Revenue Management: Art or Science?
By Jean Francois Mourier, CEO of REVPAR GURU
Tuesday, 18th October 2016

Revenue management is a very complex, time-consuming process, there are literally hundreds of factors that need to be considered when setting room rates â€" and these factors are changing all of the time, sometimes as often as every minute or every hour.

Add to that, the data collection, manually updating rates across all of the online channels, strategy meetings with various internal teams, etc. A revenue manager’s list of responsibilities goes on and on… and on… (I’m tired already, just thinking about it all!).

But the reality is that humans can only do so much. There are only so many (working) hours in a day. We need to sleep. We go on vacations and enjoy weekends off. We get sick. And even when we are hard at work, we can only analyze one page of data at a time.

And humans make mistakes; whether it’s a small typo or a mathematical miscalculation, mistakes can cost a hotel thousands of dollars in lost revenue. (Talk about pressure!) And one basic truth remains: data is fantastically useful, but unless you have the tools to use it effectively, it’s just a bunch of numbers.

But lucky for all of us, there is an app for that! Revenue management systems (RMS) are what takes a revenue manager’s job from impossible to possible (and successful!) in a very short period of time. They are able to handle the minutiae of data collection and analysis, and the time consuming process of updating rates online.

And there are no costly mistakes with algorithms and technology. They can work all day and all night (without taking a break), collecting and analyzing data, offering rate recommendations and then updating the rates across all of your property’s online channels. They can be easily supervised at any time from any computer or smartphone.

Of course, we’re not saying that revenue managers will be replaced by technology. That will never happen… and we wouldn’t want it to. Revenue management technology is important but revenue managers are even more important because they are ones who determine the strategy that the RMS should take, the ones who develops relationships with OTA managers, the ones who creates campaigns and who looks beyond data to make good business decisions that will earn a hotel more money. They are also the ones who supervise the RMS, to make sure that it’s doing it’s job properly and that the rates that it is setting are appropriate and accurate to the current market conditions.

To answer my original question, revenue management is both an art and a science. The revenue manager is the artist controlling and overseeing the science (as being executed by the RMS). Only with two working together effectively, can a property’s occupancy, ADR and RevPAR increase consistently.

So the lesson of the day is this: revenue managers are essential to the successful daily operations of a hotel, so if your property doesn’t have a talented revenue manager, get one immediately!

Once you’ve found a trustworthy and capable revenue manager, give your him/her the tools necessary to do the job more effectively: a sophisticated revenue management system. Having both will give your property the edge up over the competition, making it just good (business) sense.

Do you agree? Is revenue management an art or a science? Share your thoughts below in the comments or email us at sales@revparguru.com.


REVPAR GURU provides hotels around the world with an alternative revenue management software solution, designed to deliver maximum bookings and profits. As REVPAR GURU's custom-designed Yield Dynamic Price Engine is the only real-time revenue management software available on the market, it meets the rapidly changing needs of hotels in a very demanding business environment. REVPAR GURU’s solution offers dynamic rate optimization, real-time pricing, integrated Internet and extranet yield channel management and GDS sales distribution, to increase a hotel's RevPAR intelligently and effectively, while maintaining rate integrity and automated rate parity. Since 2004, REVPAR GURU’s software solutions have been used by hotels worldwide to increase occupancy and RevPAR. 

Headquartered in Miami, Florida, additional information can be found at www.revparguru.com or by calling +1.786.478.3500.

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