Sponsored by IDeaS Revenue Solutions
When it comes to revenue decision solutions versus pricing recommendation tools, the contrast is stark—and in times of uncertainty, hotels should accept no substitution for an automated, real-deal revenue management system (RMS).
When assessing hotel revenue management technology vendors, it's important to know how to spot critical differences between a pricing system and a true RMS:
- Pricing System – Many hotels rely on these systems to vary room rates and yield in order to grow revenue. Though these systems can provide information via reports and support rate changes, they are still largely reactionary, rules-based in nature, and are unable to process big data or provide deep analytics. Users must review and upload recommendations manually, or via automated rules, creating a higher risk of human error and taking up valuable time.
- Revenue Management System – By breaking down big data, a true RMS delivers accurate and actionable data-driven insights and decision empowerment. Through advanced automation and flexible controls, users can trust sophisticated analytics to maximise productivity, optimise business mix and capacity, enhance profitability, and improve the guest experience. An advanced RMS will act as a central solution in your overall technology ecosystem with data flowing between all tools to enable total profit optimisation across all revenue streams.
In the face of the COVID pandemic and ensuing economic and industry downturn, leading RMS vendors have made fast adjustments to their software so that it better understands how demand patterns are shifting given the volatility. But some in the industry are still questioning the value of revenue management right now altogether given the dismal state of demand.
Well, let's put this to rest. Today's sophisticated RMS solutions are not burdened by the need for high demand. Modern revenue solutions optimally price all products (room types and rates), fold in cost/profitability and can do so on autopilot if needed. These advancements in technology actually help a hotel squeeze out revenue even (and especially) in times of the greatest uncertainty. And the higher the degree of uncertainty, the higher the need for robust, accurate and relevant data to back up decisions.
This crisis has been an instance that has underlined how humans and machines need to work together. Smart forecasting and analytics technology will always have the upper hand against a human seeking to manually make sense of things—there's just too much data and too little time. Also, hotels can't maximise profitability by managing rates alone, and pricing tools that use rules to price room types are leaving money on the table.
So what exactly does a revenue management strategy that goes beyond only pricing need to incorporate? In addition to an analytically-derived pricing strategy, hotels need to consider the varying products or room types they have. With unique demand for room types, your revenue strategy needs to support your customers' buying behavior. An advanced RMS should have the capability to analytically determine the ideal price and inventory controls for each of your different room types.
Many revenue technology providers claim to do this, but often only provide the ability to manually set rate differentials on each room type. This means you provide all the insightful data but still have to set rates yourself. With revenue managers already responsible for managing so many other rates as it is—and across multiple properties in many cases—they should be able to rely on their RMS to automatically and analytically handle this component for them.
Pandemic or no pandemic, revenue management's ultimate goal is to price a room that will result in the most overall revenue and profitability for your hotel. The challenge is pricing different rooms, through many different channels, across many different days, to many different types of guests. With many automated revenue management solutions and pricing tools on the market to consider, it comes down to rules-based tools that provide recommendations versus analytics-based solutions that automatically produce powerful decisions that manage pricing, rate availability and more.
Pricing tools are certainly a step above spreadsheets but require time and effort to manage the rules and approve the recommendations. A true analytics-based, decision-making RMS will understand how a hotel's business behaves under any condition and will be key to navigating the disruption and getting your hotel back on the path to profit, now and as demand returns.
To learn more about IDeaS' all-in-one, easy-to-use revenue management solutions that will empower you to quickly reach new levels of profitability, visit www.ideas.com.