Hotel Tech Benchmark: Property Management Systems 2021

by Wouter Geerts + Skift Team - Nov 2021

Skift Research Take

This is the most complete vendor landscape and market sizing for the hotel property management system sector. With annual revenues of $4.5 billion, this is the largest hotel tech category, but it is also extremely fragmented. There is a lot to fight for.

Report Overview

The hotel Property Management Systems (PMS) vendor landscape has a few large players, but can be characterized as extremely fragmented. Skift Research’s new data tool, the Hotel Tech Benchmark, provides an extensive data set to help you understand this space.

One of the largest shifts seen in the PMS landscape is the move from on-premise physical systems to run hotel operations, to cloud-based systems. A number of legacy vendors, including Oracle Hospitality, Protel, Sabre, and Infor have been forced to innovate and find solutions to not fall behind the competition as this move to the cloud speeds up. More discussions on the most important trends and developments in the PMS space can be found in our report The Property Management Systems Landscape 2020.

This report, instead, provides a discussion of the vendor landscape, providing insights into the penetration of PMSs in hotels, the total market size and potential of the space, and an extensive list of top vendors. 

Data in this report is accurate as of November 2021. For the latest updated information, Skift Research subscribers can access our Hotel Tech Benchmark dashboard, which is updated regularly as we collect more data from hotel tech vendors.  

What You'll Learn From This Report

  • Total annual revenues for the PMS tech category
  • Growth potential for the category, expressed in U.S. dollars
  • Market shares for 87 PMS vendors, based on the amount of hotels and rooms they service
  • Market share split by third party and hotel brand proprietary systems
  • Breakdown of revenue streams for third-party vendors

PMS: The Most Important Piece of Hotel Tech

Property Management Systems (PMSs) are the heart of the hotel tech stack, and the lifeblood of hotel operations. Almost all PMSs consist of a few key modules, starting with operational modules that allow for room allocation, check-in, check out, as well as some housekeeping and room maintenance features. PMSs also have guest profile modules which track guest details, past and present reservations, as well as guest spending (referred to as guest folios). Finally, all PMSs have distribution modules which look after the sale and pricing of rooms. 

PMSs are highly integrated systems, meaning that almost all other tech systems need access to the data in the PMS to work effectively.

Due to its importance, most hotels have a PMS, although there will be mainly smaller mom and pop hotels that use their own systems based on a written guestbook or Excel files. The fewer than 10% of hotels that are not using a PMS have been doing so for a long time and will be hard pressed to change their ways. 

This means that growth of the total market tends to come from PMS vendors introducing new features, or diversifying their revenue streams. For example, we have seen many PMS vendors introducing online check-in features to respond to the Covid pandemic. Amongst many leading PMS vendors there is also an increased focus on offering solutions that help hotels process payments more efficiently, with some PMS vendors seeing great success in making payment transactions a growing revenue stream.  

Growth for individual vendors also comes through intensifying competition and through acquisitions. As technology has improved over the past years, it has become easier for hoteliers to switch PMS vendors. It remains an intrusive process, but with many PMSs now in the cloud, actually switching between vendors no longer needs to include weeks of on-premise installation and training. 

According to Skift Research calculations, the total revenue generated by PMS vendors was just over $4.5 billion in 2019. This includes both third-party vendors and hotel brand proprietary systems, which hotel owners also need to pay licensing and management fees for. Proprietary systems account for less than 10% of these total revenues. 

The unused market potential is $449 million, but as explained before, this is mostly from hotels which don’t currently have a PMS and the tech vendors might be hard pressed to change this.

The Move Towards SaaS

Revenue streams in the PMS landscape gravitate towards subscription fees, which make up around 70% of all revenue, according to data collected from vendors. Most newer PMS vendors operate with a SaaS (Software as a Service) model, where a set subscription fee includes the use of the software and additional services, while many legacy players which often relied on licencing agreements, are now also increasingly moving to this model. 

The subscription model tends to mean that other costs, including for installation and training, are included in the subscription costs and no longer a separate revenue stream. Some vendors also choose to include integrations, to differing degrees, in the subscription fee. This means that these revenue streams have declined over the years, while transaction fees are actually on the rise, as we discussed above.   

