Revenue management doesn’t often find itself associated with mythical unicorns or other infamous folklore, but there are still some very common misconceptions that tend to swirl around the importance of its technology within the hospitality industry.
Here are four common revenue management myths and why they’ve been officially been busted by today’s automated revenue management technology.
Myth #1: We don’t have any issues manually setting our rates, so we don’t need a revenue management system.
In today’s high-speed environments, manually collecting, evaluating and calculating data via Excel spreadsheets is tedious, time consuming and highly susceptible to errors – and lost revenues.
Revenue management software and automation makes a huge difference. Through algorithms, calculations and powerful analytics, revenue management systems assess hotel performance on a daily, weekly, monthly and annual basis. Revenue managers can use highly visual dashboards and reports to quickly compare rooms sold and revenue against data at the market segment and total hotel level for the next year.
The system provides updated reports to give hotels a clear vision of their data, bringing more accuracy and consistency to the forecasting and reporting process. The increased business intelligence and accurate granular forecasting makes it much easier to determine correct pricing, optimize demand and increase revenue across a hotel.
Myth #2: I need a dedicated onsite revenue manager to use a revenue management system.
With hotel staff increasingly becoming more mobile, revenue managers can be responsible for multiple properties across multiple time zones – and they need to access their revenue management system at any time of the day and from any environment. Today’s technology makes it possible to make decisions on the go through cloud-based technology and mobile applications.
Revenue management apps enhance productivity by providing critical demand forecasts and rate analysis including historical behaviors, seasonal patterns and recent trends. Based in the cloud, mobile apps and systems ensure that pricing and other decisions are never offline. Mobile access to key metrics and rates also presents an opportunity to capitalize on time-sensitive opportunities and involve a wider management team in accessing KPIs. Revenue managers are now empowered to make informed pricing decisions anytime, anywhere.
Myth #3: A revenue management system is too expensive and only used by large global hotel chains.
It’s important for hotels to operate prudently and not spend beyond their means. As revenue management solutions have been widely adopted by larger hotel chains and properties for success, this can sometimes lead smaller or independent operators to maintain a misconception around the real cost of the technology and the ROI they can expect. Many leading revenue management providers work with budget and midscale hotels in both city and resort locations all over the world.
Additionally, there are also entry level technology platforms for hotels looking to start their revenue management journey, such as pricing system technology that focuses on setting and distributing the right rates to the right guest at the right time.
Myth #4: My hotel is still under construction; I can’t consider revenue management until I have been operating for at least one year.
Many new hotels struggle with poor pre-opening preparation and a lack of in-depth pricing strategies. There are many areas of revenue management that must be considered throughout the pre-opening phase of a hotel – ranging from establishing market segment revenue and sales strategies, undertaking comprehensive competitor evaluation, pricing research, pricing processing and forward planning of market demand cycles. It is also important that properties follow a structured, standardized approach to pre-opening to ensure consistent and effective results from day one.
An integral component to the pre-opening process should be considering the optimization of room type configuration, as well as the implementation and integration of revenue management technologies with the hotel’s IT infrastructure and platforms from the very start.