The lack of revenue management know-how among many accommodation providers is partly due to some only beginning to grasp the basics of managing a property – a complex undertaking in itself.
NB: This is an article from SiteMinder, one of our Expert Partners
Subscribe to our weekly newsletter and stay up to date
Yet, it’s important to consider that the demands of revenue management have drastically changed. With rising costs, evolving guest behaviours and the varying types of accommodation businesses that have emerged, revenue management now means different things to different properties.
As revenue management transcends room occupancy and pivots to a profit-oriented paradigm, it’s clear that accommodation owners can no longer afford to ignore the critical role of the practice in the current landscape.
For instance, Diego De Ponga, Corporate Director of Revenue Management at Palladium Hotel Group, believes the classic definition of revenue management is unrealistic in today’s market, where selling inventory demands more flexibility.
“I define revenue management as a way for accommodation properties to earn more,” says De Ponga. “These days, it would be impractical to use the classic definition, as I will sometimes sell at a less ideal time, at the right price. If you’re a revenue manager for a property with 100 rooms, your task is to maximise profits from all those rooms, regardless of market conditions.”
De Ponga’s nuanced perspective on how revenue management works in today’s landscape is a result of years of experience in the field. But for many of the world’s independent accommodation providers, revenue management remains unfamiliar territory, often marked by misconceptions and misguided practices.
Overwhelming demands
“Some owners of accommodation properties are experienced business people, but new to the day-to-day operations of a hospitality business,” says Tamie Matthews, CEO and Founder of RevenYou, a consultancy for independent hotels. “While they may be excited to be in charge of the business, everything is new. They are having to learn everything all at once.”
Revenue management is therefore considered a tedious, if not optional, exercise for these time-poor owners preoccupied with other aspects of running a hotel. In fact, many owners of small independent properties we spoke with confirmed that they were ‘too busy’ to pursue learning about revenue management, given the overwhelming demands of their businesses.
It goes without saying, however, that many thousands of properties around the world, particularly smaller independents, are already implementing measures to drive revenue – without even knowing it.
According to De Ponga, hotel software solutions such as channel managers and revenue management systems (RMSs) have democratised the practice, owing to the rise of online travel agencies (OTAs).
“I can’t imagine our job without a channel manager given all the OTAs out there. This tool gave revenue managers the opportunity to develop distribution strategies. RMSs allowed us to go deeper in analysis,” De Ponga shares.
