors/ hackers
hacking in to the hotel system and obtaining confidential information of the
hotel or causing system break downs.

4. High initial cost

Introduction of business systems is always a costly affair. In addition to the

cost of the software, the company has to incur cost in providing the
infrastructure facilities, training, IT support, initially at the beginning of a
system implementation, which requires a high initial cash outflow. Especially

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for a budget hotel that operates on strict cash control it is difficult to
accommodate such large expenses from the working capital.

5. System break downs and errors

All systems are subject to break downs and errors. Therefore when there is a
system break down the hotel operations gets affected as all the procedures
are automated. Also at the initial stages of a system implementation, there
could be differences between the expected standards of the company and the
system functions. Further there is a risk of loss of data, if data backups are
not obtained regularly.

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Benefits and advantages of implementing a property management system (PMS)

Hotel PMS Feature Hotel PMS Benefit

Enhanced check-  Provide anytime, anywhere service to your guests

in/check-out capabilities using a mobile-enabled cloud-based hotel PMS

 Untether your front-desk staff so they can check

guests in, assign rooms, enable guest services, and
check guests out wherever there is internet
connectivity

Improved housekeeping  Increase housekeeping efficiency with instant

service updates on housekeeping mobile devices when
customers check out, freeing up rooms for cleaning

 Identify and manage room-maintenance needs,

ensuring rooms are clean and in perfect condition

Integrated hotel back-  Connect operations and financial processes by

office systems leveraging prebuilt integrations to accounts
receivable, accounts payable, payment gateways,
hotel industry applications, and property
infrastructure devices

 Integrate accounts receivable and commission

handling. Ensure accurate guest folios for faster,
more accurate billing

Effective hotel  Increase room occupancy and ADR through real-

distribution time rate and availability management across
management distribution channels. Boost sales through direct
booking channels on brand website

Improved hotel revenue  Empower managers to improve ADR with extensive

management options for setting rates and advanced rate-
management features for manual and semi-
automated revenue management

Better managed  Centralize and secure customer data and improve

customer data the quality and accuracy of guest profiles

 Understand customer buying patterns so you can

define more targeted packages and services

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RECOMMENDATIONS TO SOLVE THE PROBLEM IDENTIFIED

1. Discussions with the system developers.

Proper coordination and communication with the system developers is

essential for the successful implementation and operation of the business
system. In addition to that the system should be design and adjusted to the
requirements of the management of the hotel, which requires consistent and
continuous communications with the system provider. This is critical during
the initial stages of the system implementation as the employees are
unfamiliar with the system functions as well as to make amendments
according their specific requirements.

2. Conducting training sessions for the staff.

Training is important to ensure that the employees are equipped with the
necessary knowledge to use the system and enhance the efficiency and
effectiveness of the operations with the use of system functions. Also
providing proper training helps to overcome the resistance to use the system
and for change management (change from manual to automated) and
develop the trust of the senior management regarding the reports and other
information generated from the system.

3. Remote login

Several remote login options such as VPN, Teamviewer, Static IP and ADSL
line were considered to provide the remote login facility to the head office. The
IT manager of the company was to give recommendation on the best option in
providing the remote login facility after evaluating the above mentioned
options available. At the moment the report has been completed and the
management is to decide which option to be selected to provide the remote
login facility.

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4. Cost-benefit analysis

There is a general assumption that business systems are more costly than the
benefits. The main reason for that is some of the benefits from business
systems do not have a monetary value, in other words indirect benefits (e.g.
internal controls), as result there is resistance from the senior management to
allocate funds for business systems which are usually highly priced. However
a proper cost-benefit analysis by considering the indirect benefits as well may
convince the senior management to agree with system implementation.

5. Obtaining system backups and coordination with the system developers.

The IT manager at the head office is to go to the hotel every Thursday or

Friday and take a backup of the system to ensure that there would not be a
loss of data in case of a system error or a disaster situation such as natural
disaster or a fire.

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