In the Asia Pacific region, hotel owners are increasingly under pressure to improve their financial performance while managing rising operating costs and changing demand patterns. In such an environment, technology can have a major impact. A revenue management system is becoming a vital tool for hotel owners and investors. It’s not only used to price rooms but also improve operational decisions and grow profits.
Recent global research confirms it. In a survey of hotel investors In a survey by IDeaS 83% of hoteliers who use revenue management technology rated the ROI as “high” (62%) or “very high”. These results highlight the clear financial impact RMS adoption. Operators have experienced measurable gains in both cash flow as well as long-term asset values across all their properties.
How can hotels achieve a high return on investment from their RMS? Here are five ways that revenue management will bring value to your hotel.
- Smarter Pricing and Inventory decisions can increase revenue
Hotel owners can implement more accurate pricing strategies with revenue management software, which is superior to less dynamic seasonal adjustments. RMSs set the optimal price and inventory across all distribution channels and room types by analysing demand in real time, booking pace, events local and competitors. It is important to do this in markets where demand can fluctuate rapidly, and price competition driven by online travel agencies can be fierce. A hotel with an advanced RMS has a competitive advantage due to its ability to react to changes in market conditions in real-time.
Advertisements
A RMS can help hotels achieve higher revenue per room available (RevPAR) through better pricing and inventory management. Importantly, research amongst hoteliers found that 27% of investors using RMS tools report a 10%+ increase in RevPAR, while another 24% report a 4–6% lift. This difference is crucial for hotels in thin-margin situations. It can determine the success of a quarter.
- Capital Growth from Cash Flow
Cash flow is critical to the success of any hotel operation and is a major factor in determining a property’s value. The use of an RMS can help hotels increase the cash they have available after expenses. This surplus can be reinvested into upgrading the property, improving the guest’s experience or obtaining more favorable lending terms.
Recent research supports the bottom-line benefits of revenue management technology, with 25% of surveyed investors reporting a 10%+ increase in net operating income after implementing an RMS, while another 19% report a 4–9% uplift. This financial momentum creates a cycle of positive growth whereby a stronger cash flow encourages reinvestment and asset appreciation.
- A RMS is more than just pricing
A RMS does not just optimize pricing, it also allows hotels to better manage their operations and costs. An RMS can help hotel management teams better plan their staffing, housekeeping and food and drink operations. If forecast data indicates that weekend occupancy will be high, hotels can increase the number of housekeepers and front desk staff in order to provide a better guest experience. On days when booking levels are lower, hotels can manage their rosters by reducing the number of staff. This helps to reduce unnecessary wages and contributes directly to the bottom-line.
Food and beverage operations, which are often a source for waste due to their perishable nature and fluctuating demand, can be managed more efficiently. By using accurate forecasts, chefs, procurement teams, and hoteliers can order the proper stock at the right moment, reducing waste and boosting profitability.
- Eliminate busywork to focus on business growth
Hoteliers using IDeaS’ G3 RMS take, on average 5 million decisions per year to optimize revenue. Without automation, it is impossible for any revenue manager, no matter how experienced, to consistently make good decisions. If the right systems aren’t in place, revenue management can easily be burdened with repetitive tasks, such as data input, parity checks and manual rate adjustments. This leaves less room for high-value commercial collaboration and strategic planning.
A sophisticated RMS can be a game changer for revenue managers. The RMS can make a significant difference for revenue managers by continuously ingesting data and analysing it. The system uses this data to automatically identify demand, forecast future occupancy and recommend optimal prices across all segments.
A RMS can help eliminate human error and guesswork by automating routine business processes. This allows key staff to concentrate on driving commercial results that will support the growth of your company.
- Attract the right guest and maximize profit
A full hotel does not always mean a profitable one. Without an RMS in place, hotels and resorts can easily fall into the trap of selling out to lower value business, thereby leaving money on the table from higher value business opportunities. This approach can still be profitable in the short-term, but the opportunity lost to maximise room revenue will reduce the financial cushion needed to cover periods of lower demand. In order to identify the guests who have the greatest potential revenue for a hotel, revenue and price systems must be in place. These systems should take into account not only room revenue but also their overall revenue.
The data from the transaction systems should be incorporated to give an accurate picture of guests’ preferred activities and value. This includes all spending from online reservations, to check-outs, from food service, to spa services, from guest rooms, to gift shops, and much more. These data allow hoteliers to make more profitable decisions and also to make better informed decisions regarding promotions, service offerings, or inventory levels.
Increase your profits and asset value with a RMS
RMS’s value goes beyond automating pricing. It is a strategic tool which reshapes the way hotels compete and grow. Hotels that want to stay competitive must use data-driven decision making, be flexible in responding to demand changes, and optimize revenue across all channels. A modern RMS allows hotel owners to do this by giving them the insights and tools needed to grow their asset value and improve profitability.
Visit the following link for more information about revenue technology and how it can improve your hotel’s commercial results. www.ideas.com
