As the Revenue Journey continues the focus of the past articles now shifts to streamlining all the different elements by means of technology. Imagine having a tool that helps you set the right price for the right segment for the right channel for the right time with a simple click of a button.
The main focus will always remain – maximize as much revenue as possible per segment and a revenue management system can most certainly assist in doing just that.
It is important to remember that a revenue management system is a tool that is used by experienced revenue managers to assist in driving business and is not a tool that can be used to replace the actual role of your revenue manager. Gut feel is and will always be a very important part of revenue management.
Some of the benefits that a revenue management system can bring is:
– Pricing – a revenue management system assists in collating mass competitor set pricing strategies in real time and suggests the most accurate rate per segment for that given time period. This can be done manually however it would require a lot of time and often leads to errors. A revenue management system can also assist with group pricing strategies by analyzing complex data patterns very quickly in the form of a displacement analyses, this will not only assist in understanding if you are quoting the correct group rate but it also allows you to maximize total revenue and hotel profits.
– Eliminate Errors – another advantage of using a revenue management system is that once the tool pulls out the right prices, hoteliers can update prices across all channels in real time which decreases the chance of manual errors. As the distribution landscape broadens the cost of a manual error can mean more than just a loss of revenue but could also result in brand damage and a dent in the hotels credibility. A revenue management system will show a drastic decrease in errors and business efficiency will be much higher.
– Uses Science – not only does a revenue management system assist in eliminating human error, it uses systematic algorithms to collect data and in turn assist in automatically understanding the historic data. This will assist you when creating pricing strategies with a competitive edge.
– Accurate Inventory Management – as most hotels have more than one room type where many different complex restrictions can be implemented (see Revenue Journey Part 8 – Complete Revenue Management) a revenue management system assists in managing the hotels inventory by clearly indicating what restrictions to place and at what price to place these restrictions. This allows for complete inventory optimization and will in turn result in a uplift in occupancy, ADR & RevPAR.
As mentioned before, a revenue management system is a tool used to assist the revenue manager’s decisions, not a tool to replace your revenue manager – here are some ways in which a revenue management system aids your revenue manager:
– Provides guidelines on pricing – if the guidelines provide by the revenue management system is combined with the revenue managers experience and gut feel an increase in RevPAR will automatically be seen.
– Saves Time – by assisting with pricing and rate distribution the revenue management systems save the revenue manager time, this allows the revenue manager to spend more time analysing different aspects of the business as well as time to implement and improve new systems.
– One Stop Shop – A revenue management system provides the revenue manager with a single point of contact in a form of a dashboard for all the required information need to make any decision, this allows for quicker business decisions thus resulting in quicker response times and better conversion rates.
– Assists with forecasts – As a revenue management system generally includes many complex forecasting algorithms this tool can be used as a forecast validation tool for revenue managers. With better forecasting practices in place better business planning can be established.
– Assists with reporting – Most revenue management systems come with an extensive reporting module, this will assist the revenue manager by not only saving time but also by allowing more accurate decisions to be made in order to maximize business.
– Assists in Filling – every revenue manager wants his hotel to be full, the challenge is understanding the importance of pricing each room category, a revenue management system assists the revenue manager in doing just that by pricing each room category based on demand, this means there is better inventory control and in turn a better chance of closing at 100% occupancy.
– Remote Accessibility – Most revenue management systems are web based and comes with a mobile app, this allows revenue managers to change things quickly when certain market changes occur. The more dynamic and the quicker the hotel reacts to market changes the more likely an increased market share will be seen.
– Instills Confidence – the revenue management system will assist the revenue manager to be more confident in making business decisions, this confidence will go a long way in driving future business.
To conclude, a revenue management system is a great tool to assist your revenue manager and a great way to instill confidence in to the decision making process, whether it is pricing or inventory management. There are many revenue management systems out there so ensure to do all your research to find the one that fits your business needs.