With the added pressures placed upon revenue managers today, hoteliers are finding it necessary to invest in technologies that increase their chances of capitalizing on consumer behavior to optimize revenue and remain competitive.
One solution is revenue management software, which automatically calculates, monitors and analyzes market data, freeing up a revenue manager’s time to make smarter, more strategic revenue decisions for the hotel. But while many hotels realize significant return on investments upon deploying revenue management systems, others are opposed to the idea of letting a computer run their financial operations. Many hoteliers don’t trust technology and believe they can accomplish equally sound revenue management practices by attracting and retaining intelligent and strategic revenue management professionals.
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| Garth Peterson |
However, if hoteliers want to remain competitive amid today’s fast-paced, inter-connected environment, it’s vital to automate the revenue management process. Although seasoned revenue management professionals are—and will remain—valuable assets to a hotel, they simply cannot emit the high-speed, complex algorithms of revenue management software. By automating the revenue management process, hoteliers can free up revenue managers’ time to react more strategically to opportunities in the market and further boost the bottom line.
Increased efficiency
Historically, revenue management has been defined as using a hotel’s booking history and activity levels to forecast demand as accurately as possible—during periods of high demand, revenue managers increase rates; when demand is low, they discount them. However, forecasting and pricing decisions are rarely this simple. Amid heavy reliance on online travel agents, flash sales and mobile marketing, it’s almost impossible to look at a hotel’s booking history and identify trends because the booking patterns are changing constantly. In such a high-speed environment, manually collecting, evaluating and calculating data via Excel spreadsheets is not only a tedious process, it’s slow and highly susceptible to error and missed opportunities.
This is where revenue management software can make a huge difference. Through a series of complex, specialized algorithms and countless calculations, revenue management systems automatically assess hotel performance on a daily, weekly, monthly and annual basis, allowing revenue managers to quickly compare rooms sold and revenue against data at the market segment and total hotel level. This gives revenue managers and hoteliers a clear vision of their data, bringing more accuracy and consistency—versus gut instinct—to the forecasting and reporting process. The increased business intelligence makes it easier for revenue managers to determine correct pricing, optimize demand and increase revenue across their property or portfolio of properties.
Less number-crunching, more strategizing
The sheer amount of time it takes a revenue manager to collect and evaluate data via Excel spreadsheets is enormous. With a revenue management system in place, revenue managers can cut their workload in half, freeing up their time to analyze data and make better, more strategic decisions for the hotel. By automatically cranking out reports and recommendations in real-time, the system ensures revenue managers remain in control—able to act proactively, instead of reactively, to changes in the market.
For example, in a manual environment, revenue managers generally identify a booking pattern and then take action, such as raising the price of rooms. Under this scenario, hoteliers often cannot identify patterns and opportunities until nearly 80% of their business is on the books. They end up only yielding the last 20%. But with an automated revenue management system in place, hoteliers can invert that. Imagine if trends and revenue opportunities were seen with only 20% of the business on the books. The hotel is now yielding 80% of the business.
Greater culture
Perhaps one of the most significant benefits hotels have reported seeing as a result of having an automated system is a more defined and enhanced culture of revenue management. No longer faced with a mountain of work on Excel spreadsheets, revenue managers have time to conduct more in-depth analysis of the data now readily available to them. Rather than labor over creating reports and constantly changing prices, revenue managers can focus on exceptions to the forecast, such as a special event in town that might fall outside the system’s parameters.
In addition, the reduced workload frees up revenue managers’ time to meet with the sales and marketing teams to align strategies and ensure the overall marketing direction is consistent with the hotel’s goals and objectives. As the forecast becomes more accurate and consistent, senior executives in other departments—such as catering, front office, reservations, food and beverage and housekeeping—will become more confident in the reports and more familiar with the language and basic principles of revenue management.
Improved bottom line
Ultimately, hotels with an automated revenue management system in place will be far more competitive than properties without an automated system. By automating a huge chunk of their workload, revenue managers can more easily keep up with today’s fast-moving and rapidly evolving nature of business to anticipate and capitalize upon consumer behavior. In addition, by working more closely with other departments, particularly sales and marketing, revenue managers can instill their discipline throughout the organization, resulting in increased business and revenue for the hotel.
Garth Peterson is regional director of sales for the Americas region of IDeaS Revenue Solutions. A certified revenue management executive from HSMAI, Peterson is a highly recognized resource for hoteliers seeking to expand their knowledge and practices in forecasting, pricing and optimization. Over the last eight years, he has been a guest lecturer on revenue management at the University of Wisconsin – Stout, Kendall College and Normandale Community College and has been a panelist at events for HSMAI Illinois, the Minnesota Lodging Association and the North Central Business Travel Association.
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