Revenue Management in a hotel

Everyone knows the main goal of revenue Management - to sell the right product, to the right customer, at the right time, in the right place. But how to achieve this and does Revenue Management end there?

What is it?

Revenue Management is a set of actions aimed at optimizing the availability, demand, and price of a product to maximize revenue growth.

This approach is relevant in areas where demand, price, and occupancy are interrelated - for example, in air transportation, the restaurant business, and hotels.
For the first time, British Airways experimented with discounts and changes in demand. A little later, American Airlines introduced the practice of maximizing revenue by analyzing the basics of inventory management.

In hotels for the first time to study demand forecasting and income control began in MARRIOTT. They introduced discounts based on demand. And by the beginning of the 21st century, all major hotel chains, airlines and transport services have implemented Revenue Management on a permanent basis. To analyze and anticipate demand and find the "right price", the Manager analyzes a large amount of information and uses various levers to achieve goals.

Revenue Management Tasks

The hotel's revenue Manager handles the following tasks:

  1. Develops a pricing policy for each customer segment
  2. Optimize hotel load
  3. Develop personalized offers for specific clients
  4. Change the room rate depending on demand

To solve these tasks, the Manager must have an analytical mindset, but he must not forget about the creative approach to business.
Revenue Management

Control lever

The revenue Manager can use the following levers:

1. Pricing. The task of the specialist is to forecast demand using the data already obtained, and on this basis to build a pricing policy. To get full dates, the Manager must analyze the following indicators:
  • Loading;
  • Average daily room rate (ADR)
  • Revenue per number (RevPAR)
  • Gross operating profit per number (GOPPAR)
  • Total operating profit per number (TREVPAR)
  • Total profit per client (TREVPEC)
Also, to optimize the revenue from the entire hotel, you need to calculate additional departments-the revenue of the restaurant, Spa, etc.

2. The occupancy rate of rooms.
For a business like a hotel, there is often a threat of cancellation. Often hotels deliberately overbooking to increase overall sales, instead of optimizing the customer base so that each customer gets the services and offers they need.

To do this, the Manager must analyze such data:

  • Last year's demand
  • Revenue per number
  • Analysis of events, weekends and holidays

3. Marketing. The marketing strategy helps to sell high volumes of services at temporarily reduced prices. Marketing also helps establish a balance between service growth and profitability.

4. Distribution channel. As a rule, the Manager uses this lever to answer two questions:

Which channel does a particular customer segment use?
How long does it take from the time of purchase to the time of arrival?

Revenue Management

The process of revenue Management

To create a revenue management strategy, the Manager performs a number of actions Information collection.

  • Segmentation.
  • Forecasting.
  • Optimization.
  • Dynamic revaluation.
  • Programs like Curtis - C, CHWeXpress, Opera, Revenue Diary, etc. have been developed to help the revenue Manager.

The complexity of the revenue management Manager's responsibilities will increase over time, as the trend towards personalization and individualization in the service market increases. A specific approach will be applied to each client. And the responsibility of the hotel will not just be to sell the room to the person, but also to sell the RIGHT room and the RIGHT services that are aimed at the RIGHT person.
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