Choosing the Right Hospitality ERP
Choosing the right ERP (Enterprise Resource Planning) system for your hospitality business is a crucial decision that can streamline operations, provide real-time insights, and boost profitability.
As the only ERP specifically built for hospitality, Hotel Investor Apps ERP & Accounting Software (HIA) is uniquely positioned to meet the needs of all hospitality organizations. However, we believe it’s essential to explore all options. This guide will walk you through the best practices and key features to consider when choosing an ERP for your business.
In this article, we’ll cover the crucial steps and considerations that will help you identify the ERP that best aligns with your hospitality company’s needs—from evaluating core functionalities to ensuring integration and scalability capabilities.
To get started quickly, download our Must-Have ERP Features for Hospitality Checklist, designed to simplify your selection process.
What is the Role of ERPs in the Hospitality Industry?
ERPs, or Enterprise Resource Planning software, serve as a consolidated platform for third-party and privately owned management companies in the hospitality industry. They provide a single source of real-time information, ensuring transparency and accountability throughout the management chain. The right hospitality ERP can also optimize labor management, benefiting everyone from GMs to the accounting department.
A hospitality-specific ERP helps hotel companies monitor, review, and benchmark performance across brands, regions, or the portfolio. This enables hospitality companies to enhance competitiveness, empower employees, and maximize profitability.
Read “5 Transformation Benefits of a Hospitality ERP”
Read “The Key Differences Between Hotel Accounting Software and a Hotel ERP”
THE ERP SELECTION PROCESS
1. Assemble Your Selection Team
When choosing the right hospitality ERP, the first step is to assemble your selection team. The team leader, or project champion, should be someone who is enthusiastic about the ERP’s benefits and can inspire others with a vision for using modern software.
Given that various team members experience different pain points like slow systems, manual data entry, and fragmented information, it’s essential to gather input from departments such as Accounting, Operations Management, and the Executive Suite.
2. Evaluate Current Systems and Future Objectives
The second step in the process is to evaluate current business processes to find out what is working well and what causes problems. This will form the foundation of your requirements list, which should include all the core functionality your team needs and objectives for eliminating pain points.
Consider questions like:
- Which processes are time-consuming or inefficient?
- Where do we lack the insight needed to make informed decisions?
- Which systems do we want to integrate, both now and in the future?
Creating a comprehensive requirements list can be time consuming, so we’ve assembled many of the core hospitality-specific requirements below for your convenience.
3. Important ERP Features for Hospitality
Hospitality Financials:
Managing hotels requires unique financial functionality, starting with the lodging chart of accounts, or the Uniform System of Accounts for the Lodging Industry (USALI), which is the standardized, industry-specific chart of accounts. An ERP tailored for hospitality should offer financial statements aligned with USALI standards. If the ERP is not built for hospitality, this may be a customization.
Hotel Daily Report and Hotel KPIs
In hospitality, the hotel daily report is an essential tool for monitoring key metrics like rooms sold, occupancy, ADR, RevPAR, and Cost per Occupied Room. Your ERP should feature these metrics in financial reports, and on visual dashboards in real-time. Dashboards for Property and Portfolio Flash Reports enable stakeholders, from GMs to COOs, to track performance and spot trends.
Free eBook: “5 Advanced Daily Reporting Dashboards to Power Your Hotel Operations”
Time Saving Automations & Workflows for Hospitality
Another key aspect of selecting the right ERP for hospitality is its ability to improve efficiency by automating manual tasks and streamlining processes with workflows.
Examples of automations and workflows in hospitality include:
- Automated daily revenue journal entries from PMS & POS
- Recurring transactions like depreciation, accruals, or fixed management fees
- Dynamic approval processes for AP, purchase orders, or employee reimbursement
Read “8 Ways Technology can get you a Faster, Smoother Month-End Close”
Enterprise Modules for Hospitality
Hotel companies often require a different set of ERP modules than other industries. For instance, hospitality companies do not require a Warehouse Management System (WMS), but as hotel management companies get larger and seek greater efficiency they may want to modernize additional processes and bring more functions onto the ERP, for a master system of record.
During the ERP selection process, you will want to determine which of the available ERP modules will benefit your company. Some examples of ERP modules beneficial for hospitality organizations include:
- Accounts Receivable
- Intercompany Accounting
- Budgets & Forecasts
- Fixed Assets
- Expense Management
- Project Accounting
- Purchase Orders
- Inventory
- Contract Management
Read more about Intercompany Accounting for hotel companies here.
Business Intelligence for Hospitality
Utilizing hospitality-specific Business Intelligence (BI) on your ERP platform can offer significant benefits, providing real-time insights that go beyond traditional metrics. For example, hospitality-specific BI tools enable benchmarking of expenses and cost per occupied room across different regions or brands. These insights empower hotel companies to make data-driven decisions that optimize performance and profitability.
As a service business, labor is one of hospitality companies’ largest expenses. Labor Intelligence tools which blend labor data with operations and performance data enables hoteliers to monitor and control labor costs by tracking key metrics such as minutes per occupied room (MPOR), cost per occupied room (CPOR), overtime tracking, and wage data which can be segmented, layered, and drilled into.
4. Look at Integration Capabilities for Hospitality
One of the main reasons to switch to a Hospitality ERP over accounting systems is the ability to consolidate data from multiple systems into a single platform, for this, integration is key.
Choosing the right ERP for your hospitality business means finding one that can integrate with your other service providers, such as payroll and HCM, payment automation, AP automation or procurement. Banking is another popular integration for hospitality as it allows hotel operators to closely monitor cash position by hotel, region, or portfolio with single-sign-on access.
