For many reasons, 2016 brought with it some anticipated, and some less so, developments that required revenue managers to review their revenue management strategy. Brexit, the rise of the sharing economy, and the growth of mobile technology were just some of the factors that impacted pricing decisions to a lesser or greater extent. And this trend of ongoing disruption looks set to continue into 2017. With this in mind, we look at some practices the savvy revenue manager should look to employ to mitigate risk in a world of increasing disruption.
Focus on growth, but consider costs
While Book Direct has long been the holy grail of the revenue manager, championed as the most cost effective way to generate bookings, is it as cost effective as you believe it to be? Failure to recognise all costs involved in securing that booking on your website – booking engine commissions, the digital marketing costs of getting the booker to your website, and cost of maintaining your website – need to be recognised and accounted for to prevent a false economy.
Integration of Food and Beverage into the revenue function
Ensure Food and Revenue and costs are built into the RM function. Some channels, while they generate a high ADR, do not generate large F&B Spends. And while that conference booking, may not present the average rate you hoped for, the resulting spend on F&B, may more than compensate for a low ADR. It’s imperative to recognise the total revenue to the business a booking generates to make informed RM decisions.
Build the right toolkit
Systems don’t come without a cost – but operating without the support of a robust integrated toolkit, can prove to be far costlier in the long run. Investment in a PMS and an integrated booking engine and channel manager to support your revenue management operation will negate the requirement for manual intervention, reducing labour costs and minimise the chances of potentially costly errors. Real time updates also mean that you are constantly able to optimise your available inventory and make informed pricing decisions.