A recent challenge for Canadian hotel operators is the number of PMS acquisitions by large U.S. holding companies that we are seeing across the industry. These acquisitions and subsequent changes to business models can have a financial impact on hoteliers, leaving some frustrated and unsure of what to do next.
At issue is a PMS business model being adopted by some providers that incorporates a proprietary payment system. Under this model, hoteliers may face additional monthly fees if they choose not to use the payment solution offered by their PMS provider. For some operators, this can raise concerns about cost, flexibility, and choice.
How can hoteliers ensure they continue to have flexibility in their relationship with their PMS vendor? Are these types of arrangements consistent with Canadian business law and the Canadian Competition Act? One area that may warrant consideration is “Exclusive Dealing,” which can involve a supplier or customer being required to deal only or primarily with a particular firm, potentially limiting access for competitors. Whether this applies to a particular arrangement depends on the specific circumstances. What options do hoteliers have if they are concerned about additional fees or requirements but switching PMS providers would disrupt their business operations?
These are questions that warrant further exploration, and hoteliers should feel comfortable asking questions and seeking clarity about their options.
What can you do?
If you find yourself facing this type of situation, there are some specific actions you can take:
- Speak with your PMS vendor about your concerns and ask for clarity on the terms of your agreement, including any requirements or fees associated with payment processing. If necessary, seek additional information or independent advice so you can have an informed discussion about your options.
- Consider reviewing information available from the Government of Canada’s Competition Bureau or, if you believe your situation warrants further review, submitting a formal complaint: Official Complaint Form
- Consider whether another PMS provider may better meet the needs of your business.
If you currently have a PMS provider that does not have a proprietary payment system, or you are considering a change to your PMS provider, ask whether multiple gateway payment options and/or an independent processor for online and physical credit card payments are available. Having these options can provide greater flexibility if your needs change, including the ability to change payment providers without having to switch your PMS software.
While changes in technology and business models can create challenges, they also reinforce the importance of understanding your options. By asking questions and having open conversations with technology and payment providers, hoteliers can make informed decisions about the solutions that work best for their businesses.