The Revenue Management Needs of Different Hotel Stakeholders


In a competitive operating environment, where every pricing decision counts, all hotels need to ensure that they are pricing themselves correctly in the market, minimising operational costs, and attracting the right guests at the right rates.

NB: This is an article from IDeaS

And central to achieving ongoing hotel profitability today is the utilisation of advanced technologies like revenue management systems (RMS) which use data mining, machine learning, and complex predictive algorithms sets to calculate optimal pricing and inventory decisions for hotels to support their financial performance.

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Revenue management technologies are increasingly common across the APAC hotel landscape, but each level of a hotel’s ownership and management has different needs from an RMS. In order to ensure that all hotel stakeholders are aligned and that revenue management technology is delivering positive outcomes for all vested stakeholders, it is important to understand their revenue management ‘wants’ and hear from them in their own words.

Hotel Owners

By streamlining efficiency, improving pricing, and selecting the most profitable clients for group and contract business, revenue management systems save time and increase revenue for hospitality organisations. And increased revenue gives hotel owners the resources they need to excel at their primary goal—boosting the value of their organisation and increasing asset valuation.

The additional revenue that comes from the proper utilisation of an RMS and revenue management strategies directly impacts a hotel’s bottom line, making it a valuable tool for increasing a hotel’s valuation—a keystone in any owner or asset manager’s lens, especially at a time of investment, refinancing or sale. Increased revenue leads to higher cash flow, which has a number of benefits from giving the hotel greater day-to-day liquidity, to having money in the bank generating interest, and leveraging return on capital. It should also not be overlooked that the increased revenue generated by an advanced RMS makes further reinvestment in the hotel possible, or it can be leveraged to make property portfolio expansion possible.

Owners should be aware that setting revenue management standards across a hotel group also improves its overall portfolio performance. Data collection and comparisons between properties allow hoteliers to decide how to price their properties within different markets. Accurate forecasting data, market research and analysis also allow hoteliers to execute realistic feasibility studies for all future opportunities. Estimating future project successes before outlaying capital investment will help any hotel group in the fortunate position to be considering acquisitions to make decisions likely to increase the group’s long-term cash flow and value.

“We believe the era where we can fill up rooms at high rates by doing nothing is gone. It’s a competitive market out there, and we must grab every opportunity we can. We can upsell when we can, but when we cannot, we need to stay competitive. This aspect is difficult for humans to manage, and that’s where revenue management technology (an RMS) becomes essential,” says Nikolas Ioannidis, president, Belvedere Hotel Mykonos.

Hospitality Executives

Like owners, hospitality executives focus on increasing the value of their organisations. Achieving these goals requires more revenue, greater operational efficiency, and deeper insights into future opportunities—all of which an RMS can provide.

It has never been truer that a full hotel doesn’t always equal a profitable hotel. Without an RMS in place, hotels can easily fall into the trap of selling out to lower-rated business, thereby leaving money on the table from higher-rated business opportunities. To identify guests that offer the greatest long-term revenue potential to a property, hoteliers need revenue and pricing systems in place that take a holistic view of its guests’ activities, not just their room spend.

Hospitality executives need to ensure that data from transaction systems should be integrated to provide a true picture of a guest’s preferred activities and their overall value. It needs to consider all ancillary spending from online reservations to check-out, food service to spa services, guest rooms to gift shop, and more. In addition to making more profitable decisions, this data allows hospitality executives and their teams to make more informed decisions about promotions, service offerings and inventory levels – all of which can drive revenues and profits to boost the bottom line of their organisation.

“Revenue management has enhanced Taj Hotels’ approach to revenue management by delivering highly accurate 28-day forecasts and helping predict longer-term demand beyond a 60-day horizon. These forecasts help our properties plan demand-generation promotions and manage staffing levels based on occupancy. The scientific approach to managing group pricing and shoulder-night occupancies that our RMS offers helps us maximise guest revenues through changing market conditions,” says Karishma Singh, area director finance and revenue management (north area), for IHCL.

General Managers

Chronically short on time and needed in every department, general managers do more than their share to keep operations running smoothly. And while their schedules often fill up with crucial, ground-level activities such as ensuring guests receive quality service and supervising staff, general managers also need time to focus on more strategic endeavors.

These strategic initiatives include increasing team efficiency, planning budgets, setting sales targets, analysing sales figures, producing reports, managing accounts, and more. In any of those cases, general managers can rely on an RMS to support their efforts. Whether determining staffing needs or providing figures for creating a more targeted marketing campaign, an RMS provides insights that general managers can use to make more informed decisions. And those more informed decisions lead to lower overhead and increased revenue.

In order to meet their organisations’ goals, GMs regularly communicate with the sales, operations, finance, and marketing teams. They also have close interaction with the revenue management team. Since each of these departments has traditionally operated independently of one another, it’s up to the GM to balance potentially competing interests in order to enhance profitability. For example, the sales team is mostly volume-driven; they want to drive as much business as they can in order to fill the hotel. Meanwhile, the operations department is focused on customer satisfaction while the revenue management team is trying to optimise revenue.

In order to get the most out of their RMS, GMs need to break down silos and encourage collaboration; not only the organisational barriers between departments, but also ensuring the data that sits in a hotel’s various systems is widely shared. With clean, accurate data, hotels can isolate and understand their channel costs, ascertaining which is effective and profitable business. When departments align and data and market intelligence is shared, staff have a clearer idea of which strategic business opportunities to pursue, negotiate or decline.

“We are still in the system daily but only for short periods of time, giving us far more bandwidth for strategic planning. I trust the system completely. I know I can let our RMS run on autopilot when needed and don’t have to constantly worry about the decisions it’s making. The stress reduction alone—much less the monumental ADR growth and profit assistance—is greatly appreciated,” says Kristie Rasheed, General Manager at The Dewberry Charleston.

Revenue Managers

Revenue managers face mounting pressure from multiple directions: online travel agencies, the sharing economy, staffing shortages, and economic uncertainty. Facing these challenges successfully means finding the time to focus on developing strategic solutions. That’s easier said than done.

Without automation, it is difficult to compile and analyse all the disparate data points hotels collect accurately and effectively. In a high-speed environment, manually collecting, evaluating and calculating data via spreadsheets is not only a tedious process but also slow and highly susceptible to mistakes and missed opportunities. Revenue managers need an RMS to free them up from being data collectors and instead enable them to focus on strategies to leverage every opportunity with the sales and marketing teams to stimulate demand. An advanced RMS not only generates prices that adapt to market changes but also considers the competitive landscape and a guest’s willingness to pay. An RMS scientifically monitors competitor hotels’ pricing for an equivalent room type and its impact on your hotel’s pricing to gauge how aggressively (or otherwise) to react when a competitor changes pricing.

“I used to waste a lot of time on data entry and had limited data to work with. Having an automated RMS has really helped me strategise more. Instead of spending all my time in a manual environment, I can now quickly see the bigger picture and spend more time contributing to things like marketing efforts and optimising our online presence. It’s enabled me to be far more productive and proactive,” says Kelly Gattis, Director of Sales & Revenue, Sunset Tower Hotel.

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