HOTEL REVENUE MANAGEMENT SYSTEMS - TOTAL GUIDE
Creating effective revenue management systems is an essential part of managing any business within the hospitality industry.
Hotel Revenue Management Systems – A Total Guide for the Hotel Industry
Creating effective hotel revenue management systems is an essential part of managing any hotel or business within the hospitality industry. The right tools and analysis enable you to understand the market, anticipate and react to demand, effectively manage revenue, and optimise your pricing strategy so that you can obtain the highest possible returns from your various revenue streams.
We have created this total guide to help you and your team understand everything you need to know about hotel revenue management. We will explain what it is, what its purpose is, and what the key functions of a revenue manager are. We will also share some of the most valuable KPIs that you should be tracking on a regular basis to help you gather the data you need to create effective strategies for maximising revenue in your hotel.
Perhaps most importantly, we will be talking about how limiting traditional revenue management systems are, the latest innovations in hotel revenue management, and how BEONx are helping hotels around the world to shift from revenue management to a new concept: sustainable profitability.
Read on to find out what this new concept is and how a sustainable profitability platform can push your business to the next level.
Revenue management: What it is and what it’s not
Let’s start with a few basic hotel revenue management concepts before we look at how to increase revenue with the right KPIs, strategies and platforms.
Revenue management vs yield management – The terms revenue management and yield management are often used interchangeably, but they are actually very different concepts.
Put simply, revenue management within the hotel industry is all about selling the right room, to the right client, for the best price, through the right distribution channel, in the most cost-effective way possible. And all this ultimately comes down to one core strategy: using performance data and analytics to accurately predict demand and consumer behaviors. The aim is to use this data to anticipate market trends and make strategic decisions that optimise your hotel profit margin and distribution channels so that you can generate the highest possible rate of revenue growth.
In contrast, yield management is a variable pricing strategy based on the concept of understanding, anticipating and influencing consumer behaviour. Rather than looking at your overall revenue, yield control focuses on specific revenue streams (rooms, minibar, hotel restaurant, etc.) and how you can influence consumer behaviour and find the right balance between profit and fair pricing.
The purpose of revenue management
The ultimate purpose of revenue management is to maximise the money your business generates. It’s all about creating a more profitable business through effective budget management and data-driven strategies that focus on anticipating and reacting to market trends. And this has never been more important, especially given the fluctuating and unpredictable nature of the market since the start of the Covid-19 pandemic.
In fact, revenue management is now being recognised as one of the key levers of business success, to the extent that stakeholders and shareholders are demanding updates in their QBRs and annual reports. Business owners understand that the secret to remaining competitive is responding effectively to these market fluctuations and using the right data to make informed decisions relating to business, staffing, and budgets.
And all this means that hotel revenue management is the key to maximising profit and building a successful hotel business.
How to calculate revenue
When it comes to hotel revenue management, data is your most valuable asset. The right metrics and analytics can help you understand your market and identify demand trends and opportunities for improvement. They can help you make accurate and informed strategic decisions based on data that boost the revenue that your hotel generates.
Let’s take a look at some of the most valuable KPIs that you should be tracking on a daily basis as a revenue manager or hotel owner.
RevPAR stands for revenue per available room, and it is the most important hotel metric for a revenue manager. The formula helps you understand how many rooms you have sold at any given time, and how much revenue your bookings are generating for your hotel. Tracking this metric can help you maximise your revenue per room and optimise your hotel’s overall performance.
There are two ways to calculate RevPAR.
Either divide your total room revenue by the number of rooms:
Total room revenue / Total rooms available
For example, if there are 90 sold rooms (90% of your availability) with an ADR of $100 gives you a total revenue of $9,000, divided by the 100 total available rooms, resulting in a RevPAR of $90.
$9,000 / 100 = RevPAR $90
Or multiply your occupancy rate by your ADR:
Occupancy rate x ADR
For example, if there are 100 rooms available with an occupancy rate of 90% and an average daily rate of $100, the formula would be.
0.90 x $100 = RevPAR $90
Revenue management KPIs
As valuable as the RevPAR formula is, you should always use it in combination with other revenue management KPIs to get a fuller picture of your hotel’s performance (as RevPAR doesn’t take other factors into consideration such as expenses).
