Confronting Expectations: How to show the value of Revenue Management

By Paul van Meerendonk Director of Advisory Services, IDeaS Revenue Solutions | July 08, 2012

Revenue management is not a new concept, yet some are still struggling with its uptake, while others are reveling in the ongoing success it has brought to their organizations. Two recent conversations with global clients have stood out in highlighting very contrasting approaches to adopting revenue management principles.

The first: a conversation with the CIO of one of the world’s largest hotel organizations, on how revenue management could continue bringing innovation to the organization and drive value for its stakeholders. The most striking comment from this CIO was: “Revenue management is in our DNA. It is what we know needs to be done. We embrace it, understand the value it brings to the organization and want to do more of it.”

The second: a meeting with the project group of another leading global hotel organization, a similar size to the first. While it was apparent the corporate revenue management team understood its benefits, many in the organization doubted the long-term value of revenue management. In an ongoing project our organization has been helping this client demonstrate the value of more sophisticated real-life revenue management capabilities, with so far, very positive results. This conversation centered on whether the project’s success to-date was scalable, extensible and repeatable and if more sophisticated revenue management practices would really bring sustainable value to the business.

Two very similar organizations, two very different conversations.

Does it surprise me that after almost 20 years since the advent of revenue management, some companies are still struggling with the value proposition and the return on investment of revenue management processes? No. As with any complex business process, not only is revenue management often misunderstood, but there is always more to be done to educate, teach, create awareness and raise adoption. We work with companies around the world on a daily basis, helping them instill these capabilities.

What does surprise me is that two organizations with a very similar business model, operating in the same space, with similar stakeholders have taken two very different approaches to adopting revenue management principles. The first organization has clearly demonstrated the value of revenue management in a way that it is no longer questioned. It is now part of the intrinsic fabric of the company’s operations. While the second is yet to articulate what value revenue management can bring. What has made the difference between the two? These three key strategic viewpoints can help companies successfully demonstrate the value of revenue management on a daily basis.

Coming up in January 2018...

Mobile Technology: Relentless Innovation

Technology has become a crucial component in attracting and retaining hotel guests, and the need to enhance a guest’s technology experience is driving a relentless pace of innovation. To meet and exceed guest expectations, 54% of hotels will spend more on technology in 2018, and mobile solutions in particular will top the list of capital investments. Many hotels are integrating mobile booking, mobile keys, mobile payments and mobile check-in into their operations. Other hotels are emphasizing the in-room experience, boosting bandwidth and upgrading flat screen TVs to more easily interface with guest mobile devices. And though not yet mainstream, there are many exciting technology developments on the near horizon. The Internet of Things (loT) is taking form in some places, and can be found in guest room control systems, voice activation systems, and in wearable sensors that can be used for access and payment options. Virtual reality headsets are available at some hotels so guests can enjoy virtual trips to exotic locations or if off-property, preview conference facilities and guest rooms. How long will it be before a hotel employs a fleet of robots for room service, or utilizes a hologram as a concierge, or installs gesture-controlled walls that feature interactive digital displays? Some hotels are already using augmented reality for translation services, or interactive wall maps, or even virtual décor. This pace of innovation is challenging property owners and brands to stay on top of the latest technology trends while still addressing current projects. The January Hotel Business Review will explore what some hotels are doing to maximize their opportunities in the mobile technology space.