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Industry Outlook

Hotel Investor Report Highlights Critical Importance of Revenue Management Systems

Being equipped with the right tools is essential for your ability to survive—and thrive. That’s been true since the first caveman mastered the finer points of spear-making, and it remains true today even in the relatively civilized world of hospitality business.

Financial leaders in the hospitality industry are likely no stranger to cold calls, pitches and presentations highlighting the features of potentially helpful tools. Intriguing as those efforts may be, not all tools will have the same positive impact as the successful implementation of a revenue management system (RMS)—and it’s not just us saying it.

We recently commissioned a survey of hotel real estate investment executives to better understand the role of revenue management in hotel investment today, and it’s clear revenue management systems are viewed as a critical tool for successful hotel investing.

Hotel investor survey: 4 Key takeaways

Let’s dive into the results. Here’s what hotel investors had to say about hotel revenue technology and the role it plays in driving profitability.

1. Technology plays an unquestionably important role in improving hotel asset value

Of the investors surveyed, all respondents said technology is either “somewhat important” (20 percent) or “very important” (80 percent) for maximizing hotel revenue. While this alone might not be a massive revelation, it shows smart investors are acutely aware of how technology tools can be used to positively impact their properties’ bottom lines.

Perhaps more telling, however, is that all respondents said revenue management technology is either “somewhat important” (45 percent) or “very important” (55 percent) for increasing the value of their hotel properties. For investors, revenue management technology isn’t just a nice-to-have—it’s viewed as a foundational resource for maximizing the value of their assets.

2. The importance of revenue technology is growing

According to our survey, 71 percent of respondents say revenue management has become more important over the past three years.

Given the massive disruption of a global pandemic and the aftershock economic turbulence of the ensuing recovery, it’s easy to understand the increasing importance asset owners have placed on ensuring their properties are following sound revenue management strategies.

It’s also plain to see there’s an incredible value in tools and systems that can quickly gather and synthesize huge sums of data. We’re in the midst of a data, machine learning, and AI bonanza that promises to reshape entire industries with once unimaginable efficiencies. While the most sensational headline-catching potential outcomes of these technologies likely isn’t happening overnight, revenue management systems are already harnessing them to shift the competitive landscape.

Instead of revenue teams being caught flat-footed and reactive to an unexpected change in demand, revenue management software can help them adapt on the fly and ensure they’re making the most of their properties’ revenue opportunities.

Even in relatively “normal” times, the power to efficiently optimize hotel revenue is critical for staying competitive and maximizing ROI.

3. Revenue management system upgrade investments are on the horizon

Investors understand revenue management technologies are an integral tool for maximizing their returns in a shifting competitive landscape. In turn, many have plans to actively invest in these systems. In fact, our survey found that just under 59 percent (58.7) of respondents are either in the process of upgrading their RMS, or plan to make upgrade investments in the next 12 to 36 months.

These investment plans come as no surprise for Mike Chuma, Vice President of Global Marketing at IDeaS, as hotels see the clear value of an RMS for maximizing revenue for their rooms—and beyond.

“Because of the positive performance at scale, we see the use of revenue management systems expanding beyond daily room pricing to other areas of strategic growth areas such as meetings and events spaces, food and beverage, and other areas of ancillary spending within the hotel,” says Chuma.

4. Revenue management technology is worth it

Investing in revenue management software is not a small financial decision. Like with any substantial investment, it’s important to consider the potential returns before making a decision. So how do hotel investors view their decision to deploy revenue management software at their properties? 83 percent of those using revenue management technology describe the ROI as “high” (62 percent) or “very high” (21 percent).

With these results, it’s fair to say investors are making a financially prudent choice by investing in these technologies—and one that can help provide the financial lift needed for investing in further improvements or day-to-day needs. In fact, two-thirds of surveyed investors describe revenue management technology as “very important” for maximizing cash flow from hotel investments.

Dive deeper into revenue leadership insights

There’s more to the story here than just investors’ growing understanding of the value of revenue management technology. These tools are an incredibly effective way to improve the value of your hospitality portfolio and implementing them should be a top priority. While implementing a revenue management system can provide a sustained lift in relatively short order, using them to their full potential at properties with a more complex set of offerings (like meetings and events, on site services, food and beverage, etc.) often also requires thoughtful changes to these properties’ status quo that takes buy-in from all levels.

For additional insight into how hoteliers are using revenue technology to shape their organizations and more, visit our resource hub.

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