This should include:
- Occupancy rate: the number of available rooms in a hotel that are occupied at any given time
- ADR hotel: your average daily rate
- TRevPOR: revenue per occupied room (takes into account all revenue generated from an occupied room, including room service and laundry service, for example)
- TRevPAR: total revenue per available room, regardless of whether those rooms have actually been occupied. Also includes money spent in the restaurant, at the bar, etc.
- NRevPAR: net revenue per available room, which takes into account distribution costs associated with selling a room.
- ARPA: average revenue per account, used to show the average amount of revenue generated per customer account over a given period.
- GOPPAR: gross operating profit per available room, regardless of whether they are occupied or not.
- EBITDA: earnings before interest, taxes, depreciation, and amortisation, used to measure a hotel’s overall financial performance
Total revenue is the total income that your hotel generated from all sales, including rooms and ancillary services. This KPI is vital for measuring the overall financial health of your company. The larger your total revenue is, the more money your hotel is generating.
The formula is simple:
total revenue = (average price per service sold) x (number of services sold)
All the metrics and KPIs we’ve just seen ultimately serve to paint a picture of the overall rate of revenue that your hotel is generating. Understanding each revenue KPI and knowing what adjustments you need to make, and when, is the key to revenue generation.
It’s important to understand that the most effective revenue generation strategy is built around data. It’s all about knowing that every action you take has a corresponding reaction. By understanding these reactions you can create the right strategy to get the results you want: maximum revenue and maximum profitability.
Revenue maximising: strategies and how to do it
We’ve looked at the importance of having the right data. Now let’s take a look at some of the hotel revenue management strategies you could use, in conjunction with this data, in order to maximise the revenue that your hotel generates and achieve better financial results.
The following revenue management strategies all rely on a range of methods including forecasting, competitor analysis, market segmentation, and pricing strategies.
Tactical vs strategic
The first important step, before you can implement any revenue management strategies, is understanding the difference between strategy and tactics.
A revenue strategy is a plan you design in order to reach a specific goal. This might be increasing direct bookings, improving conversions, attracting new markets or shifting segmentation, for example.
Tactics, in contrast, are concrete actions you take in order to achieve the goal you establish in your strategy. This might be relaunching your website or exploring alternative booking channels, for example. Basically, it is the specific steps you need to take as part of your wider strategy.
We bring this up because a common pain point for revenue managers is finding the time to focus on long-term strategy rather than tactics.
How much time do you spend on strategy vs tactics?
Tools like BEONx can help you shift the balance so that you can reduce the time spent on tactics and focus more on your strategic vision, instead. More on this shortly. First, let’s take a look at those all-important revenue management strategies.
An effective strategy for optimising your prices is market segmentation. This is where you divide your customer base into different demographics, analyse their behaviours and booking habits, and then attempt to create tailored segment pricing for each customer type. For example, you could charge business guests lower room rates because you know you are likely to recoup your money from their use of your corporate facilities.
In the end, you need to identify your most profitable guests. You don’t need to create services for all your potential segments, but focus on the most profitable for you in terms of customer acquisition costs, distribution costs, as well as behaviour, average spend, lead time, RevPAC, etc.
Competitor analysis can be another great strategy for boosting your revenue. This strategy involves evaluating the strengths and weaknesses of your competitors and adapting your own strategy in order to gain a competitive edge. This helps you find your position in the market and the data you collect gives you the insight you need to make smart revenue management decisions. For example, you might identify a gap in the market and then create upselling or cross-selling strategies to address this opportunity and boost your revenue streams.
Forecasting is one of the most important tools on a revenue manager’s belt. Put simply, it’s the process of analysing past and present customer trends in order to make future demand predictions. You can then use your revenue management forecasts to make strategic decisions that align with anticipated behaviours and predicted levels of demand. For example, if your forecast predicts that there will be a spike in demand over the next month, you can adjust your housekeeping and restaurant budgets accordingly in advance.
One of the core objectives of hotel revenue management is price optimisation. This means creating a fair pricing strategy that attracts customers to your hotel but also makes you a profit.
There are many different types of pricing strategies.
This includes strategies based on:
- Competitor pricing
- Guest type
- Loyalty programmes
- Length of stay
- Hotel cancellation policy pricing strategies
- Upselling, cross-selling, and rate-parity strategies
Your pricing strategy also needs to be fluid. It needs to take into account market supply and demand, time of year, your different segments and your competitors. For example, you need to know when demand is going to be high so that you can charge more but allow for discount pricing when demand is low so that you still fill your rooms. It’s all about finding the sweet spot at any given time. This is where the right pricing tool or pricing optimisation software can prove invaluable. More on this shortly.