A Fragmented Landscape

Our analysis covers the largest 87 PMS vendors, but it is likely there are many smaller and local vendors which we have not captured in our research. There are a few large players, with the top 10 vendors accounting for 34% of the total market in terms of rooms, but after that, market shares become much more fragmented. The next 15 vendors add another 12% of market share, and the 25 vendors after that (making up the top 50) only add another 7% market share. 

Hotel Brands Hold On To Proprietary Systems

The PMS, often integrated in a tech platform which also includes revenue management, distribution, and marketing, forms part of a proprietary software offering that many major hotel brands offer their owners. Some major hotel companies require owners to use a specific third-party vendor, generally Oracle Hospitality, while some others have built their own PMSs, including Hilton’s OnQ, Marriott’s FS/PMS and FOSSE, and Accor’s FOLS. 

Having a PMS which is completely customized to business needs, and which ensures that all data collection and distribution remains in complete control of the hotel chain,  makes complete business sense at first glance. The problem most hotel companies come across is the need for continued investment to keep up with the latest technologies and features launched by PMS specialists.

Offering advanced proprietary tech can be attractive. For Oyo, the Indian budget chain, for example, its proprietary tech has been a strong marketing ploy, although its true sophistication is questioned.

We estimate that proprietary systems manage more than three million rooms, or just over 11% of available rooms worldwide. OnQ is the single largest system, with almost all Hilton hotels using it. Marriott is another major player, although it has a number of different systems.  

Opera Stands Apart From Its Competitors

Oracle OPERA has been the market leader for decades, and it truly stands apart from all its competitors in terms of market share. With an estimated 16% room share, no other player comes close, but the company has struggled to move from a legacy on-premise infrastructure to a cloud-based product, and it is still very much going through this now. This offers opportunities for competitors to outcompete the largest vendor. 

In our top 10 of third-party vendors, Cloudbeds and Mews are the two prime examples of a new breed of vendors which are cloud first and have seen a strong rise in adoption. While they only capture about 2% and 1% of the total rooms, they will increasingly form a serious competitor to the large legacy players like Oracle, but also Protel, Sabre, and Infor.   

Hotel Tech Benchmark Methodology

The Hotel Tech Benchmark by Skift Research is based on a mix of information provided by hotel tech vendors and proprietary data calculations. 

Participating companies have provided extensive information about their operations, including:

  • Historic and current revenues
  • Revenue streams
  • Historic and current employee count
  • Geographic coverage
  • Product breakdown, including software functionality, launch date, pricing models, and integrations
  • No. of hotels and rooms per product

Market sizes and market potential are calculated bottom-up, using information from vendor input as well as publicly available information on company websites and in franchise disclosure agreements. 

The total size of the hotel industry, which informs our ability to calculate market sizes, is a point of contention in the industry. We have used industry sources and our own estimates to determine the size of the hotel industry in terms of hotels and rooms. 

There are many estimates of the number of hotels in the world, with most somewhere between half a million and a million. We collected information from different sources to estimate the total number of hotels worldwide at 600,000

This is much higher than the often quoted STR figure, which is below 200,000. The STR estimate excludes properties with less than 10 rooms, and while known for its strong coverage of highly branded markets like the U.S., struggles to capture more independent markets in Europe and Asia.

Therefore, other sources were taken into consideration. Euromonitor International, a market research company which includes coverage on independent and chained hotels for 100 countries, estimates the market is just short of 600,000. Expedia asserts it has more than 600,000 properties on its platform, although this is likely to include more than just hotels.

Data on the number of rooms also shows extreme differences between sources. STR asserts that the average hotel has 92 rooms, while Euromonitor International puts this figure at 55. As both disregard small properties to different degrees, with STR particularly having limited coverage of independent and smaller hotels, we estimate that the average hotel has 50 rooms, to total 30 million rooms worldwide.

Revenue streams are calculated using input from participating vendors, taking into account the size of each vendor and their revenue breakdown. As participation increases, this data might change. 

Full Vendor List