Key Considerations for Evaluating Hotel Revenue Technologies


The hospitality industry is endlessly evolving. Proving to be yet another year of change, the landscape in 2015 continues to become even more dynamic. Hoteliers are increasingly taking a more holistic and strategic approach to their revenue management strategies—expanding their practice beyond just rooms by using the right pricing data.

As renovations, expansions, and overall segment growth fuel the industry, it is crucial to monitor the evolution of today’s hotel management environment. Revenue management is no longer dictated by gut instincts or stagnant spreadsheets. The practice of revenue management—and the technologies driving it—continues to incorporate new strategies yielding maximum profitability. Hotel operations are more tightly integrated with revenue management technology. The same technology that is branching out to other areas within the industry, exposing even more hoteliers to holistic revenue approaches.

Let’s explore a few more examples of what to look for in revenue management:

Use of Big Data in Revenue Management

Today’s data comes in various types of formats. It can be common to feel overwhelmed by the sheer volume of daily information: numeric data in traditional databases, information from line-of-business applications, structured/unstructured text documents, email, video, audio, financial transactions, etc.

In the hospitality industry, we know that data including (but certainly not limited to): social media, pricing systems, central reservation systems, revenue managements systems, and channel production must be watched, measured, and codified. This can lead to an information overload. The key is cutting through the noise, leveraging the most relevant and valuable data for the organization. The “big” in big data can be a challenge across industries, making it important to find and rely on the information that is most relevant for you. For hoteliers, this is the data that has the most impact on pricing and revenue strategies. The best-in-class revenue management systems don’t simply display and report on the massive amounts of data. They incorporate that data into their demand forecasting and algorithms to enhance the forecasting performance.

Powerful Analytics is Key

Hotels worldwide increasingly rely on powerful analytics to drive overall strategy. Analytics help determine the underlying impacts to performance and help predict the future set of outcomes. Prior to the surge of big data, the primary consideration for revenue managers had still remained the analytics performance of automated revenue management systems. The ability to provide an unconstrained demand forecast (the true demand for your hotel regardless of your hotel’s available inventory) is one of the most important analytical capabilities that a hotel revenue management system should encompass. Dynamic competitive pricing capabilities remain another critical component in 21st century revenue management. Hoteliers know that revenue management expands beyond pricing; therefore, another important analytical capability for any hotel’s revenue management system is optimizing both pricing and availability together.

Extending Revenue Management Beyond Rooms

Function spaces in hotels—the areas dedicated to meetings and events—can account for up to 60 percent of a hotel’s overall revenues. These spaces are serious profit drivers for a hotel property and significant revenue can be left on the table when these spaces go undersold or unsold altogether.

Leading hoteliers and academics have long recognized the potential of managing function space revenue. Even with academic findings, this area has notoriously proved to be hard to measure and capture value. While revenue management fundamentals can be applied beyond rooms, a number of crucial differences in Key Performance Indicators (KPIs) and the need for profit-driven optimization for multiple revenue streams bring additional challenges to the field. The best-in-class revenue management systems are those who have been able to successfully integrate all ancillary revenues into an overall revenue management strategy.

The Continued Rise of Social Booking

Social media and online travel agencies were once managed by conventional revenue management strategies. They have become so vital to today’s pricing that entire software systems are being developed to manage the influx of social media data and to review the information coming at hotels. In today’s digital ecosystem, guests are increasingly gaining more power and this trend continues to gain momentum.

One of the hottest topics involving dynamic competitive pricing is reputation pricing, which enables hotels to take their online reputation data and utilize it beyond operations and marketing. Utilizing pricing strategies that are centralized around data from social media and online reviews does not simply include a data display for interpretation. It integrates reputation data directly into pricing decisions.

Exciting Times Are Ahead

Successful revenue management programs will ultimately be defined by establishing cultures that fully embrace revenue management principles and practices. These cultures empower people to understand and appreciate the ability to drive profitability for all hotels. Big data analytics and social media tools lack true meaning unless the appropriate revenue management culture and learning opportunities exist. A final suggestion for evaluation is considering the available learning tools provided by technology suppliers that train (and reward) hoteliers and expand revenue management throughout the organization. Aligning revenue management goals throughout the entire organization, not just for departments and groups independently, is the true key for success.

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