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Revenue optimisation software: types and how to choose the best one
Let’s take a look at the hotel revenue management systems and tools that will help you collect the data you need in order to create a strategy for maximising revenue and profits.
Most revenue managers use an RMS (revenue management system) connected to a PMS (property management system), but there are other software solutions that can also have a positive impact on hotel revenue.
Revenue management system
A revenue management system (RMS) is a form of hotel management software that enables you to collect all the data you need in order to make informed strategic decisions that generate maximum revenue for your hotel. The right system enables you to track performance data in real time and create realistic and accurate forecasts so that you can anticipate demand and make the necessary adjustments to your pricing strategy in order to maximise the revenue that your hotel is generating.
What to look for in an RMS system:
- Forecasting management tools
- Pricing systems
- Integrations with third-party software
- Channel management
- Cloud-based reporting
- Data visualisation
It’s important to pick an RMS that understands the changing nature of the hospitality industry. For example, BEONx is now driving the shift from traditional revenue management methods to a new set of tools and methods – sustainable profitability. Our Sustainable Profit Platform has been designed in response to the hospitality industry’s need for more advanced revenue management tools focused on this concept of capturing the revenue and profit from all aspects of your hotel operations. That is why our Sustainable Profit Platform includes a state-of-the-art revenue management system for hotels, as well as a selected set of partner applications, allowing you to analyse and optimise beyond a simple revenue per room calculation, taking into account additional streams from each and every touchpoint during a guest’s stay, such parking, lounges, meeting spaces, restaurants and spas.
BEONx’s RMS relies on an advanced algorithm that understands how weight should be given to historical data at any given time, in line with changes in customer behaviour and predicted demand trends. What’s more, our HQI™ (Hotel Quality Index) takes into account the strategies and behaviours of your competitors, providing you with improved price elasticity and more detailed forecasting abilities.
Property management system software
Having access to a reliable property management system (PMS) is another vital element of effective hotel revenue management. A PMS is a centralised software application that you use to organise, schedule and perform the day-to-day functions and transactions involved in selling accommodation. In other words, it streamlines your reservation and administrative processes so that all data is centralised, and everything runs more smoothly and efficiently. Common features include tools for front-desk operations, reservations, channel management, housekeeping, rate and occupancy management, and payment processing.
Hotel rate shopper
A hotel rate shopper is a software solution used to monitor online room rates. It allows you not only to compare your pricing strategies to those of your competitors, but also identify and monitor any rate disparity in your distribution channels. This includes both the rates that third-party platforms are offering for your own hotel, as well as those being offered by your main competitors.
Hotel pricing data is collected from a variety of sources, including major OTA platforms (such as Booking.com and Expedia), metasearch engines, price comparison engines, and hotel-branded booking engines.
Other hotel management software that impacts revenue
There are many other hotel management system solutions on the market that can help you generate optimised revenue for your hotel. This includes central reservation systems, log and event manager software, channel management software, housekeeping management software, accounting and finance software, online hotel booking systems, and HRIS systems, upselling and cross-selling software, direct sales tools, amongst others.
All these solutions can give you access to the internal and external data you need in order to understand market supply and customer demand and, ultimately, calculate the ideal rates for your rooms. However, without a doubt, the solution that can provide you with real-time access to the widest variety of data and analytics is revenue management software.
Innovations in Revenue Management
There are a number of ways that digitalisation can help you create a more efficient business model for your hotel, boosting both your revenue and your profits. Generally speaking, most hotels are currently focusing on tools that help them improve two major areas of their business.
The first of these is the digitalisation of the guest experience. This includes the use of in-house communication apps for communicating with guests, and technology for digitising various touchpoints during the guest timeline, such as offering online check-in and check-out solutions.
The second area is the digitalisation of a hotel’s internal processes. This area is more focused on streamlining the way internal data is managed and processed. And one of the biggest benefits of this is that it provides revenue managers with better access to data analytics. This enables them to understand their guests better and make strategic revenue management decisions in line with consumer demand and market trends.
Let’s take a look at these areas in a bit more detail to help you understand how digitalisation can help you create an efficient and profitable business.
