The Changing Face of Revenue Management

By Paul van Meerendonk Director of Advisory Services, IDeaS Revenue Solutions | March 17, 2013

Revenue management was once one of the most under-loved and often misunderstood departments within a hotel, but today it is central to a hotel’s ability to manage demand and drive profitability. Having access to quality data and knowing how to use it effectively is at the core of successful revenue management and one of the most powerful tools you can use to accurately manage demand and maximize revenue.

Revenue management’s original inspiration came from the airline industry, which in light of increasing competition in the 1980s saw the need for more effective sales and pricing support solutions. Operating in a similar environment, with customers booking in advance, having perishable inventory, as well as the need to balance supply and demand, the hospitality industry was quick to adopt the concept. Since then, hotel revenue management has evolved significantly and its systems can now handle enormous amounts of data. Revenue managers around the world are now using these advanced systems to promote a longer-term approach to pricing and sales.

The internet has significantly changed the way the industry has approached the issue of optimizing revenue. While it has opened doors to a much larger number of customers around the world; it has also presented numerous problems for hotel owners and managers; due to the increased volumes of data that a hotel collects and the greater number of booking channels to manage.

While in the past it was common place to gather data manually, we are now in the era of what is known as big data. The volume and complexity of data hoteliers collect is growing exponentially, especially as advances in technology increase the variety of booking sources, for example mobile platforms are increasingly used to make bookings. This reality has made it close to impossible to manually crunch the numbers and keep track of numerous spread sheets. Slowly, the old systems are being replaced by automation and advanced software, which allows these large volumes of data to be gathered.

While revenue management has come a long way – there are still areas where many hoteliers are missing the mark in its successful execution. While data collection is easy with the right systems in place, it is not just the volume of data collected that is important. The quality of the data is crucial, as you won’t be able to make quality revenue management decisions without quality data.

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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.