What do Hotel Revenue Managers do?
Hotel revenue management is essentially a practice that seeks to optimize pricing for hotel rooms. Hotel revenue managers implement revenue analysis practices to ensure that hotels can maximise profits and run a sustainable business model.
Hotel revenue managers do not take an arbitrary approach to setting prices, nor do they employ guesswork, or rely on an unsupported intuitive process. Hotel revenue management uses an analytical approach: it is effectively a puzzle, a solvable equation that can find the best model of dynamic pricing for the best possible outcome for a hotel or business. Put simply, empty rooms do not make money, and if customers are booking elsewhere for a marginal saving, then effective revenue management can tangibly increase occupancy and profitability.
Hotel revenue managers must fully understand the market in order to fully optimize their revenue management strategies. Many factors can have a profound effect on the market: the vagaries of seasonal demand; the prevailing macro-economic climate; local market factors such as competition, demand and competitor pricing strategies.
Vital role of technology for the hotel revenue manager
A hotel revenue manager will evaluate the best revenue management strategy by examining market share performance, competitor analysis, price positioning and structure, business mix management and channel analysis.
Technology is integral to hotel revenue management and hotel revenue managers will regularly critically examine the hotel website performance and distribution strategy. The hotel revenue managers use these strategies to make sure that the hotel rooms are used at the optimum occupancy for the right price. Using these strategies to keep hotels running at a state of maximum profitability is what successful hotel revenue managers do.
Whilst hotel revenue managers have been using demand based pricing for a long time, it is becoming much more common in all businesses; it may eventually become ubiquitous. Uber and Amazon are two examples of companies that actively promote dynamic pricing and will raise prices whenever demand increases or analysis suggests customers may pay more. Businesses cannot ignore the evolution of revenue management strategies: it is not going away.
Many hotels may struggle in a competitive environment without competent revenue analysis, but there are reasons not to be alarmed. For smaller hotels, revenue management can be outsourced to hotel revenue management vonsultants for even as little as four hours per week. revenue management training can be given to existing staff and revenue management and distribution audits are available to examine where improvements can be made.
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