Data collection and analysis
Digitalisation makes it much easier to collect, manage and analyse data. For example, when you digitise your booking process, you can centralise all your guest data in one system. That way, all areas of your hotel have access to the information they need at the click of a button. For example, you can share this information in real time with your housekeeping and restaurant teams so that they can prepare supplies and plan employee schedules accordingly. All this helps your internal operations and revenue management systems run more smoothly so that you can create a more productive business model for your hotel.
By using the right AI tools and technology to analyse this data, you can also offer an improved guest experience. For example, guests can check into their rooms in advance instead of queuing up at your desk on arrival. They can also communicate their requirements and preferences in advance so that you are able to tailor their reservation accordingly. And the next time they make a reservation, you just need to access their digital guest file to find out everything you need to know.
Digitalisation and Performance
Digitalisation also helps you better understand your current performance levels in line with the market in which you are operating. You can use digital technology, for example, to see how many guests leave you a positive review. You can also identify if there are any areas of your hotel that are underperforming so that you can improve your guest experience. Plus, you can compare your performance data with that of your competitors to measure the impact that your current strategy is having on your hotel’s reputation.
Essentially, digitising and centralising all your data makes it easier for you to paint a picture of how smoothly your operations are running and whether you are meeting your commercial objectives as a business. And all this helps you identify what changes you need to make to your revenue management systems and strategy in order to boost profits.
Because digitalisation enables you to consolidate all your hotel intelligence data, it’s much easier to predict patterns and fluctuations in demand. For example, you can analyse your historical data in order to make informed predictions about what your occupancy levels are likely to be at any given point in time (taking into account sales conditions, segmentation strategies, trend deviations, lead time, and market fluctuations). You can then use your predictive analytics to adjust your pricing strategies and inventory accordingly.
For example, BEONx’s revenue management software combines a range of Artificial Intelligence technologies that can help you detect changes in consumer behaviour and automatically implement adjustments to your rates, inventory, and operations in line with demand trends.
Finally, the right digitalisation tools should help you break down silos and identify prescriptive recommendations that maximise your ROI.
For example, you can use a revenue management system to collect and analyse valuable metrics so that you understand your past, present and future performance. This includes data relating to guests, such as their booking habits and behaviours. It also includes the prices that tend to attract specific segments of the market and the feedback you get from your guests.
Plus, a revenue management system (RMS) gives you access to valuable market data, including demand fluctuations, booking trends, and what your competitors are offering. You can then use this data to analyse your market and competitors, predict future demand, improve your hotel market positioning, and optimise your rates.
Essentially, the biggest benefit of digitalisation is that it enables you to create an automated, integrated hotel tech stack that gives you real-time access to every aspect of your business. And achieving this level of visibility is the best strategy for streamlining your operations and generating maximum profit for your hotel.
Artificial Intelligence & revenue management
Artificial intelligence (AI) is slowly transforming many aspects of how we live our lives. We’re already seeing driverless cars, virtual doctors, and marketing chatbots. And now, thanks to recent advancements, we are also beginning to see AI penetrate the hotel industry, especially in terms of data management and decision-making.
Let’s explore some of these developments to find out how artificial intelligence is changing the way we run our hotels.
What is artificial intelligence in the hotel industry?
Artificial intelligence, also known as AI, is a computer programme that performs tasks that historically have relied on human intelligence. Essentially, these dynamic systems mimic human intelligence in order to carry out both basic and complex tasks. Specific applications include AI-powered assistants, manufacturing robots, speech recognition, marketing chatbots, and checkout-free grocery shopping.
In terms of the hotel industry, artificial intelligence is already being used in a number of areas. For instance, AI is used by many hotels in order to offer guests smart check-ins, AI concierge services, and smart devices such as digital room assistants. All this helps to automate specific services and improve the overall guest experience.
However, perhaps the biggest area where artificial intelligence is being used in hotels relates to data management. Businesses that invest in software with AI algorithms are able to automate data collection processes, understand and predict market demand, offer better prices, and improve their internal operations. Thanks to this level of automation, hotels are instead able to refocus their efforts on more strategic tasks that promote growth.
How can artificial intelligence improve your revenue strategies?
Let’s take a look now at two ways that artificial intelligence can help you enhance your revenue streams and create a more efficient and profitable business.
Automate your data management processes
Hotels generate a huge amount of data every day. This includes guest information, reservation details, and RevPAR values, to name a few categories. AI algorithms are able to automate many of these data collection and analysis processes so that hoteliers can gather all the business intelligence they need in a much more time-efficient manner.
