The Next Generation of Revenue Management Strategies
By Paul van Meerendonk Director of Advisory Services, IDeaS Revenue Solutions | February 16, 2014
There is one constant in the hospitality industry – change. What was once considered leading practice in terms of customer service, like express check-outs to avoid morning queues or offering free Wi-Fi to guests, is now expected by many travellers as base level service. Just as service offerings to guests have evolved through the years, so have the operational technologies hoteliers themselves use to ensure that their properties are running as efficiently and profitably as possible.
Revenue management has been used in the hospitality industry for well over a decade. The practice was first used to simply fill rooms, with no real view to the long term effects of these pricing decisions. Using revenue management in this way provided hoteliers in the short term with more customers and spikes of increased revenue, however, this approach also led to longer term negative effects and hoteliers who simply slashed their rates to fill rooms usually took time to recover financially from short term pricing decisions.
Over the years, revenue management has evolved to become more reliant on advanced technologies which promote a strategic, longer term approach to pricing and sales. However, even using revenue management to strategically price hotel rooms and ancillary services is no longer enough in today's dynamic operating environment where the way guests choose the hotel they want to stay in and what price they are willing to pay is constantly changing. It is time that hoteliers stop thinking about revenue management as it has been known, and start thinking about the next generation of revenue management strategies that are adapted for today's digital environment and take additional revenue streams into account.
Today's Hotel Guest is Empowered, in Charge and Online
All hoteliers need to realize that their guests have never had more power. While many hotel managers will argue that the guest has always been their core focus and offerings, services and the way rooms are packaged and sold has been tailored towards them, it is not the same guest from the past. Today's hotel guests have increased expectations and are in control of every part of their experience.
Both business and leisure travelers have changed the way in which they book hotels over recent years – in the past they may have been more reliant on travel agents or travel brochures to actually inform them of the best places to stay and relied more heavily on a traditional star rating process and descriptions of the hotel generated by the hotel themselves. These days, when a traveler goes to book a room in a location that they may not be familiar with; their selection process is much different. In many cases potential guests search for information on the hotels in the area online and specifically look to third party review sites for impartial past guest reviews to "aid" in the selection process.
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