How Outdated Legacy Systems Can Limit Your Hotel’s Revenue Potential

Outdated systems can pose challenges for businesses that rely on them, as they may be more prone to errors, security vulnerabilities, and lack of compatibility with newer technologies.
By Lauren Hall, CEO and Founder of iVvy - 2.22.2024

Despite its fast pace, the hospitality industry has a reputation for being resistant to change when it comes to updating platforms and processes. Many hotels continue to rely on outdated legacy systems that may have served them well in the past but now pose serious limitations on their revenue potential. As a result, hotels often wait until an unexpected breakdown occurs, costing them significant losses, before seeking out the necessary upgrades.

By recognizing these limitations and embracing digital transformation proactively, hotels can unlock new revenue streams, improve guest experiences, and stay ahead of their competition.

Understanding Legacy Systems

Legacy systems refer to outdated computer systems, programming languages, or software applications that are used instead of newer, more efficient technologies. In the context of hotels, this might include room booking systems, customer relationship management (CRM) software, or point-of-sale (POS) systems that have been in use for many years. These outdated systems can pose challenges for businesses that rely on them, as they may be more prone to errors, security vulnerabilities, and lack of compatibility with newer technologies.

With so many disadvantages on the table, you might wonder why so many businesses continue to invest in legacy systems. As with any form of change, there is a fear of uncertainty that comes with retiring one system and replacing it with something new. Questions of how any upgrades will impact current operations, team performance, and customer satisfaction are paramount. Many leaders also worry about the downtime associated with implementing new systems, the potential for data loss during the transition, and the steep learning curve for employees.

These concerns are all valid. Legacy systems often contain years, if not decades, of accumulated knowledge and data critical to hotel operations. This makes the prospect of migration daunting. Additionally, older systems may be highly customized to suit specific needs, offering functionalities that might not be readily available or easily replicated in newer solutions.

There’s also the aspect of integration. Many legacy systems are deeply integrated with other tools and processes. Finding new solutions that can seamlessly interact with existing workflows without causing disruptions can be challenging. The compatibility of new software with existing systems and data formats is a significant concern.

Despite these challenges, the pressure to modernize remains strong, driven by the need to improve efficiency, enhance security, and meet the evolving expectations of customers and employees alike. For hotels, the key to navigating this transition successfully lies in careful planning, phased implementations, and ongoing support to ensure that both staff and guests can adapt to the new systems without significant disruption.

Revenue Limitations Imposed by Legacy Systems

By recognizing the revenue limitations that hotels face due to outdated systems, you can unlock new opportunities for greater growth and prosperity.

Inefficiency and High Maintenance Costs

One of the most significant drawbacks of legacy systems is their inefficiency. A study by Forrester Research found that legacy systems can use up to 75% of a company’s IT budget just for maintenance, leaving only 25% for new initiatives. This high cost of upkeep diverts funds that could otherwise be used for more revenue-generating activities.

Poor Integration Capabilities

Legacy systems cannot often integrate seamlessly with newer technologies. This limitation can lead to disjointed operations and a fragmented customer experience. For instance, if a hotel’s booking system cannot integrate with the latest online travel agencies (OTAs), it misses out on the vast revenue potential these platforms offer. Statista reports that in 2021, around 50% of hotel bookings were made through online channels, highlighting the importance of integration with digital platforms.

Limited Data Analysis and Personalization

Modern hotel management requires a deep understanding of guest preferences and behaviour. Legacy systems typically lack advanced data analytics capabilities, limiting the ability to personalize services and create targeted marketing campaigns. Without the ability to analyse customer data effectively, hotels miss opportunities to enhance guest experiences and increase loyalty.

Inability to Adapt to Mobile Trends

With mobile bookings steadily increasing, hotels still using outdated systems struggle to adapt. Remember, modern travellers expect mobile-friendly services – if you’re not offering what’s in demand, you’re likely missing out on potential bookings.

Security Risks

Older legacy systems often have outdated security protocols, making them vulnerable to cyber threats. A data breach not only has financial implications but can also severely damage a hotel’s reputation. Investing in modern, secure systems is essential to protect both revenue and customer trust.

Overcoming the Challenges of Legacy Systems

Remaining competitive and efficient in today’s rapidly changing technological landscape requires updating legacy technology. However, how can you carry out this process efficiently and effectively without disrupting daily operations?

These strategies and best practices can help you overcome the challenges associated with replacing older operational systems.

Assessing Your Venue’s Needs

Before you start shortlisting software, evaluate specific requirements. You should identify the issues and obstacles that your current processes are encountering. Clearly define your objectives, targets, and the essential features for smooth operation.

Besides functionality, operational aspects should be taken into account. Ask yourself and your team the following questions:

  • Can the software adapt to business growth?
  • Is the system easy for team members to navigate?
  • Will 24/7 customer support be available?

Researching and Selecting the Right Software

Once you and your team have identified needs, goals, pain points, and essential features, it’s time to start researching software options. Websites like G2 and Capterra can help you compare software features, functionalities, and pricing to find the best fit for your needs. Make sure to read reviews and seek recommendations from industry peers to gain insights into software performance and user experience as you move through the selection process and make your choice.

Planning the Transition

When implementing software, it’s important to plan carefully to ensure a smooth transition. You should work with your chosen provider to create a detailed implementation plan that outlines the key steps, timeline, and responsibilities. Having a supportive software partner can make the implementation process much smoother and ensure your hotel receives the necessary guidance and assistance.

Implementing Venue Management Software

Implementing software is a multi-step process. Your chosen software provider will work with you to install and configure software, import and migrate data, customize the software to fit your hotel’s needs, and test and troubleshoot to ensure successful implementation.

Maximize Your Revenue Potential with Modern Hotel Solutions

While the transition from legacy systems may require substantial investment and organizational change, the potential for increased efficiency, revenue, and customer satisfaction makes it a worthwhile endeavour for any forward-thinking hotel.

For a more in-depth look at transitioning to cloud-based venue management software, check out iVvy’s article A Step-by-Step Guide to Implementing Venue Management Software.

Lauren Hall is the CEO and Founder of iVvy, a a renowned software company that provides automation and cloud-based technology to help venues fill their function calendars and planners create unforgettable events. Lauren’s passion for entrepreneurship and over 25 years of business management experience at the executive and board levels make her a highly successful businesswoman. She has built multiple companies from startup to strategic and financial exit in various industries, including manufacturing, retail, advertising and technology, both in South Africa and Australia. Lauren co-founded iVvy in 2009 and has since overseen its growth to 10,000+ clients in 13 countries, expanding to New Zealand, Asia, Europe and North America.

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