Here's the question that's on everyone's lips: how much do you need to invest in the digitalisation of your hotel?
With variations on the theme that we hear regularly from hoteliers such as "how much does a PMS cost?", "how much should we budget for Google Hotel Ads?", "what is high priority?", "do we really need a professional wifi network?"
Although the benefits of digitalisation in terms of competitiveness, productivity and image are no longer in question, the fact remains that few professionals talk about the cost.
In order to help you make this strategic move towards the digital transformation of your establishment (and because we haven't found the answer anywhere else!) we set ourselves the task of working out what budget it would take to digitalise a 50-room hotel with a restaurant.
Obviously, it's tempting to say "That depends!". Sure, the budget will obviously be tailored around a number of criteria. But 'that depends' isn't much of a help to hoteliers who want to have a clearer view and plan ahead.
So we have broken down the approximate costs for you, tool by tool. Prices are indicative only.
Spoiler alert: to successfully digitalise a 50-room hotel plus restaurant, you should expect to spend between €1,500 and €4,000 per month (excluding network infrastructure).
Here's how it breaks down. 👇
I. The most frequently-used software packages and their cost
Before going into the details of each tool, you should know that most of these programs are commission-free and operate on a subscription basis (SaaS). It should be noted that an installation fee may be charged for the installation of the tools, which will push the cost up.
Similarly, although digital tool connectivity is increasingly provided via bi-directional API connections, several players still charge both the hotelier and the integrating partner for this connection. Make sure you ask your provider to clarify this.
1. A professional wifi infrastructure
A connected hotel is first and foremost about technical infrastructure. And the most important of these is the wifi network. There are 2 reasons:
- broadband Internet access, via wifi, has become an essential feature for customers, and can be one of the primary reasons for dissatisfaction if the network fails to deliver
- the technical backbone has to be robust and efficient enough to support the multitude of digital services that a digital transformation entails.
Standard wifi networks (for domestic use) cannot support a complete computer system setup, or provide a high standard of service to your guests.
⚠️ A word to the wise! You need to take a long-term view: standards for wifi use are constantly evolving. You therefore need to plan ahead and factor in the fact that your wifi will need to be upgraded at some point.
💰 Indicative price for a 50-room hotel: from €10,000 to €50,000 depending on the equipment required (wifi, telephony, Chromecast, room automation, etc.)
2. A booking engine
Booking engines are modules that can be integrated with your website or your different social media to sell directly (cutting out the middle-man), via your own communication channels.
These tools make the purchase journey easier for customers: they can book the room of their choice in a few clicks. Your booking engine will display your rates and availability in real time.
This is the key to commission-free direct bookings, and is therefore a way to optimise your hotel's sales strategy and maximise profits.
Booking engine prices are usually quoted by establishment rather than by room.
💰 Indicative price for a hotel with 50 rooms: 39€ / month
For more details on booking engines, we suggest you read Hotel Tech Report's comparison on the 10 best booking engines for hotels in 2022
3. OTAs (online travel agencies)
Here we are talking about Booking.com, Expedia, Hotels.com, Trivago etc. Despite their commissions, online travel agencies (OTAs) provide undeniable advantages in terms of visibility (especially abroad) and e-reputation. According to a D-Edge study, they represent 71% of hotel sales.
You should know that their commission is not really negotiable. And some OTAs are pushing hotels to provide additional services free of charge, to fuel their loyalty programme and therefore squeeze their margins a little more.
💰 Indicative price for a 50-room hotel: between 15% and 20% of the booking amount
4. Channel management software
A channel manager is software that connects your hotel to booking platforms, whether they are direct or indirect. It synchronises your rates, your availability and your content (description, information, photos…) in real time, across the OTAs you are connected to and on your website.
This therefore avoids over-booking and simplifies administrative procedures.
Generally, the price of a channel manager varies according to the number of rooms. The bigger the property, the more you will pay.
Most channel managers charge between €50 and €80 per month for 10 rooms.
💰 Indicative price for a hotel with 50 rooms: 399€ / month
5. Revenue management software
Revenue management or yield management software optimises room prices based on special deals, seasonality and demand. It is an essential part of hotel management for securing maximum revenue for the establishment.
There are free software packages. Fee-based products range from €20 to €150 per establishment.
💰 Indicative price for a 50-room hotel: 99€ / month
6. The PMS
PMS need no introduction. Many of you use them (87% of hoteliers according to a Coachomnium study).
Note that some PMS packages include booking engine, channel management or even revenue management features. This can help save on cost and optimise tool connectivity.
