The importance of revenue optimisation or revenue management in the hotel industry cannot be overstated due to its critical importance to the Hotel bottom line. Basically, revenue optimisation is being able to sell the right room to the right guest, at the right price and at the right time. It requires plenty of actionable information in a timely manner, which is so often unattainable.
Online Travel Agencies (OTAs) such as Expedia, Agoda or Booking.com have become a crucial source of hotel revenue. Independent hotels are particularly dependent on OTAs for their revenue. While this is not necessarily a negative trend, hoteliers should avoid relying too much on this channel for it may hurt the hotels’ profitability. OTAs usually demand around 10-20% in direct commissions. Additionally, the rate parity agreement with OTAs limits the hotels’ pricing options.
Today, the hospitality industry in general and hoteliers in particular are faced with a daunting road that requires great flexibility especially in terms of finance.
A longstanding issue for hotel owners and managers is how to maximise revenue and occupancy rates despite the effects of seasonality. To be effective, revenue and yield management strategies need to consider seasonality but all too often, hotels approach seasonality in blocks of time, rather than looking at each day over a 365 day period, resulting in lost opportunities.