How Today's Revenue Management Systems Can Help Hotels Manage Tasks

By Lily Mockerman Founder, TCRM | July 30, 2017

Today’s revenue management systems can help any hotel quickly and efficiently manage revenue tasks that would otherwise present a challenge. It can be difficult to stay on top of distribution across multiple channels when there are plenty of other issues facing a property at any given time. In the Revenue Management world, the differences within independent or branded environments can often be significant regarding how each respective entity deals with revenue management. Often, we’re asked about differences in working with each type of property as it relates to strategies or RMS systems, and how TCRM approaches these unique challenges.

In response to these types of inquiries regarding revenue management systems, it’s likely more accurate to say that a system is more important to specific markets as opposed to an independent or branded environment. In quickly changing and dynamic markets like New York City, Los Angeles or San Diego, minute to minute fluctuations make the benefits of an RMS more substantial than to suburban markets that see little fluctuation in demand or rates as each day progresses. That being said, independent hotels are significantly more customizable from property to property in rate setup and yielding tactics, which allows Revenue Managers to use tools like Excel and simpler formulas vs. complex algorithms to help guide revenue decisions. For this very reason, it may be easier for an independent property to function without a full-scale system, whereas a brand would need that all-encompassing system to make proper decisions.

The differences in handling independent properties and chain properties are widespread, but the most significant difference is in the scope of possibilities within the system. For example, independents provide the opportunity to leverage a minimum stay-through strategy against or in combination with a minimum length of stay by arrival, combinations of which are usually not supported by brand systems. In addition, rate category setup and restrictions can be customized to suit the precise situation of a property which caters to market dynamics and property goals vs. a pre-defined structure provided by a chain.

To address revenue optimization, each chain has a slightly different approach to the RMS question. Some chains are contracting with independent RMS providers to “white-label” each system, like GRO for Hilton. Others, like Hyatt and Starwood, have developed entirely proprietary systems to suit their internal brand goals. Brand systems, particularly those that are uniquely developed for one brand family, often have a significant edge over independent systems in dynamic functions due to the size of the budget backing the development of each program.

The ability to leverage more expensive features such as hourly real-time optimization updates can quickly give a property a strong competitive edge in a major market, as opposed to many independent systems that offer updates only once or twice a day. Alternatively, brand systems leave less room for customization, which at times can hinder properties that might not fit the exact mold of the brand, resulting in additional overrides and manipulation of the system by revenue managers to help create adaptation.

This may lead those in the industry to believe that independent hotels do not possess the same resources as chain hotels. To an extent, that is true. There are certain challenges that an independent hotel faces that don’t affect chains. In today’s revenue management environment, there are a few critical resources that revenue managers must use when working with independent properties. Most importantly, revenue managers cannot excel without adaptability and learning agility. Every independent property in each market presents unique challenges and opportunities, and requires a truly adaptable approach to each situation, with the necessary level of customization, to properly leverage the opportunities that present themselves. Depending on the property, demand may dictate completely opposing strategies.

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.