Most today’s hotel operators believe that revenue management will become even more automated with further advances in data analytics capabilities. So, which technology solution is the right one? How can a hotel operator be assured that the solution they implement will best meet the needs of the hotel and enable revenue managers to achieve optimal results? The following are just a few key buying considerations to keep in mind.
Must-haves of a next-generation revenue management solution
1. Technology interoperability and data integration
Hotel operators today can gain a deep, unprecedented understanding of their guests —who they are, what they do, what their preferences are, and how much they spend across the property.
Combining the platform capabilities of a next-generation property management system (PMS) and an advanced revenue management solution, hotels can automate decision-making processes in ways that can make a world of difference in terms of pricing and inventory management.
Technology integration is key to revenue management success. The PMS, the central reservations system (CRS) or channel manager, and the revenue management solution all need to seamlessly connect and share data —preferably, in a real-time manner. Inventory-related data needs to flow into all distribution channels, including direct booking platforms and call centers, as well as the global distribution system (GDS) and OTAs.
In short, no revenue management solution can be treated as a standalone application. It needs to seamlessly integrate with multiple data streams.
2. Cloud computing data processing power
Advances in data processing power, largely enabled by the rapid growth of cloud computing, are enabling solution providers to develop capabilities that revenue managers have been striving towards for more than a decade.
Advanced revenue management solutions are able to process increasingly large volumes of data, and faster than ever. With the advent of a next-generation hospitality platform built for the cloud, the grand movement to unify the disparate and fragmented technologies and data silos has become an achievable goal.
Hotels can connect and seamlessly share data in the cloud across all parts of the property or properties and across all of the various hospitality solutions. For a large property, the totality of the data set may include dozens of guest segments, a dozen or more room types, several years of historical booking and reservations data, and upwards of a dozen length-of-stay buckets.
Advanced processing power makes it possible to include real-time integration of customer lifetime value (CLV) into pricing and availability, modeling consumer behavior from click-stream data, and integrating loyalty and total property spend data. Add to the mix competitive rate data, demand data, multi-market economic data, and even air traffic and weather predictions, if desired.
Combining all of these data sets for just one hotel could amount to several hundred million observations. Generating the pricing and distribution recommendations could easily require result in thousands of decisions being generated each day for every day into the future. Multiply that number for a hotel chain with dozens of properties and it quickly becomes clear that, more than anything, revenue management is a big data challenge.
As an example, one major hotel brand recently revealed that it generates more than 45 million forecasts nightly for each hotel, segment, room type, and channel for the next 365-day period. Needless to say, the processing and algorithms require an enormous amount of data storage and processing capacity to accomplish this task.
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While even global hotel brands may not have data processing requirements that are in the same league as Amazon, Apple, Facebook or Google, their data processing needs are certainly large enough to constantly stretch the limits of on-premise data storage and computing capacity, hence the need for cloud-based deployment.
3, Channel management and optimisation
Rates and inventory information need to be reflected accurately across all systems and touchpoints, including OTAs and other partner - and guest-facing channels. Otherwise, the prices that are presented to prospective guests on some channels may be lower than desired or rooms presented on some channels as available may, in reality, be unavailable, and the property may be overbooked. Inputting room rate and availability changes manually can result in errors that damage the brand’s reputation and lead to revenue loss.
4. Customisation to user and property needs
Because users have differing needs, any solution will invariably require some degree of customisation. Revenue managers should be able to create notifications based on their own predefined triggers. They should be able to define the data inputs and dashboard views based on their own priorities and display preferences. Flexibility in configuration is needed to mine the right data and generate actionable insights.
5. Group sales optimisation
Buyers with group business goals should check that any solution under consideration provides group sales optimisation. This means being able to evaluate group requests by forecasting the impact and displacement of transient guests while calculating ideal group rates.
Some solutions offer pricing recommendations by room type to maximise inventory and can provide meeting planners with a blended price quotation. Some solutions suggest alternate dates for flexible groups based on projected demand and availability to drive business to dates where the hotel stands to gain the most profit.
Some solutions offer simultaneous evaluation of multiple properties to identify which one would be the most profitable for the entire enterprise. Having profit-based price evaluation capabilities enables sales teams to understand unsold and undersold meetings and events space as well as less-than-optimal displacement of group business.
Expected return on investment
Making the business case for upgrading revenue management capabilities means projecting the likely return on investment (ROI).
Unlike many other technology-enabled business initiatives, the results of a revenue management initiative can generally be measured by way of an ROI calculation. Assessing the value of a revenue management solution from a cost standpoint means determining the extent to which the technology is achieving optimal financial results.
Comparing historical performance to current performance is one approach. But due to changing business practices, market conditions and various other factors, this approach may fail to provide an apples-to-apples comparison. Revenue opportunity uplift goes beyond a simple ROI calculation or historical performance analysis.
A careful measurement of RevPAR performance during a given time period compared against the same time period in the year prior to technology implementation may allow hotel operators to track incremental improvement driven solely by the new solution. In this way, hotel operators can gain an accurate read on time to value and determine the lift in revenue and profitability the new technology is currently delivering.