Artificial intelligence is particularly useful for automating repetitive processes. This includes analysing demand trends, customer behaviour patterns, and market segments. It also includes pricing automation, forecasting, reputation management, and automated processes for streamlining the booking process. By using the right software, you can easily collect, analyse and handle large amounts of data from a variety of sources that helps you understand every aspect of your target market.
For example, at BEONx, we have developed a unique revenue management system that you can use to collect and analyse data relating to your hotel’s reputation and market positioning in real time. The platform also collects valuable insights that enable you to anticipate the needs and preferences of your customers. Once the system has collected all this information, our unique algorithms analyse the data to help you identify customer behaviour patterns and predict demand trends. It also accounts for the reputation and positioning of your competitors so that you can calculate optimum prices for each of your market segments at the click of a button. This improves your ability to develop fair pricing strategies, forecast predicted trends, and offer an improved guest experience. And you can do all this without spending hours manually compiling data from numerous sources and analysing endless spreadsheets.
And, best of all, artificial technology such as this is easy to implement and integrate with your existing systems so you can create an optimum data-focused tech stack for your business without incurring inflated costs.
Improve your strategic decision-making processes
The other big benefit of using artificial intelligence is that thanks to your improved data collection and analysis capabilities, you have access to enhanced insights that you can use to develop effective revenue management strategies. Digitalising your hotel in this way can help you make better, data-driven decisions based on meaningful and actionable observations. Plus, you can create software alerts so that you are immediately notified whenever your AI tools detect any unusual patterns that you need to act on. All this helps to put you in the driving seat so that you can anticipate your market and improve your strategic decision-making processes.
Ultimately, by automating many of your repetitive data collection and analysis processes, you can leverage your most important asset: the human capabilities that you and your staff possess. You can use your knowledge, skills and experience to interpret all this data and create effective long-term strategies that promote growth. You can also refocus your efforts on more creative and innovative strategies that help you secure more bookings at optimal prices. In fact, according to a study by Deloitte, when you harness the power of analytics, automation, and artificial intelligence, you can create the right strategies to balance speed, cost, and quality, and deliver measurable business value.
Machine learning & revenue management
Hotels are constantly looking for new ways to boost their revenue growth and attract a larger segment of the market. With the right hotel revenue management strategies, you can optimise your prices, segment your market, predict consumer demand, and enhance your guest experience. But you also need the right tools and software so that you can access all the data you need to create these strategies. This is where machine learning can help.
What is machine learning?
Machine learning is an advanced technology that uses algorithms and artificial intelligence to identify hidden patterns and insights in order to predict future trends. The technology has a range of applications. Including image and speech recognition, virtual personal assistants, natural language processing, and data analytics.
In terms of hotel revenue management, machine learning can be used to enhance your revenue management systems in a number of ways. The most common applications are those that relate to data processing and analytics, automation, and personalisation.
How can machine learning be used in revenue management?
Increasing numbers of hotels are incorporating machine learning in their revenue management tech stack. In fact, AI and machine learning can be deployed in almost every process in your hotel. The main reason it’s so effective is that the technology has an enormous capacity for handling large quantities of data and complex tasks in an efficient and effective manner. This not only provides revenue managers with a wealth of valuable insight, but the right tools also save time and resources that can instead be channelled into revenue growth strategies.
Let’s explore how exactly you can use machine learning to streamline and enhance your revenue management processes.
Analyse Big Data to help you understand your market
Data collection and analysis is one of the most important elements of hotel revenue management. Machine learning provides you with three different levels of analysis: descriptive, predictive, and prescriptive analytics.
Let’s start with predictive analytics. This is where you rely on internal (hotel performance) and external data (market trends) to predict future demand.
The right predictive analytics can help you understand and segment your market and forecast and anticipate consumer demand. In the past, all this predictive data would need to be sourced and analysed manually. Which took a great deal of time and effort. Machine learning has stepped things up. By a long mile.
In fact, machine learning can identify all manner of trends in Big Data and drastically enhance the quality of your automated predictive analytics.
For example, in terms of understanding your market, machine learning can help you:
- Identify your key market segments through 360-degree customer views.
- Understand and predict the likes, dislikes, preferences, needs, wants, and expectations of your guests, helping you create optimised guest experiences.
- Predict guest purchasing behaviours based on past behaviour so that you can anticipate demand. And also adjust your pricing strategies accordingly (when they book, how they book, demand trends, revenue per guest, etc.).
