Plug and Play? Not So Fast – How to Avoid the Wrong RMS Provider
By Rachel Grier - Exclusive for 4Hoteliers.com
Friday, 26th April 2019

Exclusive for 4Hoteliers.com - Demonstrating ROI in Revenue Management to Hotel Owners TodayExclusive Feature: Revenue management is a marathon, not a sprint and hoteliers will see the greatest return over time, the longer a hotel has a system in place, working in conjunction with an effective team, the greater the return a hotel will experience.

Given a hotel’s revenue management journey will be ongoing, research is needed to understand which partner has the best solution, as well as the right experience and capabilities to help build a successful revenue culture at your hotel.

Rachel Grier (right) talks with 4Hoteliers about the importance of choosing the right revenue management partner, what hotels should look for in a solution and why training and ongoing support are keys to success.

Why do I need a revenue management system (RMS) in the first place? I already have a revenue manager working in my hotel.

Rachel Grier (RG): The current revenue and distribution environment is becoming exponentially more complex. The distribution channels are consistently increasing, as are the number of data points to analyse in order to make the correct distribution and pricing decisions. Collating this information into a single vision of the truth is a time-consuming and laborious process and leaves sparse time to think strategically and make effective decisions that drive revenue and profitability in the long term. Your revenue manager is a valuable and expensive resource, whose time is better spent interrogating data and responding to insights rather than sourcing and sorting data into countless excel reports.

A revenue solution that can make and implement tactical decisions and automatically distribute rates and inventory controls to your entire distribution environment will free up the time of your revenue manager and allow them to focus on your hotel’s revenue strategy.

Why is choosing the right RMS partner important?

RG: Expecting a simple plug-and-play implementation of any robust RMS technology is highly unrealistic—and any vendor that tells you otherwise should raise an immediate red flag. An effective solution that is going to deliver return on investment (ROI) requires the right people, who have been properly trained, utilising the right and impactful data in a system configured to meet your specific property and market conditions. Before deploying an RMS for your hotel, look for a revenue partner that will review your property’s unique situation to help you determine which solution solves your business needs. A revenue management partner that understands your business, your challenges and commercial goals is much more likely to provide a solution that yields a timely ROI.

How do I choose the right RMS partner?

RG: Given the prevalence of hospitality technology providers on the market today purporting to offer solutions to improve the revenue performance of your property, it is vital that hoteliers undertake their due diligence. Hoteliers need to look at the credibility and stability of vendors, read online reviews, industry reports and ask direct questions. Pay particular attention to the referenceable customers an RMS provider has. How many rooms does the RMS vendor have under management in your region, and what is their customer retention rate? Knowing the scale of operations the RMS provider has in your region can help demonstrate their local knowledge, their ability to support your people and ultimately the likelihood of success in your unique market.

Hoteliers should look for RMS partners that:

  • Can demonstrate positive ratings of their RMS technology by credible third parties.
  • Have a history of industry participation through events, speaking opportunities and media thought leadership.
  • Have referenceable clients and case studies with hotels in your market that you can speak to.
  • Have a strong local presence, with support staff in the region to service your business needs in your time zone.
  • Can demonstrate their experience in not only RMS implementation, but helping hotels transform their revenue culture.
  • Hire staff that have specialised and direct experience in hotel and revenue management.
  • Are able to clearly articulate and help you measure impact and ROI of an RMS purchase.

What should I look for in an RMS?

RG: When evaluating various RMS solutions on the market, ascertain what will offer the most value to your hotel. You must carefully consider the scale of your operations, level of business demand and sophistication of existing systems. When specifically comparing RMS solutions, you should be asking:

  • Does the solution address areas with untouched revenue potential, such as determining which room types to oversell and creating strategic upgrade paths?
  • Does the solution manage revenue and inventory for all business segments at the hotel, such as which yieldable corporate accounts to accept, or which bookings to take for certain lengths of stay?
  • Can the solution help determine if the hotel is giving away too much inventory to corporate accounts or wholesale allotments?
  • What data does the system use to make decisions and calculate forecasts? Revenue science using algorithms, AI, and machine learning or is it purely a rules-based system? (essentially an electronic excel spreadsheet)
  • What is the support model for the users of the system? How will they be trained?

How can I understand ROI benefits from RMS?

RG: Most RMS companies will share the average ROI results their customers receive, but what sets leading providers apart is their ability to leverage a large database of results from properties implementing revenue solutions similar to your business. This insight helps estimate the benefits and ROI for a prospective property or chain with a high degree of accuracy. This ROI calculation is a critical component when you make the decision to invest in an RMS—and it is important to understand how this number has been calculated. Realistically, owners see a 3.5 to 5.5 percent increase in their room revenue, with some hotels reporting improvements as high as 14 percent. It is important to determine if the expectations in revenue lift are truly incremental or a result of the market conditions where the hotel is located.

How important is training and support in ensuring an RMS is successful?

RG: Building a successful revenue management culture involves a time investment—from both a hotel and their revenue management partner. Time, energy, resources, and training are key to ensuring your RMS solution operates effectively and becomes a central tool in driving the revenue performance of your hotel. A hotel adopting an RMS needs a technology provider with hands-on experience in the region, from people who understand local market conditions, cultural differences and buyer behaviours.

Additionally, 24/7 live support is not just a “nice to have” option when assessing RMS providers, it is an absolute necessity should you ever run into difficulties. Any RMS provider that doesn’t offer comprehensive training and post-sales support is limiting your hotel’s chances of success. Your guests expect round-the-clock service—you should expect the same from your RMS partner.

This is strictly an exclusive feature, reprints of this article in any shape or form without prior written approval from 4Hoteliers.com is not permitted.

Rachel Grier is Area Vice President, Asia Pacific for IDeaS Revenue Solutions - A SAS Company: www.ideas.com

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