What do the world’s largest B2B software companies, like Oracle, Alphabet, and Salesforce, have in common? Besides one-word names, these companies share one crucial factor that makes them successful, scaleable, and future-proof: they’re all built in the cloud.
If the top technology companies use cloud-based technology, why do many hotels still use legacy on-premise software from the 90s? Much of the conversation in the hotel world revolves around cloud-based property management systems, but all of your tech solutions, including your revenue management system, should be cloud-based today.
In this article, we’ll outline the main advantages cloud-based software provides, highlight some renowned hotel groups who have switched to the cloud, and discuss how revenue management systems like Duetto are leveraging the cloud to add maximum value to hotels.
What Are the Main Benefits of Cloud Software vs. On-Premise Software?
Before diving in further, let’s take a step back and explain the differences between cloud-based and on-premise software. In short, on-premise technology uses files that live on your computer. On-premise software must be installed on each computer where you want to use it. On the other hand, cloud computing stores files online (in the “cloud”), and cloud-based software can be accessed through any internet browser with no software installation needed. Examples of cloud-based technology include Google Drive and Dropbox, which let you store files on a remote server and access them from any device, rather than storing files locally on your laptop.
Cloud computing offers a slew of benefits for any type of business or user. Cloud-based technology is often cheaper, more secure, and more flexible than on-premise technology. Files stored in the cloud can be more easily recovered than files stored on a device, and cloud-based software receives automatic software updates that are much more efficient than updates to on-premise software, which you need to manually download and install. According to a 2020 study, 58% of travel and hospitality executives said that cloud-based systems enabled their businesses to be more agile, which makes sense, because cloud-based software can be accessed anywhere, anytime using an internet browser. During the pandemic, the benefits of cloud computing were made even clearer, as hospitality professionals had to find solutions for managing hotel operations remotely and giving guests and employees contactless options.
Although switching to cloud computing has a lot of upside, some business leaders worry about the consequences of such a change. Change itself can be scary, but cloud-based software doesn’t lock you in for life; APIs ease the switching process, so if one vendor ends up being the wrong fit, you can transfer your data to another without too much hassle. You might also be concerned about data security if your financial and guest data doesn’t live in a server physically located on–site; however, you can rest assured that cloud-based software is even safer because of complex encryption protocols. There’s always the risk that a cloud-based software could go offline for some reason, but these instances are extremely rare.
Software expenses are another potential obstacle to switching to the cloud, but many cloud-based software vendors offer multiple contract options or even pay-as-you-go models, which let you pay for only the services or the storage you need. This is often referred to as Software-as-a-Service, or SaaS.
Finally, you might worry about losing control over your data, and while it’s true that the data won’t live on your local devices, the convenience and cost savings of a cloud-based system prove to be more beneficial than any perceived “ownership” of data in an on-premise system.
Most Leading Hotel Groups are Already Dipping Their Toes into the Cloud
Cloud computing can offer serious benefits to hotel businesses who are ready to transition away from on-premise systems. Many of the world’s top hotel companies are already starting to make the switch:
- Melia Hotels International started to use Amazon WorkSpaces, which is built on Amazon Web Services’ pay-per-use model, when the company’s call center transitioned to a work-from-home setup. Amazon’s cloud-based system was nimble enough to configure 500 work-from-home workspaces for support agents in just 10 days. Since Amazon’s model only bills Meliá for the computing power the company uses, their technology bill dropped in tandem with the big decrease in reservations during the pandemic, so Meliá wasn’t paying for any services they weren’t using.
- Hyatt leverages Amazon Web Services to create more personalized experiences for Hyatt guests, opening up incremental revenue potential through targeted upsell offers and property recommendations on the Hyatt website.
- Wyndham transitioned from traditional on-site data centers to the Amazon Web Services Cloud, which meant the company could offer an integrated and consistent experience for employees, franchisees, and guests.
- Choice Hotels became the first hotel company to migrate all of its data platforms to the cloud. Choice decided to shift to Amazon Web Services because they saw the future of the hotel industry changing as new technologies like AI, machine learning, and virtual reality became commonplace. With their legacy on-premise systems, Choice wouldn’t be able to take full advantage of this new tech, so the company chose to move to the cloud to set themselves up for future success.
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The Shift from Manual to Automated Pricing Made the Cloud Critical
Legacy revenue management systems, which were not cloud-based, centered around BAR-based pricing and discounting. To leverage the RMS’s recommendations, revenue managers had to manually implement inventory or pricing strategies on various distribution channels - automation wasn’t an option. In addition, legacy RMSs were heavily reliant on historical data and didn’t pull in much forward-looking or market data. Fast forward to today, and many legacy RMSs are shifting to the cloud in an effort to better compete with native cloud-based RMSs, like Duetto.
Cloud-based software makes two-way integrations possible, and they’re more secure, easier to implement, and more scalable than their on-premise predecessors. Cloud-based systems also allow for better connectivity between complementary software, and software updates are delivered seamlessly, with no downloads or downtime. Thanks to its open pricing methodology, Duetto gives revenue professionals the power to yield every segment, channel, and room type independently and in real-time. And perhaps most exciting for revenue managers, Duetto automates many processes that were manual in a legacy system, like implementing and distributing its pricing recommendations across various channels.
How Duetto Leverages the Cloud
So how exactly does Duetto utilize the cloud to deliver more value to its hotel clients? Like many top companies, Duetto has built its software on Amazon Web Services, which gives them the flexibility and security to focus more on building their business and less on computing needs. Duetto has been able to add new data-processing tools to its software which wouldn’t be possible without the cloud. As their business grows, Duetto can easily scale up their data processing capabilities in the cloud; without the cloud, this fast growth would be much more complicated. In addition, AWS allows Duetto to continually test and improve its algorithm that drives pricing recommendations for its hotels. To sum it up, Craig Weissman, former CTO and co-founder of Duetto, says, “Modern cloud techniques not only let you build better business logic but they make the process of building and managing data that much better.”
What are You Waiting For?
With tangible benefits like cost savings, remote access, and better security features, it’s clear why so many companies are switching to cloud computing - in the hospitality industry and beyond. Cloud-based technology ensures that your business is adaptable and scalable, so you’ll be ready for the unpredictable. We challenge you to bring your hotel business into the future and onto the cloud, just as Meliá and Choice have done. Even big players like Airbnb and Expedia have moved their infrastructure to the cloud. Now’s the time to bring your organization into the future, and cloud computing is here to stay.
This article was created collaboratively by Duetto and HotelTechReport.com