Selling the right room to the right client at the right moment at the right price -

We would like to add the following to that definition.

"On the Right Distribution Channel with the best commission efficiency"

Revenue management (RM) helps to predict consumer demand to optimize inventory and price availability in order to maximize revenue growth. Revenue Management means not selling a room today at a low price to sell it tomorrow at a higher price. RM also means selling a room at low price today if you do not expect higher demand.

RM challenges the resources to gather information about the market so that you can be proactive and not reactive. Use the information to divide your market and adjust your products through distribution, to the right customer at the right time and at the right price.

Revenue Management is not only maximizing in high period demand, it helps stimulating demand in low periods while avoiding pricing cannibalism. Revenue Management is long term strategic, takes all revenue with their profitability into consideration, can sell low rates even in high demand period

Why can we apply Revenue Management in Hotels?

• Fixed capacity
• Perishable The product is perishable
• High fixed costs, low variable costs
• The product can be priced differently
• The demand evolves
• The product can be sold in advance
• The Market can be segmented

Revenue Management started with the Airline Industry. Today more industries use Revenue Management :

• Hotels
• Car rental, Train companies
• Theatres, Cinemas
• Now starts with Restaurants
• Ikea offers lower prices at time of the week when demand is low

Almost every industry would benefit some ways from Revenue Management techniques.

But Revenue Management is more the just techniques to yield rates. It is a philosophy and culture that has to be implemented in your entire hotel.

Are you ready to say No to business? General management, Sales and Reservations need to agree on same vision and objectives. Conflicts can happen! Weekly meetings are necessary to share. Set short, medium and long term strategy together.

Decisions must be based on knowledge, not on feelings!

The practice of Revenue Management may go faster than technology: does your PMS allow flexible pricing? Records statistics for knowledge based decisions.

Based on the previous articles on the definition, fundamentals and culture of revenue management we have defined a few simple action steps for hotels.

Here are your first revenue management actions steps:

• Yield meeting should be organized once a week: agree on a same vision on how demand will evolve first.
• Develop culture of Revenue Management in your hotel: anyone should understand REVPAR, anyone should understand the reasons of saying NO to some business, and everyone should sell not only a price but also a value.
• Records statistics for knowledge based decisions. Train your team for recording properly reservation information. Keep consistent records of your data: reservations on the books, waitlist, denials, walk out, cancellations, offers.
• Do you know all options and reports available in your PMS & distribution software?

For more information on hotel revenue management go to www.xotels.com/en/hotel-revenue-management or contact;

Patrick Landman
Email: patrick@xotels.com
Phone: +34 931 824 537
Skype: plandman