Advanced Revenue Management Changes Everything
The steady climb in hotel occupancy rates and record-breaking RevPAR growth continues, albeit at a slower rate, even despite the emergence of some very real challenges to the hotel industry. These include the onerous commission structures imposed by online travel agencies (OTAs) and the effect of Airbnb and smaller online marketplaces operating in the so-called sharing economy.
In addition, there is the simple fact that, in many markets, supply consistently outpaces demand, reducing hotels’ pricing power. Many hotels have been hampered by internal challenges, as well, not the least of which, in some cases, is the limited number of rate codes imposed by legacy property management systems, constraining the number of price points a hotel can offer potential customers.
The widespread adoption of data-driven revenue management strategies and advanced technologies no doubt deserve a lot of the credit. These capabilities make it possible for hotel operators to yield rates more aggressively than ever before. Data is the new oil, as they say, and analytics is the engine that converts the data into increased profitability, as evidenced by these record levels of RevPAR growth.
In addition to improving RevPAR by upwards of 10 percent, according to the latest industry research (click here to access), hotels can boost marketing and sales effectiveness, generate competitive intelligence, and gain insights into occupancy trends, guest demographics, market positioning and channel profitability.
Until recently, the idea of a revenue manager gazing into the dashboard equivalent of a crystal ball and generating precise demand forecasts for every night of the year across every room type and every guest segment was the stuff of fiction. Now, revenue managers have the tools to generate millions of new forecasts based on analysis of demand forecasts, competitor rates, market conditions, price sensitivities and demand drivers like seasonality, day-of-week differences and market dynamics.
A state-of-the-art solution is capable of generating tens of thousands of optimal pricing decisions on a daily basis, and there is reason to believe that revenue management capabilities will get even better as the analytics continue to evolve.
In fact, according to research conducted for The 2018 Smart Decision Guide to Hospitality Revenue Management (click here to access), more than half (53 percent) of today’s hotel operators believe that revenue management will become even more automated with further advances in data analytics capabilities.