The Evolution of Revenue Management: Where it came from, and where it is going

By Paul van Meerendonk Director of Advisory Services, IDeaS Revenue Solutions | February 26, 2012

While hospitality based revenue management was originally designed to deal with mainly single and independent hotels, the product has evolved significantly to handle the rapid growth of the internet and third party booking sites. While once seen as a niche offering only used by certain parts of the market, revenue management now plays a major role in the operation of a successful hotel or resort.

Understanding the ability of revenue management to constantly evolve to meet the changing nature of the hospitality industry provides an insight into the many benefits that the product can provide to a hotel or resort with.

There is no better time to understand the durability and evolvement of revenue management as whole than during this current period of prolonged economic uncertainty. While many services and solutions provide great benefits to hotels in specific economic situations, such as during a stand along boom period or during a recession, revenue management is designed to evolve and meet the challenges of the times whatever they may be.

Revenue management in the hospitality industry was originally designed with a view to filling as many hotel rooms as possible, with no view to the long term effects of the pricing decisions undertaken. Many say that its original inspiration came from the American airline industry, which saw the need for more effective sales and pricing support solutions during the original period of airline competition which took place in the mid 1980's.

The hospitality industry was quick to see the wide ranging benefits of having such pricing and sales strategies in place, albeit in a basic and simplistic form compared to the modern day version we now see.

Hospitality based revenue management solutions were designed according to the most 'simple supply and demand economics' according to Neil Salerno, Hotel Marketing Coach (i). The original use of the product offering was designed to meet demand during particular times, whilst there was no real planning for the future as there is in today's industry.

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.