Selecting A Revenue Management solution? Ask the right questions!

Most hoteliers view revenue management as a strategic imperative, given the opportunity to improve the financial performance. That said, it is important to note that revenue management can take many different forms, some of which are far more sophisticated — and effective — than others.

According to The 2017 Smart Decision Guide to Hospitality Revenue Management, different approaches can yield dramatically different business outcomes. So, too, can different technology solutions. This begs the question: which technology solution is the right solution?

By asking the right questions, prospective buyers can rule out some options while narrowing down others. The hotel’s revenue manager(s) should be involved throughout the evaluation process. As sophisticated business professionals with deep analytical skills, revenue managers naturally have a good sense for which solutions best fit their needs and the needs of the property.

Generally speaking, they want solutions that allow visibility. The more transparency the better. Revenue managers would not want a black box solution. Rather, 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 pricing recommendations that are being made and how adjustments to the pricing model would change revenue outcomes. They do not want to wait for actual booking numbers to come in to understand the impact of their overrides and determine whether they made the right “reoptimization” decisions.

Revenue managers need to be comfortable that any new technology solution under consideration will enable them to drive continuous revenue improvement.

Will the solution provide the answers we need to our pricing questions?

To be effective, RMs require tools that will enable them to answer all of their day-to-day pricing questions. Such questions might include: By how much should we increase or decrease our rates for a given type of room? How many customer 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?

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