Usually, the virtuous management of a hotel – and related services – is based precisely on one major theme: hotel revenue management. Of course, that’s not all that allows you to break even and make a profit.
Maybe even expand and grow, from an economic standpoint, as a hotel facility. But certainly revenue management remains a key part of a hotel’s management journey.
That’s what we’re talking about: maximizing profits by virtue of available resources, so that standards are always maintained at a high level and without affecting service quality to other customers. Want to delve deeper and find out if you are doing a good job as a revenue manager for your hotel?
What is hotel revenue management, definition
Revenue management, or revenue management, is the hospitality industry subject that allows you to maximize hotel profits. The goal is to optimize the sale of services, with limited capacity.
Like, precisely, the rooms in a hotel. But it is also crucial, for example, for the tables in a restaurant or in a bathing establishment. From this definition of revenue management you can easily guess the importance of the topic in virtuous hotel management and maximizing occupancy.
What are the decisive indicators (KPIs)
Finding out the fundamental key performance indicators in this subject is crucial because it enables you to evaluate all the actions needed to optimize decision-making processes. For example, how do you calculate the key performance indicators to achieve the best possible revenue management result?
Certainly, having data on what the user spends extra on is important to enable an increase in the average receipt. But the most important data in terms of KPIs is another one: the RevPAR.
Short for Revenue Per Available Room it is one of the key KPIs you need to define to understand how your hotel business is progressing.
The formula is clear: you have to divide the revenue (room revenue) by the available rooms. This way you can get a clear data with respect to how the occupancy and overall performance of the hotel is progressing.
Another important parameter to consider is the booking performance, or Booking Pace. Why is it useful to obtain this statistical data on hotel business performance? Simple, we can compare the trend with the past to identify any problems or bottlenecks. Thus making the necessary corrections to the sales pipeline, streamlining overly complex procedures.
What is the purpose of hotel revenue management?
In summary, the task of this subject is to maximize hotel profits by optimizing the profit of each individual room. This is achieved by managing room availability as best as possible to avoid selling below cost or missing attractive opportunities.
Furtheremore it will be easier to optimize conversions and nurturing possible opportunities to improve average revenue from each individual room. This is accomplished by analyzing historical data and anticipating demand trends, evaluating possible useful customer segmentation.
What does the revenue manager do in the hotel?
The tasks of a professional dedicated to revenue management in hotels are clear. First, he or she must identify the best price for each room based on demand, time of year, and other factors. Which may intervene in the balance of the valuation. Such as, for example, any special offers.
In addition, it is his job to minimize losses due to empty rooms or rooms sold at too low a price. All this is done through a refined work of direct sales and structured planning. Which is done through the optimization of different online booking platforms.
The main task of the revenue manager is to manage the sales rates of the different rooms. But also of the services attributed to the hotel. Making specific forecasts through the use of specific tools that allow the best analysis of the data recorded in previous years.
Software and tools
In order to manage such a delicate process, maximum use must be made of technology. In such cases, the professional employeer in charge must know how to make maximum use of Revenue Management Systems (RMS) that analyzes demand, forecasts, competitor rates, and sales restrictions.
We are talking about tools that leverage advanced algorithms to predict room demand and occupancy. Suggesting optimal prices for each customer and product type.
Another key tool is the Property Management System (PMS), which integrates with the RMS software. And it enables the management of reservations coming in from the different marketing channels. It also collects historical data on the activities performed and provides historical data on the hotel’s room availability.
Clearly, the revenue manager’s duty is also to optimize the activity with respect to CRM to address the junctures in the sales funnel. Not forgetting the centrality this can have with managing online distribution channels to maximize profits. And avoid unpleasant losses.
Written By
Knowess International
Knowess International helps business owners and department heads working in the hospitality and restaurant industries to develop the necessary skills with targeted consulting.
