When properly executed, hotel revenue management can be used to deliver very substantial increases to top-line revenue growth and profitability. In fact, according to new research conducted by Starfleet Research, the implementation of hospitality revenue management results in a 9-percent average increase in revenue per available room for large and very large hotels. That percentage increase can translate into millions of dollars in additional profit on an annual basis.
As hoteliers know, revenue management is about setting the right price for the right guest at the right time. But there are many variables that come into play in that formula and those variables change frequently. Without automated systems and integration into a property management system, it can be overwhelming for hoteliers.
Without automation, hoteliers aren’t updating the rates consistently, said Larry Gorman, chief technology evangelist with SkyTouch Technology. “Since you can set up rules and put constraints into place, revenue management can enforce the systems that hoteliers want and need,” he said. “Since RM can interface easily with PMS, hoteliers can do interesting things with the data available to them. That can be the competitive differentiator in the aggressive landscape.”
Historical information is imperative for revenue management but so are social reviews, local events, the weather and things like air traffic, said Firas Bacha, senior product manager at Springer-Miller Systems. “All of those things are extremely unproductive to monitor manually but an integrated system can make and execute those revenue management decisions quickly, increasing the guests’ shopping conversions that much faster. It is a very competitive market right now and hotels are constantly fighting for every dollar.”
Automated pricing tools and better inventory management can help the hotelier strike the delicate balance between room pricing and occupancy, said Paul Sonoda, president of Innsoft. “Hotels sell a product with a limited inventory,” he said. “You only have so many rooms to sell, once a day. Every room that goes unsold or not sold at the highest possible rate is a lost opportunity.”