McDreams future-proofs its property management platform as it targets 100% growth in 5 years

German budget hotel operator McDreams Hotels is taking automation of its property management to another level as part of its bid to double in size in five years. 

Founded in 2009, the family-run hotel group already has an extremely lean, low-cost model but is now fulfilling its original vision for fully automated hotels by adopting an API-first hospitality platform rather than a traditional PMS.

With the help of open hospitality platform Apaleo, the business has been able to introduce a string of new tools to support a digital-first guest journey. API-first platforms allow operators to plug in a huge array of third-party, best-of-breed applications, ensuring constant customisation and modernisation. This also means operators who make the switch can continue to work with the top-tier solutions they already integrate with. 

For McDreams, a key partner has been LIKE MAGIC, the operations and guest experience specialist that connects guests and staff in one user-centric platform. LIKE MAGIC continues to form a cornerstone of the operator’s new tech stack, which includes new property management tools, a new digital guest journey and a comprehensive employee solution. The way McDreams has evolved its tech stack illustrates how API-first platforms allow operators to choose exactly the right mix of tools for their business — something that’s often referred to as ‘composable hospitality’.

Christoph Klein, Director of Marketing and Communications at McDreams, said: “We’re seeing the biggest change ever in the hospitality industry right now. It’s exploding and everybody wants to reinvent the future. With technology like Apaleo & LIKE MAGIC, we have the chance to redefine the future of hospitality, even as a small budget hotel chain.

“There are new possibilities in connectivity and AI is going to be a fundamental part of what we do as it’s very quickly changing everything. That’s why we decided we needed a completely new tech stack. With our old technology, we wouldn’t be able to be part of the future. It was limiting what we could do in terms of the guest journey and data management. We needed something ‘open API-first’, and it needed to be smart and holistic so we could create something seamless for the future.”

McDreams’ use of technology has always enabled it to keep prices down, with nightly rates starting from just €29.99, making it extremely popular. Its hotels, which attract 200,000 guests a year, offer keyless rooms and online check-in for contact-free stays.

All eight McDreams hotels are leased assets close to prime retail sites and transport links, and use 100% renewable energy. The company focuses relentlessly on its staff-light, low-cost model. For example, if other businesses nearby can offer guests breakfast, it won’t try to compete with them. 

“We’re almost creating a new body,” added Christoph. “In the old days, when you wanted to add a tool there would be an extra cost, and the development would take a minimum of one year. That’s why it makes sense to choose an API-first platform because you don’t have to do any development and you can just plug these new, modern tools in. 

“We want to give the customer a more personalized, individual experience, even though there is no one in particular taking care of them. AI chatbots can work seamlessly behind the scenes, leveraging guest data to provide the best customer experience without human resources. 

“LIKE MAGIC already knows whether a guest has read our messages or not, and what their preferred communication channel is. It can automatically send them a reminder by their preferred channel. The system always knows where in the whole guest journey they are and whether they’ve completed all the necessary steps to just enter their room with their smartphone. In the near future, we would like to talk to guests by AI call, which isn’t perfected as a technology but it’s not far off. AI can handle 200,000 phone calls at the same time and makes no errors. Intelligent AI-supported guest journeys don’t exist yet, but our vision is that AI will interact and analyse guest data throughout the journey, right from the search to post-stay. Everything will be connected.” 

This technology will reduce reliance on staff amid rising labour costs and staff shortages, and make it easier to onboard new employees.

Dominik Klein, Managing Director at McDreams Hotels, added: “In the future, we just want one host at each location, checking where guests are in the guest journey, helping walk-ins and providing restaurant recommendations to provide a bit of personality. 

“We already have some hotels without staff. The rest have two people to manage the surge in check-ins we see between 5pm and 9pm each day. No one in the industry needs fewer human resources than we do but Apaleo & LIKE MAGIC are going to allow us to go even further. Becoming more efficient is a big part of our growth plans. We want to double our footprint in the next five years.”