Six Reasons Why Revenue Management Technology Is Important to Small, Boutique Hotels

There’s a stubbornly persistent belief among many leadership teams from smaller boutique (and often independent) hotels that having fewer guest rooms means their property doesn’t need a revenue management system (RMS).

While it’s understandable that some may peek over the fence at their large, big-brand competitors with immense resources and end up thinking revenue management technology is not for us, the truth is advanced revenue management solutions provide an essential and practically attainable competitive edge for these small-but-mighty properties.

READ MORE | Explore how IDeaS’ solutions can benefit your boutique hotel property

Why revenue management technology is important for small, boutique hotels

No matter the size or segment, a hotel’s success hinges on its ability to maximize revenue and operate profitably. Regardless if you have a team dedicated to the function, “revenue management” happens at varying degrees of sophistication at all hotels. Advanced, automated revenue management technology is simply a means for ensuring this function is done effectively.

So why is investing in an RMS so important for small boutique hotel revenue management?

Like larger hotels, smaller properties are constantly generating data.  Especially if the property has a restaurant, spa, bar, or other ancillary sources of revenue. Without automation, it is difficult to efficiently compile and analyze all this continuous information.

Furthermore, smaller hotels frequently have fewer resources and may not have a dedicated revenue manager. This often leaves the revenue strategy up to the general manager, director of sales and marketing, reservations manager, or a third-party revenue management team – all of whom already have hectic days filled with other responsibilities. Often, this results in over-pricing and under-pricing room rates, which obviously leaves these hotels at a competitive disadvantage.

The human mind (or even a team of minds) can only process so much information in a decision-making process. One of the biggest challenges with manual revenue management practices is the inability to collect quality data in a timely manner while being able to use it before it is obsolete. Hotel data comes from a multitude of sources, changes rapidly, and is critical to making proper pricing decisions.

All of this becomes much more manageable and effective with the right tools in place.

Six reasons why revenue management technology is important for small, boutique hotels

There’s good reason to believe smaller hotels need an RMS even more than their larger counterparts to stay competitive. Here are some of the top reasons why:

1. Every room counts in a smaller hotel

Pricing rooms incorrectly has a much more noticeable impact on average daily rate (ADR) and revenue per available room (RevPAR) performance. If there is a pricing error at a larger hotel, it is easier to ‘bury’ the rate mistake. Simply stated, larger properties can hide a multitude of sins in volume. Smaller boutique properties have a smaller margin for error, and the impact of revenue mistakes gets amplified.

2. Smaller hotels compete with branded hotels

Most branded hotels use a revenue management system. If a boutique property has branded hotels in its competitive set, every single day, those branded hotels have a competitive advantage by having data ‘visibility’ and technology tools the smaller hotel likely does not have.

Like it or not, your competition is likely using an RMS. Even if your property seems to be holding its own without this technology, the long-term cumulative impact of even seemingly “small” wins in revenue performance adds up. For some operators, that improved revenue performance is the difference in obtaining better financing terms or being able to stay competitive with property improvements.

3. Effective, automated demand forecasting drives revenue success

All hotels, big and small, benefit from recognizing booking trends, demand yet to come, and where demand books. Doing so enables setting the right price, for the right guest, at the right time, via the right channel. G3 RMS’ advanced demand forecasting abilities ensure hoteliers have an automated, timely, and effective view of what’s likely to come in the weeks and months ahead. These forecasts spur a variety of commercial decisions like pricing changes, marketing campaigns, and more.

4. An automated RMS helps to find the ideal balance of business mix and length of stay

With fewer rooms, managing booking pace and capturing optimal reservations by accepting the most valuable demand across arrival dates and lengths of stay is even more critical to maximizing revenues and improving shoulder night performance. As opposed to focusing on peak nights and accepting lower-rated business when it isn’t needed, which simply trades down revenue.

5. Forecasting aids in setting appropriate staffing levels

It’s no revelation, but being able to effectively deliver a positive guest experience is impacted by proper hotel staffing. With dependable forecasts, hoteliers have greater insight into when staffing levels need to be augmented to ensure profitability while maintaining high levels of guest satisfaction.

6. Better insight into evaluating and pricing group business

Generally, in addition to having fewer guest rooms, smaller hotels often have limited meetings and events space. With that in mind, accepting groups under the right conditions, at the right price, over the best set of dates, while understanding the potential revenue impact of transient displacement is important to driving additional profitability and contributing to increasing occupancy.

Evaluating group business opportunities and pricing for optimal results is no small task for hotel commercial teams. With fierce competition for group business and planners seeking quicker responses, hoteliers need tools to ensure group business RFPs are responded to quickly, and with profitability in mind.

Level the playing field with revenue management technology

Regardless of hotel size, revenue management principles apply for all hotels.  But for smaller-sized properties, there’s less margin for error due to having fewer rooms.

By utilizing an RMS, smaller properties can level the playing field against larger properties.  An RMS helps boutique hoteliers make fact-based, data-driven decisions on what one knows will happen versus making decisions on what one thinks or feels might happen.  Such knowledge only comes from incorporating the art and science of revenue management automation – with hoteliers providing the art and the RMS bringing the science.

READ MORE | Casa Angelina Boutique Hotel Boasts Beautiful Results with G3 RMS

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