Revenue managers have a considerable workload and have difficulty taking on any more assignments.
NB: This is an article from Demand Calendar
However, what would be the next step for a revenue manager once the revenue manager has balanced the workload? Over the years, many discussions have been about how revenue management would evolve over the next decade.
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In surveys, revenue managers answered that total revenue management and profit management were high on the list, apart from fixing the constant problem of integrating systems and keeping up data quality. However, the discussion about total revenue and profit optimization has been going on for at least ten years. Revenue managers cannot do everything simultaneously, so what is the next step?
Start with the highest impact
A hotel aims to increase long-term profit to reach sustainable financial success. Therefore, the first question for a revenue manager is which actions would positively impact profit. It is vital to analyze the effects of different activities both from a long-term and mid-term perspective. Short-term, the highest result is always to sell that extra room today. However, short-term thinking will not lead to long-term financial success.
Impact of total revenue management
For a hotel with several other revenue sources than room revenue, the next step for revenue managers would be to start optimizing each source of revenue. The philosophy is that optimizing each revenue source will increase the total revenue, which will positively impact profits. The revenue manager can take two different approaches. The easiest first step is a siloed approach where the revenue manager optimizes each revenue stream. The more difficult first step is a holistic approach where the revenue manager optimizes the average guest spend. The latter will have the highest long-term impact on revenue and profits.
Siloed approach
A siloed approach to Total Revenue Management (TRM), where each revenue stream is optimized separately, can hurt overall revenue and profit. In the siloed approach, optimizing one revenue stream may come at the expense of another, leading to suboptimal results. Here are three actions that hotels can take to maximize total revenue by optimizing each revenue source.
Integrate data: Optimizing each revenue source in siloed systems is possible, but integrating data across systems would provide a more comprehensive and holistic view of demand and revenue. An overview can lead to more informed and effective decision-making and help hotels identify opportunities to optimize each revenue source and maximize overall revenue and profit. For example, suppose the hotel manages room and meeting space revenue in separate systems. In that case, it may be difficult to identify opportunities to cross-sell meeting space to room guests or to offer packages that bundle both room and meeting space. Integrating data from these systems would provide a complete picture of demand and revenue and allow hotels to identify and act on these cross-selling opportunities. In addition, integrating data can help to reduce data quality issues, ensure data security, and reduce the need for technical expertise to access and use data.
Read rest of the article at Demand Calendar
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