I am currently working with several organisations that are in the process of buying a Revenue Management Solutions (RMS) for the first time, and often we need to empower and help Revenue Managers and Commercial directors that are agents of change, often have to present strong arguments to their ownership teams to justify the investment. That’s why I’ve put together this article highlighting 10 reasons why buying an RMS can help hotels be more profitable, with proof points demonstrating the financial impact.
Reason 1: Maximising Revenue
Revenue management systems help hotels to optimise their revenue by analysing and predicting demand patterns, setting the most profitable pricing strategies, and allocating inventory across different distribution channels. According to a study by the Cornell School of Hotel Administration, hotels that implemented revenue management systems experienced an increase in revenue per available room (RevPAR) of between 4.5% and 7.5%.
Reason 2: Competitive Advantage
Revenue management systems allow hotels to stay ahead of their competitors by monitoring market trends and adjusting pricing and inventory strategies accordingly. In a survey of hotel executives, 90% reported that revenue management had become more important in gaining a competitive advantage. By implementing an RMS, hotels can make informed decisions and respond quickly to changes in the market, giving them a competitive edge.
Reason 3: Better Decision Making
Revenue management systems provide hotels with accurate and timely data, which can help them make better decisions related to pricing, inventory, and marketing. According to a study by the Hospitality Sales and Marketing Association International, hotels that used RMSs achieved a 6.5% increase in RevPAR compared to hotels that did not use RMSs. By analyzing this data, hotels can identify trends, opportunities, and areas for improvement, leading to more informed decision making and increased profitability. We know the impact can be as high as 15% for a hotel group that has never used an RMS.
Reason 4: Improved Efficiency
Revenue management systems automate many of the processes involved in pricing and inventory management, reducing the need for manual intervention and allowing hotel staff to focus on other areas of the business. According to a study by the Cornell School of Hotel Administration, hotels that implemented revenue management systems experienced a reduction in labor costs of between 2% and 5%. This improves efficiency and reduces costs, leading to higher profitability.
Reason 5: Long-Term Sustainability
Revenue management systems enable hotels to adopt a more strategic and sustainable approach to revenue management, rather than relying on ad-hoc pricing and inventory decisions. By using data and analytics to inform their decisions, hotels can achieve long-term sustainability and profitability, rather than short-term gains that may be unsustainable.
Reason 6: Better Forecasting
Revenue management systems help hotels to forecast demand more accurately, which is essential for optimizing pricing and inventory decisions. By analyzing historical and real-time data, revenue management systems can predict future demand trends and adjust pricing and inventory accordingly, leading to higher profitability.
Reason 7: Increased Occupancy
Revenue management systems help hotels to maximize occupancy rates by identifying and targeting different customer segments with tailored pricing and promotions. According to a study by the Cornell School of Hotel Administration, hotels that implemented revenue management systems experienced an increase in occupancy rates of between 2% and 4%.
Reason 8: Improved Guest Experience
Revenue management systems enable hotels to offer better value to guests by providing personalised pricing and promotions based on their preferences and booking behaviour. According to a study by the Hospitality Sales and Marketing Association International, hotels that used RMSs achieved a 5.4% increase in guest satisfaction scores compared to hotels that did not use RMSs. This improves the guest experience and encourages repeat business, leading to higher profitability in the long term.
Reason 9: Better Distribution
Revenue management systems enable hotels to distribute their inventory more effectively across different channels, such as online travel agencies, direct booking channels, and offline channels. This enables hotels to reach a wider audience and generate more revenue, while minimizing the costs associated with distribution. With an RMS, hotels can easily manage their distribution channels and adjust pricing strategies in real-time, ensuring that their inventory is being distributed in the most effective way possible.
Reason 10. Real-Time Analytics
Revenue management systems provide real-time analytics on key performance indicators, such as occupancy rates, average daily rates, and revenue per available room. This enables hotels to monitor their performance and make informed decisions based on up-to-date information, leading to higher profitability and a more sustainable business model. Real-time analytics are especially important in today’s fast-paced and competitive market, where even small changes in demand can have a significant impact on a hotel’s revenue.
In conclusion, investing in a revenue management system is the fastest way to for any hotel looking to improve its results and it’s revenue management processes and achieve short and long-term profitability. With an RMS, hotels can maximise revenue, stay ahead of the competition, make better decisions, improve efficiency, and achieve long-term sustainability. As the hospitality industry continues to evolve, an RMS is becoming an essential tool for hotels that want to succeed in a highly competitive market. Automation will be key in this process.
If you are on the search and you have not come across BEONx, our commitment goes beyond room revenues. We understand that there are many other areas of your hotel’s operations that can impact profitability, from food and beverage to spa services to meeting spaces. That’s why our revenue management solutions are designed to map out all the potential profit centers across your organization, so we can help you find your X that will take your hotel’s profitability to the next level.
Get in touch and we and our team of experts will work closely with you to develop a comprehensive revenue management strategy that takes into account all aspects of your business to help you deliver exponential profits.
