For a while now, Revenue Management has become the core of the hospitality business. It is not just a bunch of techniques to improve your pricing, but a proper science. And as such, it needs methodology, knowledge and procedures.
NB: This is an article from Beonprice
If you want to be successful and create a way to continuously and sustainably improve your results, you need a plan: establishing objectives, deciding how to get there, measuring performance, evaluating deviations and redirect your path.
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Technology will be a very useful resource to be included in that plan, and for sure, you will consider the implementation of a Revenue Management System. In Beonprice, we want to give you some ideas on how to prepare the perfect conditions for your Revenue Management plan to succeed:
1. Build a Revenue Management culture
As stated before, Hotel Revenue Management is much more than a technique to price right. It actually includes many more aspects that affect the results of the whole organization, such as data analysis, forecasting, pricing strategy, segmentation, distribution strategy, inventory management, etc… This implies that the entire organization must act according to a global philosophy with common objectives.
The RM Culture needs to be built from the leadership and involving the whole team: general management, sales, reservations, F&B, marketing, e-commerce,… all members of every department in the hotel need to understand and recognise the importance of Revenue Management.
Revenue Management is no longer a person or a department, but it is a philosophy of the company that tells us to make strategic decisions based on knowledge instead of feelings. Talking about this way of thinking throughout the weekly and daily meetings, will help the staff to identify themselves with the global goals. They will understand the overall strategy and become involved in setting short, medium and long term strategy together, and implementing procedures that will lead to achieving the company objectives.
Building a Revenue Management culture means that every person in the company keeps in mind what they want to achieve in terms of revenue generation, and that everyone of them has a particular role contributing to this culture. All tasks and procedures should be seen through the revenue management glasses, all decisions have to be based on facts and data, and be more and more strategic.
2. Focus on goals and set efficient procedures towards them
Sometimes, we get so overwhelmed by the daily work that we lose sight of what we wanted to achieve in the first place. We all know that before getting to work and getting into the mess of the working day, it is convenient to sit down for a while and set the priorities of the day. That is why it is necessary to have established some general objectives in advance, and to guide each of our tasks towards the achievement of those goals.
Decide what are the most accurate performance indicators for your business, then define your objectives for each of them and develop a plan on how to get the results you want. Remember that too many goals make nothing a priority, so choose your long-term strategy, stick to it, and make sure everyone in the organization adopts it. Any task that is not going to have a positive impact, direct or indirect, on your performance indicators, should be removed from the task list, or sent to the bottom of the priority list.
Of course, this applies to all departments. Avoid departmental silos: all of them should be working together, and everyone’s main objective need to be improving results from the revenue management point of view. Weekly meetings should be focused on how every department is contributing to achieve the goals of the company.
Make sure you define SOP’s that are efficient and guided by the revenue management attitude. You have focused your company on revenue, now you need to use the basic techniques of RM to convert market uncertainty to sales probability and increase revenues: understand your micromarkets, know how to segment them, determine the price elasticity, adapt your product for customer satisfaction, etc.
3. Empower and engage your team
Far from the general perception that we may have about new technologies putting the human resources away, the human factor has never been so important. The roles are just changing and the current paradigm makes it vital to have the human experience and judgment to interpret data and make decisions, based on information and knowledge provided by artificial intelligence.
In order to spread the revenue management culture throughout your organization, you need to educate your team. Train everyone with adaptative RM content depending on their different positions within the company. Involve non experts, and make them feel important, as they can always bring new valuable points of view.
Outline roles and responsibilities, and explain how every job is contributing to a sustainable growth of the company. It is key to your business success that you trust your team and give them the ability to make decisions. They need to be trained and independent to solve any situation that may occur, especially when it comes to those positions directly related to the customer.
Encouraging upselling and cross selling will allow your collaborators to feel as part of the same team, as they improve revenues for all departments, taking over the global objective as a personal goal. Establishing a goal-based rewards system can also help this purpose.
4. Make sure you have a good tech stack
Revenue Management is a diverse discipline: it is not only about pricing right or dynamic pricing, but also brand image, distribution strategy, demand displacement, forecasting, segmentation, quality and reputation, etc.
There is no single solution in the market that can solve all aspects, so you will need to decide what are your priorities, and look for the optimal combination of software, looking for efficiency not only in costs but also in operations. You need to build your tech stack for it to be adapted to your market environment, the size of your company, the marketing tactics, your competitors and the distribution channels you want to work with.
The RMS has become a key feature of the hotel tech stack. One of the advantages of implementing an RMS is its ability to summarise all the information from other tech tools and describe your current situation, predict the future and prescribe decisions based on that knowledge. Having a proper technology to manage information, frees up time for the revenue management team to do the more strategic tasks.
One of the key challenges for hotels to benefit from proper RMS software is the need to provide their transactional data to the RMS provider. This is normally done by integrating the hotel PMS with the vendor RMS and providing the reservations data on a daily, so you need to make sure the integration is guaranteed between the software you are choosing.
We also believe that, at some point in the future, we will be able to get rid of integrations, by creating more versatile solutions that unite all the functionality of the PMS, CM and RMS in one single software, served as an easy-to-use web service application, and putting the Revenue Management in the centre of the Hotel Management software structures.
5. Celebrate success
As we said, your revenue management plan must have clearly defined objectives to achieve. Make sure every member of the team has individual objectives, the completion of which is frequently been measured.
The first thing to evaluate in Revenue Management is, of course, the incremental revenue generated. But milestones such as adopting new business policies and procedures, or meeting the progress plan, are also important.
Celebrating success in every step will make your team feel proud of the company and stronger to move forward for the next goal. Make sure all the staff is informed about the progress of the business improvements. Talk, give feedback and recognition to the people who contribute day by day to the achievement of your goals. Make this kind of relationship to the team part of the daily agenda of the company leadership.