How Today's Revenue Management Systems Can Help Hotels Manage Tasks
By Lily Mockerman Founder, Total Customized Revenue Management | 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.