How Revenue Management Can Bolster Bottom Line Results in Emerging Markets

By Paul Vanderbroeck Chartered FCIPD CC, Leadership Expert, PVDB Consulting; Faculty Member Glion Online | August 11, 2013

To say that hoteliers operating in emerging markets often face challenging business conditions is an understatement like no other. From operating in boom to bust business environments, from periods of slow business growth to increasingly fierce competition, hoteliers in emerging markets face economic uncertainties on a daily basis. Yet, despite these challenges, they are also presented with enormous opportunities to grow revenue if they have the right people, processes and tools in place.

To help ensure that industry best practice strategies and systems are in place, hoteliers in emerging markets should take lessons from their counterparts operating in more developed markets. Critically, emerging market hoteliers should be looking towards the widespread adoption of revenue management amongst hoteliers in developed markets and how individual and group owned properties enjoy stronger bottom line results.

Revenue management is often seen as a grey zone in emerging markets and hotel owners and general managers alike are reluctant to be amongst the first to adopt it. However, what hoteliers in emerging markets must understand is that when their local industry experiences a sustained period of growth, they will soon find they are no longer operating in a competitive market segment made up of only smaller local hotel owners, but rather, the collective success of the local industry will attract the larger international hotel chains. International hotel chains are a threat to local hoteliers in emerging markets as they bring with them greater sophistication in terms of both their operational strategies and systems. Therefore it is vital that local hoteliers act now to ensure they have the right tools, technologies and operational processes in place to maximize revenue, regardless of the maturity of the market or the competitive landscape.

Revenue Management is an Investment and Not a Cost

Many hoteliers in developed markets have recognized the benefits of revenue management and its potential for maximizing revenue from hotel guests; in periods of both high and low demand. Yet in emerging markets, revenue management is generally viewed as an additional cost, due to the initial outlay required, rather than as the asset and strategic tool for increasing returns that it is.

Revenue management helps ensure that rooms are priced at the right rate at the right time, which leads to a higher flow-through of additional revenue and directly impacts bottom line results. Through the accurate forecasting revenue management offers, hoteliers can also be in a better position to anticipate changes in the market and implement successful strategies to ensure revenue-per-available-room is always maximized. While revenue management comes with an initial investment, including people, processes and tools, its implementation will better equip hoteliers to retain guests, operate sustainably in the future and maximize revenue over the long-term. This will positively impact the bottom line and ensure a long-term return on investment.

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