How technology can help hotels maximise revenues in an uncertain market
GUEST OPINION: To operate profitably in a disrupted market, hoteliers need to leverage all hotel functions and maximise their profits in unison. Instead of just seeing hotel revenue through a lens of guest room rates, this holistic approach takes other revenue streams into account, with a goal of coordinating the property’s mix of revenue and profit centres more strategically.
Maximise revenue from each guest
To properly understand the value of a guest, a holistic view of customer’s lifetime contribution must be obtained, not just their room-rate spend.
To obtain this total revenue perspective of a guest, data from all hotel transaction systems should be integrated to provide a true picture of a guest’s preferred activities and overall value to also include ancillary value—from food service to the day spa use, guest rooms to gift shop purchases, the cost of the booking channel, etc.
Through using an advanced revenue management system (RMS) to help identify who their most valuable guests are, hoteliers can deploy strategies to make those guests feel welcome, recognised and inspire long-term loyalty.
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A modern RMS makes a significant difference to both the top and bottom line for hoteliers. Using a series of specialised algorithms and calculations, an RMS automatically assesses hotel performance and market demand, and then deploys pricing and rate availability decisions across the distribution ecosystem accordingly.
Total profit optimisation capabilities built into the most sophisticated RMS also enable hotels, resorts and casinos to capture the most valuable business while considering the total contribution for each guest.
This allows hoteliers to evaluate total revenues, profit margins for each revenue stream and the costs associated with acquiring and servicing guest stays in real time, while determining highly sought metrics such as profit per available room (ProPAR).
Adapting to a changing market
While historical booking data might be less directly comparable to the conditions of today, an RMS should be able to build out a range of forecasts based on all credible external and internal market intelligence, such as government announcements, travel policies, flight data, google search trends and market reports.
In this environment, revenue managers are challenged to find relevant data sets today and therefore should build their forecasts based on several scenarios (optimistic, most likely, and pessimistic) before reviewing the actual demand versus forecasted results and adjusting long-term pricing strategies.
Leverage analytics to support business planning
While older versions of an RMS might use a limited number of forecasting models at a level defined manually by users, high-performance forecasting, built into a modern RMS, relies on hundreds of advanced forecasting models where the most appropriate model is selected by the system automatically.
Then the forecast model parameters are calibrated to understand the impact of the specific price sensitivities –no-shows, cancellations, booking windows, etc. – within the forecasting group to a granularity of individual rate codes and room types.
Hotels face increasing pressure to optimise costs and operational budgets. Folding these into the forecast process intelligently and using it as a next step to operational planning and budgeting can improve staffing efficiencies and hotel profitability, even in a disrupted market.
Analytics can be employed to solve a variety of challenges, including adapting the forecasts to demand shifts. Solutions should be agile and advanced enough to choose the relevant data sets for multiple segments or channels in the property.
For example, the domestic leisure segment will have more relevant history than the international tourist market.
Automate hotel revenue processes with an advanced RMS
Manually collecting, evaluating, and calculating data for the purposes of price-setting via spreadsheets is not only a tedious process, but also slow and highly susceptible to mistakes and missed opportunities, especially in this era of uncertainty. This is why an RMS is more important in the hotel sector than ever.
An advanced RMS not only generates prices that adapt to market changes, but it also considers the competitive landscape and a guest’s willingness to pay, to help generate demand and maximise revenue opportunities.
Gloss