Success with Hotel Revenue Management Means Asking Right Questions
According to the The 2018 Smart Decision Guide to Hospitality Revenue Management, more than one-quarter (28%) of hoteliers who have not upgraded their revenue management within the past 3 years plan to do so in the next 12 months.
By asking the right questions, decision makers can determine which revenue management solution on the market best fits their needs and is most likely to deliver the benefits they seek, with minimal risk and expense. The hotel’s revenue manager(s) — people who know the nuts and bolts of inventory management and length of stay control and who understand, for example, how to calculate group rates and apply rate fences — should be included in the evaluation process.
Most revenue managers want solutions that provide visibility. They want to be able to look under the hood and dive into price sensitivity data and observe at a detailed level what inputs are behind the system outputs that are being made and how adjustments to the decision model would change revenue outcomes. They do not want to wait for actual booking numbers to come in to understand the impact of their strategies and determine whether they made the right decisions. In short, revenue managers need to be comfortable that the new solution will enable them to do their jobs with maximum effectiveness.
Make sure the revenue management solution can provide answers to pricing questions
To be effective, revenue managers require tools that will enable them to answer all of their day-to-day pricing questions. These questions may be voluminous, and some may be difficult to always know in advance.
Such questions might include: By how much should we increase or decrease our rates for a given type of room? How many groups, and what size groups, should we accept on a given day? How much should we charge walk-in guests? What should be the floor and ceiling for our rate range? Are the changes in demand and bookings likely to represent a short-term or long-term pattern – and, if the latter, what actions should we take in response? To what extent should we discount negotiated rates? What should our best available rates be for the coming year?