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What Keeps a Revenue Manager Awake at Night
By Ian Chinn - Exclusive for 4Hoteliers.com
Thursday, 24th November 2022
 

Revenue managers are under more pressure and at the centre of more operational decisions within a hotel than ever before.

They no longer merely set room rates for a single hotel but are now key contributors to the overall commercial performance of a property (or hotel group) and all its revenue streams.

Working under pressure is nothing new to revenue managers. So what actually keeps them awake at night? What are a revenue manager’s bad dreams made of today?

Addressing dirty data

Effective hotel management relies on accurate, consistent data to identify promotional needs, plan campaigns, and guide pricing and inventory decisions. Without clean, accurate and timely data revenue managers are operating in the dark.

As part of a recent study, research firm Gartner found that “Organisations attribute poor data quality as the cause of an average of $15 million in annual losses.” Gartner also found that “60% of survey respondents did not track losses and, therefore, do not know what the impact [of poor data] is on their business.”

For revenue managers losing sleep over the thought that their hotel might be relying on dirty data, quickly identifying and rectifying data sources is important. Focus should be on three areas:

  • Poor data input – Entering the wrong information into databases can cause nightmares. Incorrectly entered information includes incorrect booked dates (vs. stay dates), nationality (vs. country of sale), and incorrect marketing segmentation. Incorrectly entering these categories often leads to poor forecasting and costly revenue strategy mistakes, such as selling the wrong product at the wrong time through the wrong channel.
  • Not tracking lost business – If your hospitality organisation fails to track lost business from group wash, early departures, or cancellations, the perfect sell-out is doomed. Tracking and forecasting lost business enables hotels to avoid unnecessary complimentary upgrades and aim for that ideal 100% occupancy.
  • Tracking channels as a market segment – Each channel sells an array of rates, such as the best available rate (BAR) and advanced purchase. Yet, we know that these two examples – booking and guest buying behaviors – aren’t the same. When these two rates get segmented together, it becomes difficult to distinguish which of the rates is performing, which isn’t, and how to better sell each.

By implementing concrete data standards and best practices to improve data hygiene, hotels can expect revenue and market share growth resulting from better insights and precise strategy execution.

Quality insights for pricing decisions

Revenue managers understand better than most that commoditisation of hotel products is currently at its peak. If guests’ book via travel portals or online travel agencies (OTAs), the direct comparison of identical offers no longer shows the subtle or significant differences between hotels.

Apart from the price, the offers are barely distinguishable. As a result, a common scenario that can cause sleepless nights for hotel revenue managers, is having poor pricing structures in place that can cause hotels and hospitality businesses to bleed revenue and market share.

To ensure that their hotels are priced correctly in the market, revenue managers need to source quality research and analysis to determine the competitiveness of a proposed pricing structure within a market. Additionally, they need to know the price sensitivity bands for each product.

Investing the time to know the pricing bandwidth and not solely relying on gut feel would enable hotels to know their price limits without negatively impacting their brand and market positioning. Frequent reviews of your structure against the marketplace and your booking data offer two ways to help you remain competitive and relevant.

Automate away inefficiencies

Another key inefficiency that continues to keep many revenue teams up late is how data is siloed in different formats and independent systems. For example, relying on the property management system for rooms data, spreadsheets of competitor rates, and then a different point-of-sale system reports for restaurants.

In these situations, revenue managers will spend hours collecting the data from multiple sources and then spend even more time manually unifying these reports, analysing information, and producing the total revenue insights for single or multiple properties.

The bottom line is that manually collecting multiple data sets from disparate hotel systems and collating, evaluating, and calculating data via spreadsheets is not only tedious, but also highly susceptible to mistakes and missed opportunities.

Thankfully, automation not only collects and unifies data. It gives insights into revenue opportunities and regular updates to illuminate the most current state of business.

In the past, manual-based revenue management approaches looked at a hotel’s booking history and current activity levels to forecast demand. During periods of high demand, revenue managers would increase rates. When demand was low, they would discount them, thereby generating best-case revenue under both scenarios.

In today’s high-speed environment, the enormous volume of data needed to be gathered, analysed, and decided upon means it is not humanly possible for any hotel revenue manager—or team for that matter—to get every decision right, every day.

Artificial intelligence (AI), combined with data analytics embedded within an advanced revenue management system (RMS) enables the automation of many daily revenue management tasks and helps to attract guests, maximising profitable opportunities and expedites your hotel’s pandemic recovery.

Revenue managers sleep better when they have less to worry about

Hospitality organisations across the APAC region are leveraging the power of automated revenue management to help address key operational challenges and overcome what keeps them awake at night.

An automated RMS that can make effective pricing decisions to maximise business and revenue, benefits the overall hotel commercial performance, and frees up a revenue manager’s time to focus on more strategic, high-value activity.

Written by Ian Chinn, senior product marketing manager for IDeaS

For more information on how your hotel can benefit from an automated revenue management system, please visit: www.ideas.com

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.

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