How do Property Management Systems work

Hotel property management system
The Complete Guide to Property Management Systems (PMS)
Chapter 1 of 5: How do Property Management Systems work
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Most hoteliers and owners of accommodations will tell you that property management systems are very complex and advanced. In most cases, that's true and it's due to the way some companies promote them using very complex technical terms. So here is how it works in 5 simple steps:

1. The rooms & apartments

Let's say you own a small hotel that has 7 rooms & apartments it total, separated into 3 room types: Standard (2 rooms), Deluxe (2 rooms), and Premium (3 apartments) and that you have set the following numbers for separating them:
  • Standard 1
  • Standard 2
  • Deluxe 1
  • Deluxe 2
  • Premium 1
  • Premium 2
  • Premium 3
Every month, your total available nights are:
  • Standard: 30 nights x 2 rooms = 60 nights
  • Deluxe: 30 nights x 2 rooms = 60 nights 
  • Premium: 30 nights x 3 rooms = 90 nights
--

2. The bookings

Bookings can come from different sources and with different prices (if you use discounts/deals) so every booking is unique. Let's say for example that you have these four bookings:
  • Booking A: 5 nights in a Standard room
  • Booking B: 4 nights in a Standard room (same dates as Booking A)
  • Booking C: 3 nights in a Deluxe room
  • Booking D: 5 nights in a Premium room
--

3. Matching bookings with rooms

Here is where the PMS comes in. It allows you to combine each unique booking with a specific room for knowing exactly what is booked, what is available and when. So in our example, you will need to open your PMS and add the following:
  • Booking A -> Add To -> Standard 1 (5 nights)
  • Booking B -> Add To -> Standard 2 (4 nights)
  • Booking C -> Add To -> Deluxe 1 (3 nights)
  • Booking D -> Add To -> Premium 1 (5 nights)
--

4. Updated available rooms & apartments

After you do the above step, the PMS will automatically calculate the remaining nights and dates that can be booked, so if we say for example that this was happening in January, it will give you this information: Standard: 60 nights - 9 booked nights = 51 nights available
  • Standard 1 = 25 nights available [1-6 Jan: booked | 6-30 Jan: available]
  • Standard 2 = 26 nights available [1-5 Jan: booked | 5-30 Jan: available]
Deluxe: 60 nights - 3 booked nights = 57 nights available
  • Deluxe 1 = 27 nights available [1-4 Jan: booked | 4-30 Jan: available]
  • Deluxe 2 = 30 nights available
Premium: 90 nights - 5 booked nights = 85 nights available
  • Premium 1 = 25 nights available [1-6 Jan: booked | 6-30 Jan: available]
  • Premium 2 = 30 nights available
  • Premium 3 = 30 nights available
--

5. The income

So after you add these to your PMS, the calendar which is the core of your PMS will show what is available, what is booked, for which dates exactly, and how much money each booking will generate. So following our example:
  • Booking A -> Standard 1 (5 nights) x 70 Euros per night = 350 Euros
  • Booking B -> Standard 2 (4 nights)  x 70 Euros per night = 280 Euros
  • Booking C -> Deluxe 1 (3 nights) x 90 Euros per night = 270 Euros
  • Booking D -> Premium 1 (5 nights) x 120 Euros per night = 600 Euros
Total revenue: 1.500 Euros And that's it. Very simple, right? So now let's look at the concrete benefits you will have if you start using a PMS, in the next chapter.

Next Chapter:

What are the benefits of Property Management Systems

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