Expectations for the hospitality industry grow stronger with every year – and the shelf life of how long a competitive offering is considered leading-edge before it becomes just another standard guest expectation has dramatically decreased over the recent years. For example, free Wi-Fi and complimentary happy hours – once competitive selling points for hotels – are no longer lucrative offerings for guests to come by.
Looking even further within the hospitality industry, revenue management has also seen similar shifts in its expectations. As its technology has steadily improved over the years, hoteliers around the world now rely heavily on its capabilities for strategic hotel pricing and assessing market demand. In fact, hotels are in a prime position to reap the benefits of a burst of new, but not altogether unsurprising, revenue management expectations.
From unlocking the opportunities of sophisticated analytics to employing innovative and flexible pricing strategies to gaining the maximum benefits of automation, hotels can anticipate a variety of fresh ways to boost their bottom line profits and increase their strategic revenue opportunities.
Rejecting the One-Size-Fits-All Pricing Approach
Automated revenue management technology has proven its value within the industry by providing a more effective use of inventory, increasing shoulder night performance and reducing quiet nights. It has also become a true game changer in helping hotel organizations establish and deploy the right rates to the right customers at the right time.
In fact, establishing a public pricing strategy is one of the top revenue management strategies that every hotel organization needs to create. For many hotels, this can be an overwhelming challenge since their property might be new to its market, facing strict parity commitments or searching for more effective pricing to bring in better revenue results.
Due to the uniqueness and diverse revenue goals of each individual property, hoteliers are recognizing how important it is to find the right automated pricing strategy that best suits their business needs. That means progressive hotels are rejecting standard one-size-fits-all pricing approaches in favor of evaluating multiple options to confidently select an approach that best complements their business mix and distribution technology.
And while many revenue management systems on today’s market tend to be more limited in providing only one pricing option, there is advanced revenue technology available that allows hoteliers the flexibility and choice of multiple analytically-driven pricing approaches. This is a critical capability especially needed for hotels questioning whether their current prices are leaving money on the table.
Group business management – and pricing – is another pivotal area of revenue management. With corporate and leisure group business on the rise, hotels are increasingly looking for advanced technology that can help them quickly and intelligently evaluate their group requests. Today’s technology helps hotels forecast a potential group’s impact and displacement of transient guests, while identifying ideal group rates and dates for the sales team to offer. These advanced capabilities even allow sales managers to provide rates by room type to maximize hotel inventory and become even more profitable by evaluating alternate dates for flexible groups. This is a huge benefit to all hotels – especially those managing multiple properties. State-of-the art group pricing technology allows them to simultaneously evaluate numerous properties to identify which property will stand to make the most profit.
Passing on Manual Recommendations for Automated Decisions
While automated pricing and inventory decisions aren’t considered “new” by any means in the industry, they are one of the most critical outputs needed for hotels looking to achieve their maximum revenue potential and increase their strategic abilities. As hotels evaluate their revenue management opportunities, passing on manual recommendations for automated decisions may just fall at the top of their strategic wish list.
Decisions are system controls that are continually optimized and automatically deployed from a revenue management system to the hotel’s integrated selling systems. Recommendations, on the other hand, are suggested rates that have to be manually implemented by a user into their selling systems. This means revenue managers are responsible for reviewing, approving and uploading every recommendation their revenue management system produces. This not only impacts the amount of time and resources spent validating and uploading rates, but it also forces revenue managers to be less nimble – having less time to course correct when there are sudden shifts in the market.
All hotels face the challenges of forecasting occupancy, setting associated pricing strategies, determining overbooking levels, distributing pricing across various channels and reporting on the results. However, hotels should not have to sacrifice time that should be spent on strategy that is spent instead on reviewing and implementing their system recommendations.
Taking Revenue Management Beyond Guestrooms
Meetings and events business makes up a significant portion of the hotel revenue pie. In fact, meetings and events can represent up to 60% of overall revenue for many hotels. With so much revenue riding on successfully managing meeting and event space requests, there’s an enormous opportunity for hoteliers to take even more advantage of their technology.
To help hotels maximize this meetings and events business, data from sales and catering systems and property management solutions can now be integrated within advanced revenue management systems. This allows revenue managers to optimize profits across multiple revenue streams from guest rooms and meeting spaces to food and beverage, catering, A/V equipment rental, ancillary spend and more. Its profit-based price evaluation capabilities enable sales teams to understand unsold and undersold function space, as well as less-than-optimal displacement for group business.
Powerful Analytics Keep Growing
If there’s one thing the evolution of revenue management technology has shown us, it’s that analytics matter. Today’s hotels and tomorrow’s success stories have to consider how important it is to build a solid analytical foundation for optimal forecasting and establishing the right rates. With words like “big data” and “analytics” becoming important themes in the industry, it’s imperative that hoteliers understand what those capabilities can bring to their hotels.
Today’s revenue technology offers intuitive user-friendly designs, innovative interfaces, customized reports and dashboards, and lots of useful functionality. However, digging deep into their analytics is where the market becomes truly divisive. Identifying the right analytics often means that hotels have to ask their technology providers some tough questions. For example, many revenue management systems use one or two forecasting methods for transient and group business, taking a relatively general approach to analyzing data. Other solutions employ advanced analytics with hundreds of forecasting models to solve specific hotel challenges and produce extraordinary results. These powerful analytics analytically assess guest price sensitivity while accounting for season, day-of-week, days-to-arrival, length of stay and more – in addition to managing rate availability, optimizing stay patterns and strategic overbooking to drive the most revenue overall.
Analytical capabilities is where revenue management systems are divided into good analytics and great analytics. While good analytics can get the job done, great analytics optimize based upon a hotel’s strategy, competitors, trends, etc. and simply make hotels more revenue.