The secret to successful hotel management? Delight guests and protect margins. Hoteliers need to deliver stellar guest experiences, watch expenses, and closely manage revenue to run a profitable business.
Revenue management is the science of aligning pricing and promotions in all revenue streams to drive profit optimisation. It requires offering the right product—whether that’s a room, a meal, an event, an amenity, or a combination package—at the right price to the right customers on the right channels. It is a complex process, and it has to move at the speed of modern digital business.
Effective revenue management requires automation and data-driven decisioning. Revenue management solutions use historical data, market trends, competitor rates, and algorithms to forecast demand, recommend the best pricing strategies in real time, and offer detailed business intelligence for effective strategy-making.
The dual challenges of software cost and complexity
Perhaps no industry experienced greater disruption during the COVID-19 pandemic years than the hotel and hospitality sector. Disruption fuelled an acceleration in digital transformation, as hoteliers quickly adopted cloud-based solutions. Revenue management teams improved collaboration with marketing and other key departments to optimise pricing strategies for digital marketing channels.
Today, revenue management solutions leverage data analytics, machine learning, and AI algorithms to automate revenue management tasks, create sophisticated demand forecasts, and supply data-driven insights. Cloud-based for global user access, these powerful solutions integrate with other key hotel management solutions and marketing channels, including property management (PMS), sales and event management, and online travel agencies.
Traditionally, revenue management software cost and complexity presented challenges for some hotels. Financially, many software packages were out of reach for budget chains. And solutions built for the needs of luxury global brands contained functionality that was not needed at smaller, regional chains, making those solutions more complicated to set up, learn, and use.
Hoteliers want a new approach to revenue management
Cloud-based solutions touch virtually every area of a hotel to create superior guest experiences, boost revenue, and encourage repeat visits. As the needs of the hotel sector have evolved, we believe it is time for a new approach in revenue management.
By talking to hospitality leaders in all kinds of roles, from hotel owners to revenue managers, general managers, regional managers, and external revenue management consultants, their wants and needs from revenue management technology have been uncovered.
From budget to luxury hotels, and from smaller chains to large international brands, industry professionals described how revenue management technology could best deliver value to their organisations. Their insights have been distilled below into four top characteristics for the ideal hotel revenue management system.
Need #1: A single, adaptable revenue management solution
First and foremost, hotel leaders want a single solution that can handle both simple and complex revenue management scenarios. They see value in a modular solution that enables them to pay only for the functionality needed today, while reserving the ability to unlock additional functionality down the road.
The ideal revenue management solution should be priced within the reach of budget hotel chains and offer simple, yet highly effective, functionality for hotels—even those without a dedicated revenue management professional. Hotels should be able to add advanced functionality to their application subscription at any time.
Always on the move, hotel professionals don’t have time to find a computer every time they need to monitor occupancy and make revenue decisions. The right revenue management solution would have excellent mobile functionality for these busy, on-the-go roles.
Need #2: Science-based algorithms empowering data-driven decisions
To get dynamic pricing right, hotels need a detailed demand forecast generated by highly accurate, powerful data algorithms that use AI and machine learning. It is important that a revenue management engine is driven by science, rather than rules. A rules-based system lacks the adaptability and intelligence to avoid a downward price spiral when multiple competitors use the same set of rules.
Need #3: A truly innovative solution, ready for the future
Hoteliers express the need for a solution able to continuously evolve as their unique business needs change. To support agile reporting, they want it to be easy to slice and dice data, with lots of options for visualisations. The ideal revenue management solution would render role-based dashboards that can be adapted easily to incorporate new types of data.
An ideal revenue management solution will meet hoteliers where they are today and support tomorrow’s goals. To future-proof the solution, it needs to be built on a data model that allows for superior forecasting and the ability to take revenue management to the next level—empowering operational optimisation through dynamic cost management, marketing promotion optimisation, and ultimately, enterprise-wide total profit optimisation.
AI will be foundational in next-generation revenue management. But AI should not replace human intelligence. Hospitality is a people business. The ideal revenue management solution should be designed with a spirit of collaborative intelligence, integrating human input with AI automation to improve results.
Need #4: Rapid deployment and short time-to-value
Finally, hotel leaders want a revenue management solution delivered with the key in the ignition. A tool all decision-makers in their organisation can easily adopt and learn. It should positively impact revenue and add value right away.
Hoteliers want an automated implementation so they can set the system up themselves. The right solution will deploy quickly and be tailored easily to specific roles including the revenue manager, owner, and GM.
The ideal revenue management system will offer an interface so simple and intuitive that new users learn it quickly, with very little effort. The ability to self-train should be built into the application.
By Eric Wong, Vice President of Hospitality, Infor Asia Pacific
This article was first published by Accom News