Upgrading revenue management capabilities means implementing the right technology solution and integrating the right data sources – ones that have been shown to improve forecast accuracy and pricing decisions. It also means putting the right organizational resources in place and creating a revenue-focused culture.
According The 2018 Smart Decision Guide to Hospitality Revenue Management (now available for complimentary access), and based on the experiences of more than 150 top-performing hotels, there are a number of success factors for next next generation revenue management. Here are 5 of them.
1. Focus on data integration
The revenue management solution needs to seamlessly integrate with the property management system (PMS), which, in turn, needs to integrate with the central reservations system (CRS) or channel manager. For revenue strategy to be most impactful, the PMS also needs to incorporate valuable data streams from all point of sale (POS) systems in order to capture ancillary spending on food and beverage purchases, as well as function-specific solutions (spa, golf, etc.).
2. Focus on data quality
Choose data sources that will help with accurate decision-making and steer clear of all the rest. Be wary of incorporating every last piece of data that may be available from every possible data source into the decision model. Revenue forecasting accuracy tends to be a case of “quality over quantity” rather than “the more, the merrier.”
While poor technology integration can result in some data discrepancies, most data accuracy issues stem from human error. Put consistent processes in place that staff can follow to help improve data accuracy.
3. Hire the right revenue manager(s)
The role of the revenue manager has never been more important. In fact, some industry observers contend that revenue managers should be the highest paid employees in the hotel, given their potential contribution level to top-line revenue growth. Of course, in smaller hotels with limited budgets, the revenue manager and general manager are oftentimes one and the same person.
Unfortunately, general managers may have little or no training in the science of demand forecasting and price optimization, invariably leading to suboptimal results. Ideally, the individual running the show should have the specialized skills and knowledge needed to ensure the solution produces maximum benefit. In addition to employing large teams of seasoned revenue managers, some major hotels are now carving out positions for data scientists to evaluate all of the data that is collected and to refine the pricing models based on that data.
4. Think in terms of “total revenue management”
While guest room revenue is the bread and butter of most hotels, ancillary revenue steams can contribute significantly to overall revenue and profitability. Look to see if there may be a golden opportunity to apply revenue management tactics in these and other non-room categories to achieve optimal financial results. Hotels that fail to embrace next-generation solutions that enable “total revenue management” will fall behind their competitors.
The best of revenue management solutions allow hotels to consider the contribution margins and capacity constraints of not just guest rooms, but also restaurants, bars and cafes, spas, golf courses, ski lifts, and any other assets of the property. Some advanced solutions include capabilities specifically focused on optimizing meetings and events revenue and driving profitability. These capabilities allow hoteliers to optimize profits across multiple revenue streams, from guest rooms and meeting spaces to food and beverage, catering, A/V equipment rental, ancillaries and more.
Thinking in terms of total revenue management, taking into account the ancillary spending that takes place in hotel restaurants, bars, conference centers, banquet space, golf courses, etc. and not just revenue management as it pertains to guest rooms, can mean leaving a lot less money on the table and significantly boosting revenue and profitability.
5. Partner with the sales and marketing departments
The pricing recommendations and market insights generated by revenue managers can be valuable across multiple parts of the organization. Access to the tools and dashboards should be made available to marketers, in particular, who are charged with demand generation activities.
Insights, such as those that forecast periods of high demand versus low demand and that reveal which customer segments are planning to book rooms for a certain period, should inform every campaign. The insights should inform how aggressive to be with marketing offers and promotions, toward which customer segments the offers and promotions should be directed, and when, exactly, to present the offers and promotions, and which marketing tactics are most likely to elicit the desired responses.
To achieve optimal results, it’s imperative that revenue managers work hand-in-hand with the sales and marketing functions and integrate all of their customer acquisition strategies.
The 2018 Smart Decision Guide to Hospitality Revenue Management is currently available for complimentary access. Click here for more information and to access the new resource.