Whether you're the owner of a small hotel, or the revenue manager for a major chain, at some point in time, you'd be looking to maximise business revenue and impact. Therefore, it's imperative to focus on a comprehensive revenue management strategy.
With a high quality Revenue Management System (RMS), you can be assured of success.
If you think just purchasing a Revenue Management Software will boost your sales, you're wrong. While it helps a lot in the long run, purchasing is only the beginning of the journey. As it goes with everything, the beginning can't be shoddy, and you need to understand the key benefits, USPs, and shortcomings of the software you're considering.
While buying such an important tool, you shouldn't be investing in the dark.
With my experience in managing clients around the globe, and the fact that they often need help with choosing the right set of tools, I thought I'd give you some important information - an everything to know kind of guide - to help you make an informed choice.
I'm sure you'd want to skip right to the part where I answer the most basic question - Which Revenue Management System is the best for my hotel? Trust me, I would have wanted for things to be that simple, but they really aren't. Your choice will depend on several factors, out of which the most important one is the property size:
Big Hotel → 50+ Rooms
Medium Hotel → 16 to 49 Rooms
Small Hotel → 5 to 15 Rooms
Micro Hotel → 1 to 4 Rooms
But regardless of the hotel size,
a good Revenue Management Software will put you ahead of the competition, and give you a substantial advantage in attracting more guests.
So, what's the fuss about?
How do you make the choice?
How will the tool help?
Let's dig deeper into the subject for some good understanding.
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What is Revenue Management?
Revenue management is one of the most important concepts in the hospitality industry. With perishable inventory, fixed costs, limited supply and varying levels of demand, it has become even more important in an evolving industry and tough times.
Revenue Management uses available data and analytics to predict demand, leverage strategic decisions, and maximise revenue.
When it comes to hotel owners, revenue management is mostly utilized for selling the right room category to the right customer. For the best cost efficiency, this needs to be done at the right time for the right price via a reasonable distribution channel.
When this is accomplished, the Revenue Management System becomes the most important tool in hotel management to help owners and managers make informed decisions. It's not only backed by data but empirical evidence to optimise hotel business practices.
For most hotels, Revenue Management Software is a new addition to the set of tools. With changing times, these systems are becoming more flexible, open, and useful. They not only save a good amount of your time but lead to higher revenue. In fact, with Revenue Management Software, even the smallest hotels can leverage dynamic pricing!
Revenue Management Systems consider many important data points, including customer demand, market supply, and internal data. This information is used to calculate the right price for the rooms. It helps you optimise pricing across distribution channels from a single central dashboard.
What are the benefits of using a Revenue Management System?
It goes without saying that a high quality Revenue Management System can help you calculate ideal room rates. You can use the software to adjust rates in real-time, consider projections of future profit and demand, and get crucial information about competitors. Overall, these details can help you adopt a strategic approach to maximise revenue.
Regardless of the size of your hotel, the main reason why a Revenue Management System is important is the ability to perform complex calculations quickly, efficiently, and accurately. It's the perfect tool to assess real-time market data, which is impossible to replicate manually. Most importantly, unlike the staff on duty, the tool works 24/7, 365 days a year.
As a result, you're able to improve key performance indicators, such as
RevPar, also called the Revenue per Available Room. The calculations made by the software determine ideal rates by day, audience, and room type, instantly adjusting prices across distribution channels from a single dashboard. It also has a positive impact on your hotel's GOPPAR (Gross Operating Profit per Available Room).
Contrary to popular belief, Revenue Management Systems are even more important in smaller hotels, since fewer rooms require you to maximise revenue for each room. In larger hotels, it's an essential tool, since it's almost impossible to manually handle the workload of revenue management, which could eventually result in more errors and poorer decisions.
What are the Top Revenue Management System Features?
Revenue Management Systems are full-fledged software packages, which come with a wide range of features and functions. While we've listed the most important ones, don't forget to take a look at this detailed article about the
best RMS Solutions of 2021.
While it's not necessary to connect the RMS with everything, you need to make sure all the prices get updated from a single place. Two systems should be able to communicate with each other and share data without disruptions.
Individual Channel Management
The Revenue Management System should allow you to optimise pricing across distribution channels through the
Channel Manager. With a high quality RMS, you're able to leverage per channel pricing, discount prices, commissions, and generally optimise pricing opportunities to maximise revenue.
Open & Dynamic Pricing
A solid RMS lets you price distribution channels and room types independently of each other. While it's always better to set BAR pricing as a guide to manage room rates, the software should be able to calculate and suggest rates dynamically.
Additionally, it should be able to leverage complex algorithms, current market data, past performance data, and other crucial information to offer optimal room pricing.
Automated Rates Updates
With a lot of manual workload, revenue managers aren't able to work effectively and efficiently. With a good RMS at their disposal, managers and owners can automate routine tasks, such as uploading rates to Channel Managers. Ideally, your revenue management strategy should be running on autopilot. At the same time, it should be controlled with minimal scope for erroneous rates.
We make independent hotels improve RevPAR, ADR and occupancy.
With proper monitoring of the competitors' rates, you're able to adjust your own pricing accordingly. A good RMS is able to find competitors' pricing on OTAs, track the price trends, and report the information in real-time. This helps you make price adjustments swiftly, allowing you to attract budget-conscious guests.
A lot of Revenue Management Systems come with a built-in rate shopping feature, allowing you to check room rates of other similar hotels in the area.
If you're able to securely collect and store data, you're at an advantage to know exactly what's been working for your property.
In order to adjust pricing or make crucial decisions about inventory, you should be able to leverage accurate and extensive data.
It's always better to choose a Revenue Management System that collects, stores, and organizes data from across business operations, and provides everything in the form of easily understandable reports, charts, and graphs.
Intelligent Reporting, Monitoring & Alerting
A high quality RMS learns to automatically notify you about various things that could or should require your attention. This includes drops in important KPIs, special events influencing sales, or actions you could take to improve RevPar.
It's pointless to use a Revenue Management Software without Intelligent Reporting. The platform should be able to build, export, and share important data, providing you with more time to focus on strategic decisions. These could include insights and KPIs, including RevPAR, occupancy rates, average daily rates, etc.
Benjamin is originally from France, but has been living abroad and travelling extensively for over 15 years. He currently lives in Dublin, Ireland, with his Polish wife and young daughter.
With years of experience in assisting hoteliers manage operations or opening up innovative hotels across the world, Benjamin has been a trusted name in the hospitality industry, and is well known for his knowledge and expertise in European markets.
Currently, Benjamin works across the globe, helping hotels use modern technology to improve operations & revenue. He understands the challenges independent hoteliers face, and believes that running a hotel should be simple.
Benjamin's life goal is to open a chain of eco-friendly hotels, promoting sustainable tourism and local community development.