Revenue management is one of the most important roles in the hospitality industry.
NB: This is an article from inTouch
Why? Because financial performance is a revenue manager’s greatest measurement for tracking how well their hotel meets each their guest’ needs. Revenue managers take what they’ve learned about their guests and use it to fill rooms to their maximum capacity while ensuring guests are satisfied with their experience (and therefore want to come back!).
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Here’s everything you need to know about the importance of revenue management in the hospitality industry.
The importance of revenue management
Although revenue management is often siloed and seen as its own category, and not a cross-departmental function, this could not be further from the truth. Revenue management impacts every area of a hotel’s business, including:
- Marketing — How to better reach and resonate with consumers to maximise revenue (for instance, personalisation).
- Branding, reputation, and public perception — The work revenue management puts into reaching the right guests with the right pricing and amenities inherently affects customer satisfaction. Public perception improves with every happy customer that recommends the hotel and shares their experience via positive online reviews (one study found that 94% of customers share their positive experiences).
- Sales — Whether hotel staff is trying to upsell, cross-sell, or simply get a room booked, the insights revenue management provides into consumer behaviours, patterns, and preferences can influence the success staff has with closing the deal.
- Finance and operations — Key to running a profitable hotel, revenue management helps you optimise and allocate budgets based on the data from your hotel management systems.
- Food and beverage — Revenue management extends to your food and beverage department, helping you access performance by menu, server, guest, and more. Gain the food and beverage data to:
- Create more profitable menus
- Source high-quality inventory for better deals
- Identify upsell opportunities
- Build restaurant and bar revenue forecasts
Basically, you gain the data to improve the performance of your entire food and beverage department.
- Sales and catering — Use revenue management to learn which events are the most successful to optimise their location, sales, time and impact.
Ultimately, these use cases emphasise the importance of your revenue management team working closely with all departments to align on the best ways to maximise revenue and offer a consistent guest experience.
This isn’t the only reason revenue management is so important for hotels. Here are additional benefits to consider:
Lowering costs & maximising revenue
Effective revenue managers identify trends in their hotel’s data to lower hotel costs and increase revenue by optimising their guests’ experiences based on their room, price, amenities and other preferences. This maximises revenue by ensuring no room is left empty while room rates are at the highest they can be while still attracting guests that are willing to pay. To lower costs, revenue managers focus resources on selling to their best-fit customer segments in the most profitable channels.
Attracting your ideal guests
Through channel management and segmentation, you not only boost revenue and lower costs — you reach your ideal guests. As mathematician Des MacHale said, “Take some time to play around with segmentation. If you can pinpoint your best and worst customers, it’s well worth your time.”
Through the best business intelligence tools, you can target your hotel’s ideal guests using consumer insights based on the unique experience your property provides.
Increasing the value of guests’ experiences
One of the most common challenges hotels face when selling rooms and reaching the right customers is increasing the value of their hotel in the eyes of their guests. Hotels achieve this by leveraging amenities, services, and industry innovations to ensure every step of the guest’s experience adds real value. Through dynamic pricing and targeted package offerings, revenue managers can increase the value offering of their hotel.