Revenue Management is one of the hot topics at the present time for improving hotel profitability, especially for independent hotels.
Why is revenue management important to independent hotels today?
Revenue management offers independent hoteliers insights that enable their property to leverage its position and drive RevPAR in positive market conditions. In softer demand scenarios it provides insight on which segment is under performing so that the property’s sales and marketing teams can take corrective action.
Today, RM systems are used by leading hotel brands around the world. However, it can be argued that smaller properties need the technology even more than larger hotels, given that limited volume means every pricing decision counts. Smaller, independent hotels frequently have fewer resources compared to larger chain hotels, and usually do not have a dedicated revenue manager.
As a result the RM strategy is left up to the general manager, director of sales and marketing, reservations manager, or the accountant– all of whom already have very busy schedules filled with other responsibilities. This lack of a dedicated resource and siloed operating systems mean that rooms are either overpriced, ultimately turning guests away, or priced below market opportunity, diminishing the total revenue performance of the hotel.
In addition to revenue supporting growth, an RM system can help independent properties balance the right business mix and address length of stay issues. Many independent hotels fall into the trap of focusing on peak nights and often accept lower-rated business when it isn’t needed, which simply trades down revenue.
With fewer rooms in smaller scale independent hotels, managing booking pace and capturing optimal reservations by accepting the most valuable demand across arrival dates and lengths of stay is even more critical to maximising revenues.