Average prices vary from €4 to €12 per room per month.
💰 Indicative price for a 50-room hotel: 499€ / month
7. POS
POS software is one of the most important technology solutions for hotels and restaurants.
The POS, or point-of-sale system, is a tool that allows your hotel/restaurant to manage its inventory and orders, invoice and develop point-of-sale accounting. It often works hand in hand with the PMS tool.
In addition to its basic functionality, the software is also used for creating reports.
Prices range from €69 to €229 for the most comprehensive versions.
💰 Indicative price for a 50-room hotel: 119€ / month
8. Digital marketing strategy
Be under no illusion, it is impossible to implement a digital marketing strategy without investing time ... and money! In fact, it will be one of the most expensive items on your digitalisation checklist. And the bad news is that digital marketing will cost businesses more and more over the next few years.
That said, whether handled in-house or by a marketing agency, a digital marketing strategy will help you raise your hotel's profile, attract new guests and build their loyalty. If done well, it can quickly pay for itself.
Advertising on social media, community building, local SEO, Google Adwords, Google Hotel Ads, content creation, influencers – you need to budget at least €2000/month.
💰 Indicative price for a 50-room hotel: 2000€ / mont
9. Housekeeping software
A hotel's ability to turn rooms around has a direct impact on profits, and housekeeping software significantly speeds up this process, resulting in lower costs and higher revenues.
A Housekeeping software package makes sure daily tasks are optimised, increasing efficiency and productivity, and providing a better service for guests.
These solutions list the tasks done and to be done by housekeepers and allow them to monitor how their duties are progressing. They also make it possible to assign each task to a staff member, log room status in the PMS, manage the cleaning schedule for the rooms, manage the laundry, etc.
Prices range from €79 to €259.
💰 Indicative price for a 50-room hotel: 99€ / month
10. Guestapp
Choosing a mobile application for your hotel considerably improves the guest experience by facilitating access to information throughout the guest journey: before, during and after their stay. But that's not all: a mobile app is an investment that generates additional revenue by providing access to the hotel's services.
Again, the range of prices for mobile applications for hotels is extensive, varying from €59 to €750 per month for a 50-room hotel.
💰 Indicative price for a 50-room hotel: €239/month (that’s our most popular deal, for example :) )
You can see our rates in detail here.
II. Staff: the keystone of hotel digitalisation
You have reached the end of the list and are probably feeling daunted by the sheer number of software tools. Don’t panic! You don’t have to put everything in place right away. Take it one step at a time.
On that front, you can do worse than take the advice of Hotel Tech Report —“Hotels need to break down their digital transformation into bite-sized chunks: small, achievable actions that have a direct business outcome. At the brand level, hotel chains are best advised not to create technology in-house but to work with the best technology providers.
By definition, a successful digital transformation requires the integration of new technologies in your processes and by your staff. Hotels need to focus on one area of improvement at a time, rather than trying to do everything at once.”
And we would like to stress this part" a successful digital transformation requires the integration of new technologies in your processes and by your staff."
Because tools aside, the digital transformation will first of all involve your staff.
According to a McKinsey study in fact, 3 of the 5 factors that contribute to the success of a company's digital transformation are people-centric.
These factors are:
- having the right digital-savvy leaders to lead the way
- building staff skills and abilities
- giving teams the means to work with new tools
- digitalising everyday tools
- and finally, communicating frequently via traditional and digital channels.
So where are you at with your staff?
III. State subsidies for digitalisation
Once you've built your digitalisation plan, you'll need to find financing. French Government solutions exist to support companies in their digital transformation. Here are a few of them.
1. The France Num guaranteed loan
The French Directorate General for Business has set up a funding scheme to facilitate the financing of digital transformation projects for small businesses with fewer than 50 employees and that have been operating for at least three years.
The loan totals 715 million euros (financed by the European Commission and the French State) distributed to 300,000 companies (an average of 25,000 euros per company).
2. Regional subsidies
In addition to the Recovery Plan, the French State and local authorities support the economic activity of small and medium businesses, artisans, shopkeepers and independent professions by providing subsidies for digital transformation. The aim is to find customers via the internet, retain them and save time through digital communication and software implementation.
France Num has listed here the main grants available for digitalising your hotel in France, depending on your region (list updated in February 2022)
Conclusion
Bear in mind that regardless of the cost, like any investment, the real question is “what are the returns?”. So we'll leave you with two vital questions that need to be answered before embarking on any kind of digitalisation
- What are your objectives?
- What return on investment do you expect from these tools?
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