Next-generation revenue management technology: The hotel industry speaks
February 23, 2024
The secret to successful hotel management? Delight guests and protect margins. Hoteliers need to deliver stellar guest experiences, watch expenses, and closely manage revenue to run a profitable business.
Revenue management is the science of aligning pricing and promotions in all revenue streams to drive profit optimization. It requires offering the right product—whether that’s a room, a meal, an event, an amenity, or a combination package—at the right price to the right customers on the right channels. It is a complex process, and it has to move at the speed of modern digital business.
Effective revenue management requires automation and data-driven decisioning. Revenue management solutions use historical data, market trends, competitor rates, and algorithms to forecast demand, recommend the best pricing strategies in real-time, and offer detailed business intelligence for effective strategy-making.
The dual challenges of software cost and complexity
Perhaps no industry experienced greater disruption during the COVID-19 pandemic years than the hotel and hospitality sector. Disruption fueled an acceleration in digital transformation, as hoteliers quickly adopted cloud-based solutions. Revenue management teams improved collaboration with marketing and other key departments to optimize pricing strategies for digital marketing channels.
Today, revenue management solutions leverage data analytics, machine learning, and AI algorithms to automate revenue management tasks, create sophisticated demand forecasts, and supply data-driven insights. Cloud-based for global user access, these powerful solutions integrate with other key hotel management solutions and marketing channels, including property management (PMS), sales and event management, and online travel agencies.
Traditionally, revenue management software cost and complexity presented challenges for some hotels. Financially, many software packages were out of reach for budget chains. And solutions built for the needs of luxury global brands contained functionality that was not needed at smaller, regional chains, making those solutions more complicated to set up, learn, and use.
Hoteliers want a new approach to revenue management
To find out exactly what the hotel industry wants and needs from revenue management technology, the Infor Hospitality product team undertook an extensive needs analysis. We talked to hospitality leaders in all kinds of roles, from hotel owners to revenue managers, general managers, regional managers, and external revenue management consultants. We sat with leaders at the local level, regional level, and those working in global headquarters.
From budget to luxury hotels, and from smaller chains to large international brands, we listened as industry professionals described how revenue management technology could best deliver value to their organizations. Their insights have been distilled below into four top characteristics for the ideal hotel revenue management system.
Need #1: A single, adaptable revenue management solution
First and foremost, hotel leaders told us they want a single solution that can handle both simple and complex revenue management scenarios. They see value in a modular solution that enables them to pay only for the functionality needed today, while reserving ability to unlock additional functionality down the road.
The ideal revenue management solution should be priced within the reach of budget hotel chains and offer simple, yet highly effective, functionality for hotels—even those without a dedicated revenue management professional. Hotels should be able to add advanced functionality to their application subscription at any time.
Always on the move, hotel professionals don’t have time to find a computer every time they need to monitor occupancy and make revenue decisions. The right revenue management solution would have excellent mobile functionality for these busy, on-the-go roles.
Need #2: Science-based algorithms empowering data-driven decisions
Need #3: A truly innovative solution, ready for the future
Hoteliers told us they need a solution able to continuously evolve as their unique business needs change. To support agile reporting, they want it to be easy to slice and dice data, with lots of options for visualizations. The ideal revenue management solution would render role-based dashboards that can be adapted easily to incorporate new types of data.
An ideal revenue management solution will meet hoteliers where they are today and support tomorrow’s goals. To future-proof the solution, it needs to be built on a data model that allows for superior forecasting and the ability to take revenue management to the next level—empowering operational optimization through dynamic cost management, marketing promotion optimization, and ultimately, enterprise-wide total profit optimization.
AI will be foundational in next-generation revenue management. But AI should not replace human intelligence. Hospitality is a people business. The ideal revenue management solution should be designed with a spirit of collaborative intelligence, integrating human input with AI automation to improve results.
Need #4: Rapid deployment and short time-to-value
Hoteliers want an automated implementation so they can set the system up themselves. The right solution will deploy quickly and be tailored easily to specific roles including the revenue manager, owner, and GM.
The ideal revenue management system will offer an interface so simple and intuitive that new users learn it quickly, with very little effort. The ability to self-train should be built into the application.