As the floodgates open on pent-up travel demand, it’s time for your hotel to invest in more than a basic pricing tool to optimize incoming streams of revenue.
The hospitality industry is at last recovering from its greatest challenge. Now, as travel demand returns, your hotel will need more than a mere rate-changing tool. It’s time to budget for the right technology to future-proof your business.
When it comes to revenue management decision solutions versus pricing recommendation tools, the contrast is stark. In good times and bad, hotels should accept no substitution for an automated, data-driven, demand-based revenue management system (RMS).
When assessing hotel revenue management technology vendors, or reevaluating the system you currently use, it’s important to know how to spot critical differences between a pricing tool (which may or may not call itself an RMS) and a true RMS:
- Pricing Tool – Many hotels rely on these systems to vary room rates and yield in order to grow revenue. Though these systems can provide information via reports and support rate changes, they are still largely reactionary, rules-based in nature, and are unable to process big data or provide deep analytics. Users must review and upload recommendations manually, or via automated rules, creating a higher risk of human error and taking up valuable time.
- Revenue Management System – By breaking down big data, a true RMS delivers accurate and actionable data-driven insights and decision empowerment. Through advanced automation and flexible controls, users can trust sophisticated analytics to maximize productivity, optimize business mix and capacity, enhance profitability, and improve the guest experience. An advanced RMS will act as a central solution in your overall technology ecosystem with data flowing between all tools to enable total profit optimization across all revenue streams.
In the wake of the COVID pandemic and ensuing industry downturn, some in the industry have questioned the value of revenue management given the demand disruption. But this is a misguided notion as today’s sophisticated RMS solutions are not burdened by the need for high demand or historical data to optimize your revenue.
Modern revenue solutions optimally price all products (room types and rates), fold in cost/profitability and can do so on autopilot if needed. These advancements in technology actually help a hotel squeeze out revenue even (and especially) in times of the greatest uncertainty. And the higher the degree of uncertainty, the higher the need for robust, accurate and relevant data to back up decisions.
Humans + Machines
The past year or so has underlined how humans and machines need to work together. Studies show that responses to COVID-19 have speeded the adoption of digital technologies by several years—and that many of these changes could be here for the long haul. Just as we were able to stay connected through webcams and virtual meeting platforms, automated, machine-learning tech will keep us profitable and productive.
Smart forecasting, pricing, and analytics technology will always have the upper hand against a human seeking to manually make sense of things—there’s just too much data and too little time. Also, hotels can’t maximize profitability by managing rates alone, and pricing tools that use rules to price room types are leaving money on the table.
So what exactly does a revenue management strategy that goes beyond only pricing need to incorporate? In addition to an analytically-derived pricing strategy, hotels need to consider the varying products or room types they have. With unique demand for room types, your revenue strategy needs to support your customers’ buying behavior. An advanced RMS should have the capability to analytically determine the ideal price and inventory controls for each of your different room types.
Many revenue technology providers claim to do this, but often only provide the ability to manually set rate differentials on each room type. This means you provide all the insightful data but still have to set rates yourself. With revenue managers already responsible for managing so many other rates as it is—and across multiple properties in many cases—they should be able to rely on their RMS to automatically and analytically handle this component for them.
Pandemic or no pandemic, revenue management’s ultimate goal is to price a room that will result in the most overall revenue and profitability for your hotel. The challenge is pricing different rooms, through many different channels, across many different days, to many different types of guests. With a range automated revenue management solutions and pricing tools on the market to consider, it comes down to rules-based tools that provide recommendations versus analytics-based solutions that automatically produce powerful decisions that manage pricing, rate availability and more.
Pricing tools are certainly a step above spreadsheets but require time and effort to manage the rules and approve the recommendations. An analytics-based, decision-making RMS will understand how a hotel’s business behaves under any condition and will be key to navigating the disruption and getting your hotel back on the path to profit.