Revenue Management
What is Revenue Management
Hotel Revenue Management: The Fusion of Science and Art
In the realm of hospitality, Hotel Revenue Management stands as a cornerstone, bridging the gap between science and artistry. It transcends mere number crunching; it embodies a delicate dance of manipulating figures and seizing sales opportunities, all while harmonizing with sales and marketing efforts.
At its core, Revenue Management employs sophisticated algorithms and analytical tools to decipher complex data sets.
These tools help forecast demand, optimize pricing strategies, and maximize revenue potential. It’s a science that relies on meticulous analysis of market trends, competitor behavior, and historical performance metrics. Through mathematical models and statistical analyses, Revenue Managers can identify patterns, anticipate fluctuations, and make data-driven decisions.
However, Revenue Management goes beyond the realm of equations and algorithms. It requires a keen understanding of human behavior, consumer psychology, and market dynamics.
Here lies the artistry of Revenue Management – the ability to interpret data through a nuanced lens, to recognize subtle shifts in consumer preferences, and to craft strategies that resonate with target audiences.
Collaboration with Sales and Marketing teams is paramount in this endeavor. Revenue Managers work hand in hand with sales professionals to identify untapped market segments, capitalize on emerging trends, and tailor offerings to meet customer needs.
By aligning pricing strategies with promotional efforts and marketing campaigns, Revenue Management amplifies the impact of sales initiatives, driving revenue growth and enhancing brand value.
Moreover, Revenue Management thrives on creativity and innovation. It’s about thinking outside the box, exploring unconventional approaches, and seizing unconventional sales opportunities. Whether it’s crafting dynamic pricing packages, leveraging social media platforms for targeted promotions, or orchestrating strategic partnerships, Revenue Management empowers hoteliers to unlock new revenue streams and stay ahead of the competition.
In essence, Hotel Revenue Management embodies the fusion of science and art – a dynamic interplay between analytical rigor and creative intuition.
By harnessing the power of Data Analytics, collaborating with sales and marketing counterparts, and embracing innovation, Revenue Managers can navigate the complexities of the hospitality landscape with finesse, driving sustainable growth and fostering enduring success.
As a revenue manager, your responsibilities include establishing a pricing strategy and considering seasonality.
This entails various tasks, including but not limited to analyzing a multitude of MOST common reports:
Summary:
- Tour Operators Property Marketing Operating Statement
- Profit & Loss
- Room Statistics
- Guest Satisfaction Survey
- Star Data Report
- Call Volume
- Shop Scores
- Room Segmentation
- Source Markets
- Group Business
- Lead Source
- Benchmark Rate Evaluator
- Peak Rooms
- Reasons for Lost and/or Turndown
- Reader Boards
- Conversion Ratio
- Group Booking Pace
- Meeting Planner Satisfaction Survey
- Revenue Management Revenue Plan
- PDP Express
Additionally, you’re responsible for tasks like RCSL (Revenue Control System & Ledger) management, including:
- MITS Start-Up
- RCSL
- Setting Group Rates
- Group Forecasting
- Forecasting
- Price Sensitivity
- Booking Pace
- Accurate Segmentation
- Benchmark Room Rate
- Establishing Citywide Room Rate
- Identifying Business Opportunities & Displacement
- Utilizing Segment Forecasting Tools
- Maximizing Revenue by Selling the Right Rate
- Analyzing RevPAR, ADR, and Occ% performance relative to competitors and previous years
- Considering competition and market dynamics
- Understanding customer segments
- Analyzing historical hotel performance and trends
Furthermore, you’re involved in examining future trends such as the evolution of hotel loyalty and advanced guest segmentation.
Regarding accounting processes, you oversee tasks such as software management (e.g., PeopleSoft Chart Field Mapping), journal entry creation, reconciliation, and error resolution.
This includes managing spreadsheets for tasks like Daily Income Journal, Cash Declaration, Room Stat Balancing, and processing journals with VAT lines.
Additionally, you stay informed about cash management, updating daily operation reports, demand reports, and inventory timeline reports
Revenue Management is to sell the right product to the right customer at the right time or the right price.
How can a hotel determine what that “right price” should be?
Setting the “right price” is a challenging, never-ending process that is crucial to a hotel’s success.
Pricing should be rational and fair to customers. It should address differences in customer demand and segmentation across regions, hotel types and seasons and contribute to overall customer loyalty.
It should target specific customers and offer them the best possible price/value relationship for their money.
In addition, a hotel’s pricing strategy should help increase revenue.
Revenue Management Applying data & analytics to predict demand and adjust pricing
Pricing is one of the three key processes involved in revenue maximization; the other two being Inventory Allocation and Selling Strategy.
As a revenue management process, pricing focuses on appropriate price setting, offering a broad range of rates to customers. This allows a hotel to increase revenue beyond what it would make if it offered only one rate to its guests.
In sum, when setting its pricing strategy, the hotel needs to balance the long term goal of building customer relationships and brand equity with the short term goal of maximizing revenue.
Establishing a pricing strategy
is not an exact science, but an interpretive process that requires balancing internally oriented needs and information with externally oriented information. On the one hand, the hotel needs to consider its financial goals and historical pricing. On the other hand, it needs to analyze supply and demand, the relative strength of its product, competitor actions and customer response to its price setting.
The pricing process includes setting both a Pricing Structure and Pricing Level.
The Pricing Structure involves the number of rates that the hotel offers and the qualifications it places on each rate to determine at which points in time and under which circumstances the rate should be available.
The Pricing Level involves setting the main price point for the property. Determining the Benchmark Rate is the key process in setting the Pricing Level.
A hotel needs to develop a pricing strategy for both its transient and its group business. While the benchmark rate is the main price point for transient business, group rates are based on a different set of criteria and vary between groups.
The process involved in determining group rates is described in the Standards section.
Rational pricing forms the cornerstone of Hotel’s chain pricing strategy. To fully understand How Hotel’s Chain pricing philosophy, one needs to understand the fundamentals of rational pricing.