7 Tips to Make a Winning Business Case for a New Hotel RMS

A recent study by Regional Research Reports concluded that in 2022, the global Hotel Revenue Management Systems (RMS) market was valued at millions of USD and was projected to reach multi-millions of USD by 2033. And there are reasons we’re seeing such a rapid rise in demand: Next-generation RMSs.

NB: This is an article from FLYR (formerly Pace Revenue), one of our Expert Partners

The many benefits of RMSs – particularly AI-driven RMSs – are clear.

• Hotels using AI-driven revenue management systems have seen a 20-30% reduction in labor costs. (Researchgate.net)
• Hotels that implement revenue management systems typically experience a 10-15% increase in direct bookings. (Skit)
• Switching to an RMS provides organizations with a 7 to 20% rise in revenue per available room. (Deloitte)
• Hotels see a 2 to 7% increase in profit margin, on average, within 12 months (Hotel Tech Report).

Still, it will take a compelling business case to convince higher management to make the switch. And while statistics, like the ones above, will surely help, they won’t be enough.

Let’s look at what you can do to make your proposal authoritative and persuasive to significantly augment your chances for approval.

1. Understand the Needs and Pain Points

Before presenting a case for investing in a new revenue management system, it is crucial to thoroughly understand the needs and pain points of your hotel. Conduct a comprehensive analysis of your current revenue management processes and identify the areas that need improvement.

If your organization is currently using a legacy RMS system, it may not be able to handle the increasing complexity of today’s revenue management challenges. These include dynamic pricing, personalized offers, and real-time demand forecasting. This can limit a hotel’s ability to adapt to market changes and maximize revenue potential. Legacy systems can also require significant manual effort to maintain and update because they lack integration with other hotel systems, leading to data silos and inefficient workflows.

If you don’t have an RMS at all, revenue directors rely on manual processes and intuition to make pricing and inventory decisions – which is not exactly optimal decision-making, leading to missed revenue opportunities and suboptimal pricing strategies. Without accurate forecasting and demand analysis, revenue directors may struggle to allocate inventory effectively. And overbooking can result in unhappy guests and potential reputational damage while underbooking leads to lost revenue.

Highlighting and addressing these challenges will help you tailor your case to address specific pain points and demonstrate the value of a new system in solving those issues.

2. Allies and Advocates

As human beings, we are social creatures. We create relationships with others, and the stronger those relationships are, the higher the trust levels between those individuals will be. In other words, you’re more likely to trust your friend than a stranger. And when a good friend advocates something, you tend to listen.

So, in pitching for a new RMS, before you go straight to the CEO’s or CFO’s office, find yourself one or more influential advocates. Identify key influencers within your hotel, such as senior executives or influential department heads, who can support your case. With a few key allies on your side, your business case becomes that much more compelling.

Share success stories from other hotels or industry case studies to demonstrate the positive impact of implementing a revenue management system. By appealing to emotions and illustrating real-world examples, you can make a more compelling case for investment.

On top of the above, discussing your plan with advocates is also likely to yield new ideas and identify weaknesses in your proposal. You have nothing to lose and everything to gain by taking this approach.

3. Frame it as a Necessity

New tech can sometimes be seen as a luxury rather than a necessity. And if budgets are tight (as they tend to be), you’ll have to break that perception in order to get approval. And that means framing your proposal as a necessity – wanting something won’t be enough. You have to need it.

Making the case that your competition is gaining an edge through their use of an RMS is a good starting point. AI-driven revenue management systems like FLYR for Hospitality are becoming increasingly popular in the hotel industry due to their ability to analyze large amounts of data and provide accurate Decision Intelligence and your organization wants a piece of that.

The platform can automatically adjust room rates based on factors like demand, competition, and market conditions, helping hotels optimize their revenue and maximize profitability. Because it uses AI algorithms, the platform can also identify patterns and trends in customer behavior, allowing hotels to offer personalized pricing and promotions to attract more guests and increase bookings. Unlike other RMS platforms, FLYR’s solution can continuously monitor market conditions, competitor pricing, and demand fluctuations in real time. It can refine decision outcomes through a feedback loop, ensuring that it becomes more intelligent and effective with every passing day, so its benefits should grow with time.

The system’s automation capabilities save revenue directors valuable time and ensure that pricing decisions are always based on the most up-to-date and relevant data. The ability to harness the power of data is becoming increasingly crucial for hotels to stay competitive in the dynamic hospitality industry. Highlight these points, and your proposal becomes the way to level the playing field: a definite need. It also underscores the fact that there are risks to doing nothing.

4. Anticipate Common Objections

Change is perceived differently by different people. But one common denominator is that change often elicits a sense of insecurity. And so, depending on the people you’re making your pitch to, they may invoke various reasons to resist that change. Whether that’s budget constraints, integration challenges, or a mischaracterization of the benefits, you should anticipate and address those rebuttals. You should have well-thought-out and practical responses to each one that are aligned with your business case.

Provide clear and concise explanations, offer solutions to potential challenges, and highlight the long-term benefits and competitive advantages that outweigh any short-term obstacles. They should spell out the benefits while reassuring decision-makers that making the change is a wise business decision.


5. Provide alternatives to highlight your solution


Tied to the above, you want to show that you’ve done your research and know what you’re talking about. That means being aware of the alternative solutions. There’s a good chance you’ll be asked about them anyway, so be ready.

You want to have a list of alternative RMSs or alternatives to RMSs altogether. Lay out their benefits and pitfalls, their costs, and their risks. You want to demonstrate high-level knowledge and that you used that knowledge to pick the best solution for your organization.

From there, list the benefits of your chosen solution. The benefits should make it clear that your solution is the most compatible with your business goals and provides a measurable path to success (i.e., growth).

6. ROI is Your Secret Weapon – Use it

As we’ve already stated, you’re making a business case for a necessity. And what’s more necessary than revenue to a business? Luckily for you, RMSs have a solid record when it comes to return on investment – so the math is already on your side, and math is a powerful ally in the business world.

Remember that statistic in the opening paragraph that stated RMSs provided between 2 and 7% rise in profit margins over 12 months? Well, that translates to an ROI of 200 to 350%. And that’s a figure that sticks in the mind. You’re trying to bring others to your point of view. You should highlight points that cater to human psychology. The ROI should figure prominently in your proposal and be presented after some of the key benefits of your proposed solution for maximum impact.

You also want to provide a realistic timeline for the implementation process and its path towards growth. The change you’re proposing must be deemed safe. Keep your timeline high-level – you can always provide more details after approval.


7. Demonstrate the Scalability and Flexibility

Highlight the scalability and flexibility of the new revenue management system. Show how the system can adapt to the changing needs of your hotel as it grows and evolves. You want to show that the solution you’re proposing fits with your organization – that it can adapt to your needs.

Emphasize the ability to integrate with other hotel systems and technologies, ensuring a seamless flow of data and maximizing operational efficiency. This will address concerns about future-proofing the investment and provide reassurance to stakeholders.

Wrapping Up

So those are seven essential tips that can tip the balance in your favor when pitching a new RMS. A successful pitch in this context is a blend of business savviness, rhetoric, and human psychology. And you need all of these to be successful.

RMSs have made their mark in the market and have proven their worth, which already helps make it an easier sell. Still, by ticking the above boxes, you maximize your chances of approval and will help set your organization on a growth trajectory.

Read more articles from FLYR (formerly Pace Revenue)