- Flag potential risks associated with each guest segment (customers, macro-industrial environments, micro-environments, etc.) and transform them into revenue opportunities.
- Adjust your market predictions in line with external factors such as weather, upcoming events, traffic, etc.
All this business intelligence helps you gain market awareness so that you can keep your guests happy and optimise your pricing strategies. This, in turn, enhances your hotel’s reputation, gives you a competitive edge, and enables you to refocus on the development of sustainable and profitable revenue streams.
Enhanced forecasting so that you can design actionable revenue management strategies
As we just discussed, machine learning provides you with three different levels of analysis.
Let’s explore these levels in a bit more detail:
- Descriptive analytics: the analysis of structured and unstructured data, including internal analytics (hotel performance) and external analytics (competition and market). This helps you to paint a picture of the current status of your business.
- Predictive analytics: additional data that complements your descriptive analysis with external factors that might influence market trends, such as weather, traffic, economics, upcoming events, etc. This helps you better predict future demand.
- Prescriptive analytics: the analysis of both descriptive data (the current status of your business) and predictive data (your demand forecasts) in order to identify (prescribe) effective sales strategies.
Machine learning provides you with valuable prescriptive recommendations that you can use to design actionable strategies that respond to your predicted forecasts. This is essentially what revenue managers have been doing manually for years, but machine learning can speed up the process, make more accurate data-driven predictions, and exponentially enhance your results. And, given that forecasting is an essential part of your role, this is a huge benefit.
In fact, it’s so effective that prescriptive analytics is believed to be the future of hotel revenue management.
Automation & revenue management
Revenue management automation is revolutionising the way hotels manage their data. Evolving technology is enabling revenue managers to access the predictive and prescriptive data they need for their strategies in a much faster and more efficient way instead of relying on gut instinct. It’s also internal revenue processes so that managers can instead focus on what matters most: revenue growth.
What is revenue management automation?
An effective revenue management strategy needs to be based on hard data and analytics. You need access to detailed historical data in order to understand your market, design profitable pricing strategies, and anticipate and react to demand trends. In the past, revenue managers would process all this data manually, which took a great deal of time and effort. These days we thankfully have access to tools and platforms for revenue management automation.
In simple terms, revenue management automation is the use of artificial intelligence and machine learning technology to optimise and enhance a hotel’s processes. The main objective behind hotel revenue management automation is to streamline as many repetitive tasks as possible so that reliable data can be collected on an ongoing basis. That way, revenue managers get access to the real-time analytics they need to make accurate predictions, monitor their distribution channels, and design data-driven strategies. And this is essential for generating maximum revenue growth.
Benefits of revenue management automation
Revenue management automation has been around for a number of years now. Most hoteliers understand the benefits of automating basic repetitive tasks to improve the efficiency of their teams. However, we now need to start thinking about automation at a higher level. Can we automate decision-making, for example? Can we use data to make profitable long-term revenue strategies?
Let’s take a look at some of the more advanced benefits of revenue management automation.
Enhanced predictive and prescriptive analytics
Most people understand the concept of predictive analytics. However, we are now seeing the benefits of using another form of data analysis: prescriptive analytics. Prescriptive analytics combines your descriptive data (the current status of your business) with your predictive data (your demand forecasts) in order to identify (prescribe) effective revenue management strategies. You get access to valuable prescriptive recommendations that you can use to design actionable strategies that respond to your predicted forecasts. Essentially, this enables you to make better data-driven revenue management decisions based on solid recommendations.
With the range of opportunities that AI and revenue management automation now offer, revenue managers can access advanced tools that enable them to transform their data into a level of in-depth awareness that can be used for accurate predictive and prescriptive analysis. And this is changing the revenue management landscape. If you don’t keep ahead with these changes, then you will be missing out on valuable business insights.
Improved decision-making processes
Automating the decision-making process is the next big step in revenue management. Please don’t misunderstand us though. We’re not saying that this technology can do your job for you or that all decisions can be automated. The key is finding the right balance between revenue management automation and human insight. But AI can certainly enhance the decision-making process, especially when it comes to those daily, repetitive choices.
These days we have access to so much data it can often be overwhelming. There are quickly evolving market conditions, demand trends, and consumer behaviours. We have to take into account fluctuating pricing strategies as well as the changing needs and expectations of our guests. That’s a lot of data to process on a daily basis and it can sometimes be difficult to pinpoint which metrics you need to refer to when you make a strategic decision.
