Hospitality and airline industries are considered to be the epitome of best practices in pricing and revenue management. In the battle to gain competitive advantage alongside high yields, sophisticated software suites are deployed by them to forecast demand, manage inventory and monitor competitor prices. Yet technology, no matter how refined, is just an enabler of a broader business strategy.
“Variable costs may only amount to around 10 – 20% of the price, remainder being fixed cost and profit!” – HOSPA
This triggers a question.
How to build a revenue-based business case to support technology spends in this price-intensive industry?
Pricing is a marketing activity and technology evidently enables it to respond instantaneously. Planned investment drives commercial strategies that are further fortified by holistic views of assessment and RM. Such technically enabled decisions augment crucial revenue related functions.
Key characteristics of a comprehensive and technical RM effort, and its incorporation into management programs are as listed below:
- In order to instinctively determine what segments produce better flow-through, profitability (along with ancillary revenues) are tracked by market segment.
- To optimize all revenue streams for both tactical and strategic influence, the RM tool’s role gets stretched.
- Industry metrics like RevPAR, Occupancy and ADR are tracked by room type to clearly identify suboptimal value propositions.
- Unnecessary business spends are drilled down by the revenue center.
- In order to identify, monitor and mitigate lost revenue opportunities, methodical tracking of upgrades are done.
Businesses with the following characteristics can apply the above revenue optimization solutions.