Building the Perfect Revenue Management Strategy Is Not Enough
Hotel Revenue management is a data-driven technique consisting of three interdependent components: customer, product, and price. In order to maximize the hotel revenue in the hospitality sector, it is important to sell the right space at the right price and at the right time. This is the selling mantra of the hospitality sector.
The four ingredients of the recipe to maximize revenue are Segmentation, Forecasting, Pricing, Distribution.
The traditional hotel revenue management model that was in practice until a few years ago focused only on keeping the maximum number of rooms occupied by the guests. With developments in technology and customer behavior now, the focus has shifted to demand-based pricing or dynamic pricing. This concept has moved to not just hotels but also other hospitality establishments also like amusement parks, theatre, etc. and across travel sectors like airlines, cruises, car rental, etc. They charge a surged price for the tickets during peak hours or high demand. This helps them ensure more profit when the demands are high and cover up for the losses during low demand.
A revenue manager must take many factors into consideration, such as changes in consumer buying behavior, the roles of various online distribution channels, and the activities of the competitive set.
A modern revenue manager’s job now is not limited to monitoring room rates, it has stretched beyond this extending to revenue strategy to analyze all available data to determine the tactics that will produce the greatest revenue and optimize room inventory.
We are now at a stage where big data is quickly generated and collected. Additionally, data has become increasingly sophisticated in terms of variety, volume, and type. But while revenue management relies on huge piles of data, data alone is not enough. Revenue managers also need to churn that data and provide required insights and actions to be taken.