Revenue management automation uses AI and machine learning technology to scan through all your data, identify patterns, and highlight what’s most important at any given time. The right tools can recommend actionable strategies so that you know exactly what decisions you need to make at any given time.
More profitable long-term revenue strategies
Finally, revenue management automation can help you design more profitable long-term strategies.
For example, as we saw above, you can use an RMS to automate your basic, repetitive data collection and analysis processes. This ensures you have continuous access to real-time predictive and prescriptive analytics. You can also use RMS algorithms to automate your daily decision-making processes. This frees up a lot of time that you can use to work on revenue growth.
Perhaps most importantly, though, you can use the human factor to input your own knowledge and expertise so that your revenue management automation system is better equipped to detect anomalies and shifts in behaviour trends. In other words, with the right inputs, you can manage by exception and automation. And this is the future of revenue management. In fact, this balance of automation and human insight is precisely what you need to take your strategies to the next level and ensure long-term total revenue growth for your hotel.
Sustainable Profitability – redefining how the hotel industry thinks about revenue management and profitability
What is it?
At BEONx, we believe that sustainability and profitability come hand in hand. Sustainable profitability is an approach that transforms sustainability from an operating cost into a profit centre for your hotel. Moving from a hotel revenue management system to a sustainable profitability approach will allow you to optimise the use of resources and maximise resource efficiency in order to intelligently retain revenue and unlock maximum value for your customers.
With BEONx, you can leverage sustainability as a profit driver within a holistic, guest-centric approach to profitability. From seamless guest messaging and time-saving automations, to intelligent upselling and revenue auditing, our toolkit helps hotels align sustainability and profitability for a lasting impact on guest experience and the bottom line.
By integrating sustainable practices within your hotel, such as offering guests the ability to skip cleaning, thereby reducing water and reducing energy consumption, you can significantly improve your profitability per room. This approach positively impacts the triple-bottom-line of People, Planet and Profit, through improving the guest experience, optimising resource utilisation, and maximising profitability through reducing operational costs.
Eco-conscious consumers, including hotel guests, are increasingly willing to pay a premium for products and services that demonstrate good sustainability credentials. Moreover, sustainability is an increasingly important factor in the consumer purchasing decision. Consequently, adopting a sustainable profitability approach for your hotel will enable you to differentiate from the competition, influence consumer purchasing, and allow you to charge a premium price.
To further empower both hotels and customers to benefit from the shift towards sustainability, BEONx is developing a Hotel Sustainability Index (HSI) in partnership with the industry. The HSI will allow hotels to benchmark their sustainability metrics with their industry peers, whilst also providing greater transparency to customers. We envision this index becoming an industry standard, with scores prominently displayed on booking engines and Online Travel Agencies (OTAs), offering potential guests a clear measure of a hotel’s commitment to sustainable practices, thereby driving the industry towards a more sustainable future.
What are the benefits for hotels?
Shifting from a hotel revenue management approach to a sustainable profitability approach creates numerous benefits for hotels:
- Reduce Costs: through the efficient and optimal utilisation of resources, hotels can reduce operational costs and retain more profit from every transaction.
- Charge Premium Prices: eco-conscious consumers are increasingly willing to pay premium prices for sustainable products and services, further increasing your hotel’s profitability.
- Improve Brand Image: brands that can demonstrate credible sustainability credentials benefit from greater brand preference and brand affinity, which in turn positively impacts customer loyalty and price elasticity.
- Differentiate From Competitors: the path to sustainability is not equal and many hotels will be left behind as they fail to transition, which in turn creates a huge market opportunity for your hotel to differentiate and capture additional value from customers.
- Simplify Tech Stack: our unique platform allows you to integrate all your hotel data points into one place, allowing you to seamlessly uncover profit potential from across revenue streams and understand how you are competing in terms of quality and guest-experience versus your competitors.
- Increase Profitability: all of the above factors will contribute to creating a more profitable hotel, as a result of a reduction in costs, increased operational efficiency, higher prices per transaction and greater long-term customer loyalty.
At BEONx, we understand that true, long-term success depends on creating the right conditions for your hotel profitability strategies to succeed. This means having access to the right data for your team to analyse on a daily basis so that you can stay ahead of forecasted market trends, build the right organisational culture, and make data-driven decisions that leverage your data and help you create long-term profitability strategies built for success.