There will also be service providers which are unique to the hospitality industry, such as Property Management System (PMS), Point of Sale (POS), and hotel analytics like STR or HotStats. Ideally, your hospitality ERP will already have existing integrations with your hospitality solutions, which will save you time and money during the implementation process.
Lastly, check whether the ERP offers an open API and/or an app marketplace which will facilitate future software integrations as your needs change and new solutions are developed.
5. Get Demos with Shortlist Vendors
Once you have created a shortlist of ERP options based on hospitality-specific functionality and hospitality-specific integration capabilities, schedule personalized demonstrations. These demos will help you visualize how the ERP can benefit your organization and offer a chance to ask in-depth questions about features and capabilities.
Read “4 Best ERP Software for Hotels in 2024”
6. Consider Ease of Use
Another important consideration is the usability of the ERP software, as it will become the primary system for your organization’s back office functions. It will be used by employees at individual hotels, from housekeeping manager to General Manager, as well as at corporate offices, like accounts payable clerks, operations managers, and executives, or even hotel owners/ investors, so intuitive navigation and ease-of-use is crucial.
You will want to consider how valuable the ERP will be to employees using the system the most. Does it empower employees to execute their job at a higher level of performance? To deliver more accurate, timely, and relevant information? So that everyone has the information they need, when they need it to make informed decisions? By automating manual tasks and making complex tasks easier, an ERP should free up time for employees to optimize operations, reduce expenses, and focus on better customer service.
To evaluate usability/ ease of use for a hospitality ERP, look to software review sites like Hotel Tech Report for any reviews on usability, as well as direct feedback from referrals on ease of use, such as ease of navigation or access to help guides. You may also want to ask ERP providers for concrete examples of user friendly features during product demonstrations.
7. Factor in the Total Cost and ROI
Choosing the right hospitality ERP will also depend on your budget. As you consider the price of an ERP, also take into account the total cost of ownership (TCO), and the potential return on investment (ROI).
Look for clarity of pricing as you evaluate ERPs. Evaluate factors like monthly fees, implementation costs and whether there are hidden costs. Hidden costs can include additional fees for data usage, service, or users beyond your service tier, or even multi-year contracts with price hikes. There may also be costs for customizations or integrations. Lastly, if the ERP provider will not be doing the implementation, there may be a separate consultant fee and retainer for implementation and setup.
Once you know the total cost of ownership, now you can start to look at the return on investment. The right hospitality ERP will be an investment with a payoff measured by a more efficient team who are better able to focus their time on more meaningful tasks. The right hospitality ERP will help your hotel company control costs, optimize labor, improve customer service, and have more powerful data to make proactive management decisions.
8. Read Reviews and Get References
Performing due diligence is essential when selecting a hospitality ERP. Since the hospitality industry has unique needs, it’s important to understand how similar organizations use and rate the software.
Start by reading online customer reviews on reputable sites to get a sense of real-world user experiences. These can give a variety of perspectives from different positions.
Next, dive into case studies of comparable hospitality companies to see how the ERP has been implemented and what outcomes were achieved. These case studies can provide valuable insights into whether the system will meet your specific needs.
Additionally, seek out references directly from the ERP provider, and supplement this with word-of-mouth feedback from industry peers who have used the system. This comprehensive approach will help you make a more informed decision, ensuring that the hospitality ERP you choose is a good fit for your business.
Read “Lark Hotels & HIA: Operational Transformation and Employee Empowerment”
9. Compare the Implementation Process
As you evaluate shortlisted ERPs, consider the implementation process. How much time and effort will be required from your team?
An ERP with built-in hospitality functionality and staff knowledgeable in the hospitality industry will shorten the implementation period as there will be fewer custom build-outs and the vendor onboarding team will have a knowledge framework to understand your unique needs.
It is easier to give focused attention to historical exports, report formatting, and data verification for a streamlined 8-week implementation process, than it is to be distracted by a long, even multi-year implementation. A general ERP without out-of-the-box hospitality functionality or knowledge requires extensive coordination in order to specify and communicate requirements for custom-build-outs such as a hotel daily report and custom integrations with PMS systems, the entire implementation process for hospitality has been known, anecdotally, to take up to 2 years.
Video “3 Best Practices for Hotel Accounting Software Implementation”.
Download “The Ultimate Hotel Accounting Software Implementation Guide”.
10. Assess Ongoing Support
As an ERP is the backbone of the hospitality back office, ongoing support is critical. Ask how your team members will access support, whether there is a prioritization system for tickets and what the typical response time is. In addition, assess how each vendor handles post implementation support and whether their customer service team understands the hospitality industry and hospitality-specific features and functions.
Conclusion
Selecting the right ERP for your hospitality business can transform operations and enhance profitability. By thoroughly assessing your needs, defining clear business goals, and aligning them with hospitality-specific ERP requirements, you can effectively evaluate potential hospitality ERP solutions.
Taking the time to review demos, compare ease of use, analyze customer feedback, check references, and study relevant case studies will help you make an informed decision. Additionally, considering factors like total cost, the implementation process, and support availability ensures you choose an ERP system that will drive long-term success for your hospitality business.
Hotel Investor Apps (HIA) is the ONLY full ERP designed specifically for hospitality, including all the above hospitality-specific functionality, hotel PMS and POS integrations, and hospitality business intelligence. At Hotel Investor Apps, we pride ourselves on our hospitality background and knowledge and offer a streamlined 8-week implementation process which is possible thanks to the hospitality functionality available out-of-the-box. With HIA you hotel company can consolidate data, automate and streamline processes, and have real-time analytics for more proactive and profitable hotel management.
Must-Have ERP Features for Hospitality — Checklist
Jaime Goss has over a decade of marketing experience in the hospitality industry. At Hotel Investor Apps, Jaime heads up marketing initiatives including brand strategy, website design, content, email marketing, advertising and press relations.
