Hotel revenue management is the process of optimizing revenue by predicting demand and setting prices accordingly, most commonly found in hotels to forecast occupancy in order to maximize their room rate, hotel marketing strategy, and overall property performance.
NB: This is an article from EHL
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It’s a complex and ever-evolving field for a revenue manager to navigate, with many channels and tools to keep up-to-date with. But it is a key function for any hotel that wants to remain competitive in today’s marketplace to get a firm handle on in order to welcome more guests through their doors. Today, Artificial Intelligence is making the job of data analysis much easier in a variety of ways, this article will go into detail about how Revenue Managers can use AI to get ahead of the competition.
Why is revenue management important for hospitality businesses?
Hotel revenue management is important for a number of reasons. First, it helps hotels to maximize their profits. By setting prices that are aligned with market demand, hotels can ensure that they are generating as much revenue as possible from their rooms. Second, hotel revenue management helps to improve the guest experience. By offering rooms at competitive prices, hotels can attract more guests and ensure that they are getting the best possible value for their money. Finally, hotel revenue management helps to protect hotels from financial risk. By understanding demand patterns and forecasting revenue, hotels can make better financial decisions and avoid losses.
Revenue management in the age of AI and Big Data
A study by McKinsey Global Institute found that AI adoption by businesses could increase global GDP by up to $13 trillion by 2030. What’s more, attitudes towards the technology are shifting as a survey by PwC found that 72% of business leaders believe that AI will be a significant business advantage in the future. AI is integrating many industries and professions, the lodging and hospitality industries included. Revenue Management is one of those professions that is set to reap the benefits of AI integration. Since the key to being successful in revenue management is following data trends closely and using these insights to set the right pricing at the right to the right customers, AI is perfectly suited to supporting this hotel function.
Preparing routine reports for a revenue management team can be a time-consuming part of monitoring performance. Business analytics and data visualization tools such as Agile Business Intelligence (BI) and Power BI by Microsoft are transforming the hospitality industry in significant ways with their ability to rapidly process and analyze data, produce reports, and integrate information on one platform.