9 Ways to Increase Profitability in Revenue Management

It’s that time again. Budget season is here. And as hotel owners begin crafting their shiny new 2020 budgets, they’re tasking their revenue managers with finding ways to drive higher profitability in the coming year.

NB: This is an article from Rainmaker

Here we take a look at the top nine ways to use your revenue management system (RMS) to boost your bottom line.


comprehensive segmentation approach is the basis of an optimal pricing strategy and market mix. A BI-enhanced RMS quickly sifts through data to break down broader categories – like business and leisure – into micro-segments based on booking behavior, price sensitivity, arrival dates, length of stay, channels, lead time, source market, and more. You can continuously reassess segments and increase profits by applying targeted pricing by segment.

Guest Valuation

Develop a more complete picture of total guest value with an RMS that captures guests’ ancillary spend on top of room revenue. By employing scientific algorithms and data analytics, you’ll understand who your most valuable guests are. You can then maximize the profitability of each customer through more accurate demand forecasts, and by setting rates that optimize both room and ancillary revenue across segments.

Connecting with CRM

The growth in online customer interaction, and the importance of online review sites in customer booking decisions leads to the need for an RMS that connects with a customer relationship management (CRM) system. Valuable CRM data allows hotels to take a more customer-centric approach to revenue management – creating a lift in the bottom line through tailored upgrades, targeted pre-stay offers, and onsite activity purchases, all based on guest preferences, behaviors, and past purchases.

Utilize Data to Measure Marketing Programs

Personalized emails generate a 20 percent increase in sales. Your business intelligence (BI) tool consolidates valuable data on guest bookings and behaviors into one platform, creating a single source of truth. When shared with marketing you are able to match marketing calendars up with demand reports to measure success in campaigns. It also allows you to personalize marketing efforts in ways that engage your most valued guests and fill need dates.

Increase Brand Performance

A cloud-based RMS and comprehensive BI tool can seamlessly communicate and share data in real time between all of your properties.  It allows you to have one comprehensive platform that tracks and reports data company-wide, so you have every team member, on each property, working with one single source of truth. Employees can collaborate on the same goal of driving profits across your entire brand and identify trends and even issues before they even happen.

Advanced Forecasting and Optimization

It is critical for revenue managers to understand upcoming demand to project occupancy, maximize revenue, and manage operational
needs for the upcoming year. Demand forecasting predicts how many rooms would be booked on a
given day if there were no constraints; this is often referred to as unconstrained demand. 

The forecast generated by an RMS should provide a picture of the total, unconstrained demand for future dates to hone in on the most profitable business mix and recommend the best price, something that is virtually impossible to produce without the aid of an advanced RMS.  To produce the most accurate forecast, you must account for things such as historical patterns, marketing promotions, seasonality, and events. The forecast can also be shared with marketing to identify periods of low demand and use promotional offerings more tactically, helping you achieve your performance goals in terms of revenue and profit. Finally,  you are working off an accurate demand forecast when preparing your budget for 2020 is imperative to your success.

Optimal Pricing for Transients & Groups

Effective yielding must include demand forecasting and analysis of both transient and group business. A scientific RMS with group forecasting capability incorporates all revenue streams – guest rooms, function space, F&B, and more – allowing you to accurately analyze displaced transient bookings, as well as other groups. You can then proactively price your transient bookings, and negotiate better rates from groups – optimizing your entire property and maximizing profits.

Navigate OTA Conversations

Rely on the forecasting and historical reporting functions of an advanced RMS to optimize your contract negotiations with OTAs. You can distinguish between the incremental revenue OTAs bring in during need periods versus their diluting effect during peak periods. Monitor demand, market factors, and booking patterns to optimize your pricing and take advantage of OTA marketing power at a reasonable ROI.

Boost Direct Bookings

As previously mentioned, today’s RMSs allow you to break down your customer business based on multiple factors. Effective segmentation combined with the predictive analytics of BI let you view data in new ways that increase direct bookings. You can feed loyalty data directly into your guest profiles to send customized communications that incentivize repeat stays, and boost per-stay revenues. And you can analyze loyalty program costs to ensure that the revenue your program is producing is truly profit lifting.

A RMS that provides data analytics and business intelligence will improve productivity and collaboration among all your team members, keeping departmental goals aligned and driving greater profitability throughout 2020 and beyond.

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