Revenue management – time wasters, automation, and which tools are *really* important
Time is scarce. Especially in the hotel industry.
Which only makes it all the more important to work efficiently and effectively, as this might be the only way to leave enough bandwidth for the most important and demanding tasks.
In the area of revenue management, many hotels have room for improvement. But, fortunately, behind this supposed problem hides a valuable opportunity:
If you manage to uncover your biggest time wasters and implement better solutions, you will gain time to successfully optimize your results.
Let's take a look at how this can be done – and why effective revenue management doesn't require everything in every hotel to be 100% automated.
Automatic for the hotels?
It’s a no-brainer: automation saves time. But how much automation do you actually need in your hotel? As useful as automation is, it often comes at a high cost. Not every hotel recoups these costs through saved time or additional revenue.
In the area of revenue management, when we think of costly automation, we think of fully automated revenue management systems that immediately adjust room rates to any market development.
But how often are these rate changes really necessary for your hotel? Unless your property is in a highly dynamic market, rate adjustments are probably only necessary occasionally. This means that the time savings and revenue increases you can achieve with a fully automated RMS are limited. This makes the price-performance ratio of such systems dubious for many hotels.
An alternative to costly RMS
So, naturally, the question arises: Could you save the money for the RMS, change your prices manually as needed instead, and still achieve the same turnover?
To do this, you need to know what's going on in your market at all times. But you don't need a sophisticated RMS for this. A detailed market analysis can be perfectly sufficient and may bring several advantages:
You get to know your market and the competition in detail and become better at spotting new trends in the data. This helps you better understand the consequences of your decisions: How does the market react to your price adjustments? And how does this shift your positioning?
Getting to grips with your environment in this way helps you back your gut feeling, and also the data helps you make concrete proposals for action as to react correctly to new developments.
The challenge here, however, is that the market data required for this is not always easily accessible and quick to collect.
This is where the most massive time sink in revenue management comes into play.
The biggest time eater in revenue management
If you want to know what's going on in the market, you have to collect data and analyze it. Many revenue managers still do this manually today: They collect internal, market and competitor data in Excel spreadsheets, which they then use to analyze demand and make pricing decisions.
But just because this practice is widespread doesn't make it the best or most effective solution.
At best, it provides a snapshot of the market, which becomes outdated the moment the situation changes even slightly. Then the painstakingly collected data is no longer up-to-date and decisions are based on incomplete information.
Stuff that happens frequently today – markets are more dynamic and unpredictable than ever. This means that demand can change without warning and competitors may also react unexpectedly. Researching from scratch each time takes a lot of time and energy, and slows down the decision-making process.
By the time you get your data together, the first rooms have probably been sold too cheaply. Although no hotel can really afford this, it is something we witness every day.
Also, ask yourself whether your revenue or reservations staff really has the time for manual market research. This may work well as long as things are slow and there aren't too many other tasks. But as soon as the busy season kicks in and the daily to-do lists grow, this process breaks down and you have to go back to working with outdated data.
So you need an alternative that you can maintain during both quiet times and busy periods.
A little less static spreadsheets, a little more action!
Manually collecting data and preparing it in Excel spreadsheets is a monotonous task that hardly challenges your employees' skills. The talent and time of your team are supposedly needed elsewhere.
This is where using a business intelligence tool comes in handy, as it can take over the tedious research work and always provide you with the latest data. This is not about replacing employees with a technology solution. Rather, it's about taking the pressure off the team and freeing up more time for important tasks.
This approach brings several advantages:
It starts with constant realtime access to current market and demand overviews, OTB data, and competitor prices and conditions. This saves you a lot of time, as you no longer have to manually collect and prepare your data. This also means that outdated, static Excel tables are finally a thing of the past. Because with a BI tool, you can retrieve information that you need at any time in the desired format with a single click.
Which allows you to directly tackle tasks such as price optimization, analyzing your positioning or developing new strategies. This means that you can react faster and better to changes in the market and increase your sales as a result.
One step closer to the (cutting) edge
Once you have achieved initial success with your BI tool and have a good understanding of your environment, you can reconsider whether an RMS is worthwhile for you.
Especially if your market is very dynamic, an RMS that automatically updates prices as demand fluctuates could be of great help. It saves you even more time because you don't have to change your rates yourself. It also allows you to react as quickly as possible to any change in the market, no matter how small. This means you are always optimally positioned and maximize revenue.
Since workloads and needs vary from hotel to hotel, it's important to weigh well which tool is best for your property.
Take a look at your processes: Are you still doing research manually? Where else can you save time? How dynamic is your market?
Test different tools and measure your successes. Where is the investment justified and where is it unnecessary?
Often, a solid business intelligence tool is enough to optimize processes and results while keeping your costs in check. There is still time for an RMS if necessary.
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