Revenue Management (RM) is one of the key elements of a hotel’s revenue strategy. It is considered a form of business management—a set of techniques based on analytics and data—whose primary goal is to optimize profits.
RM is the cornerstone of all hotel marketing and encompasses several areas of hotel management:
- Segmentation: Which customers am I targeting, and how do I reach them? There are segments we may not have targeted yet, and we could have more business opportunities if we do.
- Demand Forecasting: Try to anticipate future trends to optimize revenue using the Forecast tool.
- Product: What kind of product do we have?
- Distribution: How do I use distribution channels such as Booking, Expedia, etc., including other metasearch engines?
- Competition: Market data and average price, among other variables.
- Price: What price should we set for our product?
Ultimately, it is through the proper management of these five areas that revenue management truly comes into its own.
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Revenue Management Systems: A Hotel’s Management Philosophy
Revenue management systems are automated systems that handle large amounts of data related to hotels: reservations, customer profiles, revenue, and demand. Today, online reputation helps us gather the necessary feedback on our services from guests who visit the hotel. There are already products available that monitor our reputation and that of our direct competitors, thereby helping us understand how we are perceived by consumers.
The dynamic pricing system shows us how market trends are evolving and what the forecasts are. The more information we have about the customer, the more personalized the experience will be and the higher the expectations we’ll create for them, in addition to what’s known as “Business Intelligence,” , which allows us to access all information in a detailed, up-to-date, and error-free manner.
All of this information is passed on to the distribution channels, where its importance in hotel chains has grown in recent years. Direct distribution accounts for 30%, and the rest goes through intermediaries. On the other hand, the so-called “Channel Manager”is a tool that allows you to update all distribution channels at the same time, thereby ensuring that the same price is offered across all of them.
Objectives of Revenue Management Systems
We live in a complex environment where we deal with a wide variety of technologies, and where it is essential to be able to integrate all of this information to predict demand patterns and optimize room inventory and pricing, thereby maximizing profit growth to improve accommodation management.
Hotel demand forecasting takes into account historical data, external factors, and recent trends. Macroeconomic and weather forecasts, competitors’ prices, website traffic, and traveler trends are all factors that would be impossible to calculate manually, and that is where these automated management systems come into play—systems that enable us to develop sales strategies to achieve success in hotel marketing.
Internal Operating Phases of an MRI System
First, a forecast is generated—that is, all the data is collected to predict demand—and once the system knows what to expect, it optimizes the process by selecting the most profitable segments that provide the greatest value to the hotel in both the short and long term. then it establishes inventory controls, pricing decisions, overbooking recommendations, and minimum stay requirements. These are the ways the system filters demand and determines which guests ultimately stay at the hotel. The final step is to monitor the results—that is, to evaluate the impact metrics—since this will influence the next analysis.
