Winning the Numbers Game: The Rainmaker Guide to Hotel Revenue Management

Author: Avanti Joglekar

Hotel revenue management is a discipline that optimizes revenue by strategically managing a property or group’s room inventory and pricing based on predictions about consumer demand. In the hospitality industry, revenue management can be defined as selling the right room to the right customer at the right moment at the right price. Maximizing revenue during high-demand periods and stimulating demand during periods of lower demand are some of the basic strategies involved.

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While revenue management relies on market data and past and current trends, the data alone is not enough. A revenue manager must understand and consider many factors, such as changes in consumer behavior, the roles of various distribution channels, and the specific set of competitors in his or her market. The manager also needs to know how to use segmentation, create forecasts, and implement pricing models. Having an overall understanding of the property of group’s market, position, and strategy allows a revenue manager to be proactive rather than reactive.

Revenue management strategies and technologies have evolved rapidly over the last decade. Consumer markets have changed dramatically and the ways that consumers conduct research and purchase products have been transformed by emerging digital and mobile technologies. Technology has also offered new insights into consumer behavior that have never before been available. Revenue management’s job now is to use all of the available data to determine the strategies that will yield the greatest revenue while optimizing current room inventory.

Additionally, new distribution channels are being introduced on a seemingly monthly basis. Monitoring and leveraging online travel agencies, such as Expedia and booking.com, is vital. At the same time, Airbnb and VRBO.com are relieving some of the pressure in high-demand periods, potentially affecting the prices that can be charged in specific markets on compression dates. Companies like Expedia and Airbnb offer user-friendly, readily accessible online platforms that consumers can use to book room stays. They are also masters of online marketing, with impressive marketing budgets. A strong revenue management strategy has to rise to the same level if it is to compete in today’s rapidly evolving online marketplace.


Merely reviewing reports only at year end and setting once-a-year revenue management benchmarks will position a hotel for failure. A winning approach to revenue management requires a comprehensive understanding of the market, incorporating the latest intuitive technology and predictive analytics customized for the property, as well as consumer demand insights generated from social media and online review sites. All of this information must be synthesized before revenue managers can forecast demand, set up dynamic room rates, and successfully navigate the complex landscape of online distribution channels.

In the following weeks, we will delve deeper into the four topics of segmentation, forecasting, pricing, and distribution for traditional hotels seeking to take their revenue management to the next level. 

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