The many moving parts that make up any hotel business are usually difficult to predict, manage, and optimise. Revenue management is no exception, and (like food and beverage, or marketing) it is a specialised niche of its own that is growing in scope.
Most hoteliers are familiar with the basics of revenue management – when demand is high you increase your prices, you should use historical data to determine when occupancy is likely to rise and fall, and so on. However, with the availability of vast amounts of data collected from multiple touch points (digital and offline) with both your own guests and from external resources, revenue management is becoming increasingly complex and specialised.
In their 2017 projections, Skift refers to data interpretation as the ‘ultimate intelligence’ – now that hoteliers know that it is essential to collect and mine data, they need to make it work for them in every aspect of hotel management. The field of revenue management is becoming more and more of a science, and in more competitive markets a dedicated revenue manager can change the game entirely for any hotel.
Revenue management is a constantly evolving discipline, and there is so much written on it that it can be difficult to know where to start. We had a look around the web to find some of the top resources published recently that will help you decide what revenue management should mean for your hotel.
If you are looking for a very brief overview to get you started with revenue management, eHotelier does a Q&A with Rachel Grier (IDeaS Managing Director, Asia-Pacific) about best practices in revenue management for independent hotels.
According to Grier, it’s not just the larger hotels that need to focus on their revenue management strategy – smaller hotels and independents are also losing potential revenue opportunities by not having someone dedicated to the role.
"It can be argued that smaller properties need the technology even more than larger hotels, given that limited volume means every pricing decision counts." – eHotelier
There is also more to revenue management than getting room rates right (although that is vital). Revenue management can, for example, feed information back to marketing about underperforming segments to help marketing perform better, and it can help hoteliers understand booking, cancellation and no-show trends among different market segments.
"Revenue management can be applied in any business, provided there is fluctuating demand, the customer can buy the product ahead of consumption, and there is a perishable, capacity-constrained inventory that loses revenue opportunity if unsold today." – TrevPAR World
On-Demand Webinar: How hotels can simplify today’s complex revenue management strategies – SiteMinder
Although the topic of the presentation is simplifying your revenue management initiatives, Kevin O’Rourke, Executive Vice President of Global Sales for SiteMinder, actually provides an in-depth introduction to implementing a revenue management strategy. Whether you have a redundantly complex revenue management system in place, or none at all, this presentation will help you to wrap you head around the complexities of modern revenue management in a simple way.
Revenue Management means “to sell the right room through the right channel to the right customer at the right price and the right time.” – SiteMinder
Towards the end of the recording there is also a great discussion between a stellar panel of industry experts and leading minds when it comes to not only revenue management, but hotel management in general. (Panellists: Neil Corr, Senior Advisor, IDeaS; Sean O’Niell, editor in chief, Tnooz; Gene Quinn, CEO & Producer, Tnooz).
Skift discusses the outcomes and implications of a recent Cornell University Study, drawing on the wisdom of their network of industry thought leaders. They point out that proper training for revenue management professionals is important, as they need to be equipped with the intellectual tools to be strategic about revenue management, and that an astonishing number of hotels are not using the software available to them to help with revenue management.
“It’s time for systems, reporting, and key performance metrics to catch up to the reality that defines revenue optimization success.” – Skift
They also mention that smaller hotels and independents that rely on OTAs like booking.com might actually be more educated when it comes to revenue management than bigger hotel managers because of OTA’s marketing efforts to educate hoteliers about their B2B add-ons, such as booking.com’s BookingSuite (which provides several B2B services, including marketing, distribution and revenue management).
Kelly McGuire, Vice President at Wyndham Destination Network speaks here about bringing revenue management and guest-centric efforts together. Her theory of “Guest-Centric Revenue Management” focusses on identifying your most profitable guests to “attract the mix of guests that will optimize profits for the entire enterprise”. Most hoteliers are covering this to a degree through personalisation efforts, but combining your guest insights with your revenue data gets you a step closer to ensuring your “offers and incentives are incremental (not diluting other revenue) and profitable”.
“The first problem to overcome is that total hotel revenue management and guest-centric revenue management should not be thought of as two separate initiatives. In fact, I believe that when total hotel revenue management is executed properly, it actually is guest-centric revenue management.” – Kelly McGuire, Vice President at Wyndham Destination Network
Find out why only asking for reviews, or only sending guest surveys, isn't enough in this day and age. Click on the banner below to download our slideshare on why you need both: