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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