Revenue Management, Risk Management and Payroll Processing
Completing the Puzzle
By David Hogan Executive Director of Major Accounts, Heartland Payment Systems | October 18, 2015
According to Cornell University's prestigious School of Hotel Administration (SHA), implementing a revenue management strategy is a vital strategy of hotel operations. SHA defines revenue management as "a systematic process designed to increase revenue by considering demand, reservation scheduling and variable pricing." Revenue management includes evaluating different pricing models, applying duration-management strategies, forecasting, group management and overbooking, pricing strategy, and application of revenue management techniques to other hospitality-related industries, including spas and athletic facilities.
If you have been in the hotel industry long enough, you probably remember filling out paper ledgers by hand. The most recent equivalent is completing a complicated Excel spreadsheet you put together on your own. Everybody has their own reasons for getting into this space. While mastering booking curves and predicting demand is a satisfying part of running a successful hotel, I don't think many hoteliers got into the industry purely to comb through mountains of paperwork or gigabytes of data.
Lodging demand in the U.S. continues to grow and hoteliers should see moderate economic spikes this year, according to PwC's Lodging Forecast. While the industry recovers, hoteliers will resume investing in infrastructure, amenities and technology. Each component plays a critical role in operations. However, most will agree that a hotel's revenue management system (RMS) is the technological foundation that allows hoteliers to profitably operate their property.
Many hotels still have one person dedicated to these tasks, but more and more hoteliers are realizing that they need to dedicate more resources, staff and tools. The revenue managers define the metrics and goals for the hotel and they make sure everyone buys into what those goals are and helps them work toward them.
We know everyone uses some sort of revenue management tool. You simply have to in order to see what you make, how you make it and where you could be spending and saving more efficiently. However, for a revenue manager to do their job well, he must employ a series of tools and use various approaches. With the current software on the market, it seems likely that hotels will move away from compartmentalizing in favor of a central hub of information and revenue-generating capabilities. Many large national chains have already started consolidating their systems.
Among the reasons for this is the rise and effectiveness of data analytics. "Big data" is a buzzword you've likely heard bouncing around lately. It's a broad term for data sets so large or complex that traditional data processing applications are inadequate. This type of data is now being analyzed to help create effective forecasts and maximize revenue.