The idea of a revenue manager gazing into the dashboard equivalent of a crystal ball and basking in accurate demand forecasts for every night of the year across every guest room type and every guest segment used to be the stuff of fiction. The idea of that revenue manager stepping into the pricing decision and distribution equivalent of a self-driving car that takes them from Point A to Point B, dynamically updating rates across channels along the journey, was equally far fetched. The analogy may be botched, but the message is clear as day.
With recent technology innovation, revenue managers need not spend their valuable time making manual calculations, pulling pricing levers, and keystroking updated rate information. Instead, they can sit back and “manage by exception.” They can always take the controls, putting their foot to the gas pedal or steering in a different direction if they wish. But, generally speaking, there is no need to do so. Putting their faith in a science backed solution and taking a hands-off approach to day-to-day operations unless unusual circumstances arise and/or where human judgment is required, tends to be the better approach and gives them more time to focus on strategy.
Next-generation revenue management solutions use rich data inputs to fuel a dynamic pricing decision engine designed to optimize financial performance. Yet, despite many similarities, not all solutions are the same. In fact, different solutions have dramatically different features and functions, are built on fundamentally different philosophies, and often produce dramatically different business results. Some solutions allow revenue managers to yield by room type. If, for example, the solution detects a spike in demand for the “deluxe double” room type, it will automatically increase the price for that room type without also boosting prices on other room types. Some solutions yield each segment, channel, and room type independently in real time. Some set rates that optimize guest room and non-room revenue across various guest segments. Some solutions price by day or length of stay while also allowing hotels to price within a range or set specific price levels for certain attributes. Some solutions calculate demand forecasts for each future use of hotel rooms, and recommend the appropriate selling strategies, such as open/close rates, stay controls, open/close room categories, and overbooking levels. Some solutions incorporate group forecasting along with transient pricing so you are setting the best rate across all your business.
Given all this, which solution is the right one? Which one will best meet the needs of the hotel and produce optimal results? The answer is: It depends on what is best for your property and how you want to reach your goals. To read more about the buying considerations for adding the right revenue management solutions to your property, download our latest eBook with Starfleet Media - The Smart Decision Guide for Hospitality Revenue Management.