Choosing between a cloud PMS vs on-premise system can be difficult. No matter which one you decide on, your property will still benefit from a property management system.

These tools simplify bookings, transactions, housekeeping, and more. But would a cloud or on-premises approach be better for your property? In this post, we’ll help you decide.

What is a cloud PMS?

Cloud computing involves hosting complex software on a remote server. You can access these via the Internet, usually for a subscription fee. A cloud PMS lets you manage complex bookings entirely online, with minimal IT maintenance.

In contrast, an on-premise PMS is installed on your property’s local servers. As your business grows, you might need to upgrade your infrastructure, and you’ll likely need an IT team on hand. On the plus side, on-premise systems can offer more control and customisation tailored to your operational needs.

Cloud PMS options are rapidly gaining popularity across the accommodation industry, and for good reason. These solutions are often cheaper, more efficient, and more flexible. However, you must take stock of your property and its needs before committing to any PMS tool.

Cloud vs on-premise PMS: The main differences

Cloud and on-premise property management systems have a lot in common. For example, they fulfil the same key tasks and focus on tech solutions. These tools, however, still have different features and specialties. Our in-depth PMS comparison can highlight which one is better for you. Here are the six main PMS software differences that are worth keeping in mind:

1. Deployment

• Cloud PMS tools exist entirely on external servers that you’ll connect to via the internet. Your team can log in from anywhere across a range of devices; they also won’t rely on complex infrastructure or upgraded servers.
• On-premises systems, need to be installed and maintained locally. Software issues typically require in-house IT support, while cloud providers offer remote support and system monitoring.

2. Cost

• An on-premises PMS usually requires high upfront fees, which can be impractical for small or budget-friendly properties. You’ll also have to pay for extra maintenance. Cloud PMS tools usually have a subscription model with smaller monthly fees.
• In either setup, you’ll have to train your staff, another major expense. They’ll need to know how to use the system to fulfill their duties. A cloud approach means you can more easily afford this training.

3. Security

• Both cloud and on-premises tools deal with sensitive data and require impressive cybersecurity, so they’ll need an unbreachable system and several backups. With an on-premises tool, you’ll be responsible for setting up in-house security.
• Cloud vendors take care of their products’ security measures, and as these serve many users at the same time, their security is also often stronger. You’ll get a PMS tool that meets the Department of Defense’s data protection standards.

4. Updates

• An on-premises system needs manual updates - the IT team might even need to install these themselves on every device. If the tool grows in complexity, you may also need extra IT infrastructure, which might not be practical.
• Cloud PMS tools often have automatic updates, letting you access the product’s newest features instantly. These systems also use bug reports from potentially thousands of users, meaning they’ll fix issues and errors before you get them.

5. Dependency

• Cloud PMS tools need internet access to work reliably. If you have a sudden Wi-Fi problem, however, you might be able to use a limited offline version. Your system should update automatically as soon as you get back online.
• On-premises tech solutions usually work without consistent internet and don’t rely on a cloud provider’s connection. However, reputable cloud services usually have high (usually over 99%) uptime regardless.

6. Integration

• Cloud systems are broad and modular by design, meaning your cloud PMS could connect to hundreds of other tools or services. They might even come with a built-in channel manager that monitors your presence on online booking agents.
• Integrating third-party tech with an on-premises PMS might be more difficult. You might need a custom solution to connect with anything beyond the most popular companion software and agents. Ultimately, a cloud tool is more adaptable.

Deciding between cloud and on-premises PMS solutions

Taking these differences into account, cloud systems have many advantages over most in-house PMS setups. They are reliable, secure, cost-effective, and flexible. In spite of requiring internet access, they are still often the obvious choice.

Cloud solutions are especially popular with smaller businesses—including properties on a budget. Saving up for an on-premises PMS can mean bleeding money in the meantime, especially as these systems cost up to (and even beyond) $20,000.

However, there are some situations where an on-premises PMS would be better. For example, properties in remote areas may struggle to stay online. Properties with more complex workflows might also need a truly custom solution.

In terms of actual features, there are few PMS software differences. Most modern tools should come with dynamic pricing and scalability as a standard. The main distinction is in how these tools use those features to offer more convenience.

Dispelling cloud PMS myths

When looking at cloud PMS vs on-premise tools, it’s important that you make the correct decision and ensure you understand the full potential of cloud software. 

A common criticism of cloud PMS tools is that they only work with a stable server. However, high-quality providers promise over 99% uptime - can an on-premises solution say the same?

An in-house tool is often more bespoke than a cloud PMS, though cloud setups have ample customisation options. You’ll still be able to build a setup that fits the property, such as via guest-facing technology.

Finally, it’s worth reiterating that cloud services technically aren’t online-only; your property can still use most of the system’s features during an internet outage. 

Final thoughts

A cloud-based PMS is often the smarter choice for today’s fast-moving accommodation industry—offering flexibility, lower upfront costs, and seamless integrations. And with robust security, automatic updates, and scalable features, it’s an investment that grows with your business.