By customising their revenue management system aptly, hoteliers can use the data to provide flexible pricing across various parameters to reach revenue targets
By Vinita Bhatia
Not many know that the hotel industry’s revenue management system (RMS) is actually an offshoot of the yield management system created for the airline business. And the first adopted of an automated RMS was Marriott International in the late 1980s for some of its American properties.
Gradually, this became the cornerstone of the hospitality industry and evolved to a level where it not only helped hoteliers manage their room inventory, but also achieve the best price for it. In contemporary times, with multiple distribution channels, it is challenging for revenue managers to keep a watch over everything that is happening. Given the rapid fluctuations in the market, the RMS should be able to handle changes in demand or rates on a daily basis.
Discovering new opportunities
Revenue managers have to constantly keep unearthing new opportunities to address revenue optimisation for their properties in an innovative fashion – no easy feat this! This is where the right RMS system comes handy, provided it is customised as per the requirements of each property. It can then provide flexible pricing for length of stay (LOS) by arrival date. You can also tweak it by day of the week – whether it is a weekday or weekend – to reach revenue targets.
Hilton Chennai customised its IDeaS RMS to create automated daily pickup report for its commercial team to help them understand prospective demand and make pricing decisions accordingly. It helps the reservations team to increase booking conversion by constantly updating the RMS with hotel information and selling strategies.
Ankit Pradhan, revenue manager for Hilton Chennai, said, “Our online and in-house rooms’ upsell program is attached on the programme with an incentive to drive premium room type selling, thereby generating additional room revenue. We also optimise online channel revenues by creating customised packages and promotions as per a traveller’s need.”
It is possible to amend a RMS only if the right one is selected from the word go. According to Pradhan, such an automated system should be fully integrated to reduce manual workload and provide excellent reports for analysis.
“Besides offering commercial insights as per business need on a real-time basis, it should be capable of dynamic decision-making ability based on current market demand and historical trends. It should also perform tasks and forecast future demand with optimum accuracy,” he suggested.
FIGURE OUT THE NOT-SO-OBVIOUS
For a robust RMS, it is essential to leverage the various algorithms that can sometimes escape attention. Pradhan explained that their RMS helped Hilton Chennai with inventory and pricing controls for low, shoulder and high-demand periods and to drive the most profitable business segment mix in lieu with market requirement.
“It directly interfaces with the hotel’s inventory and pricing system, which connects with all distribution channels. It is updated with competition pricing for future dates on real-time basis helping us understand market demand and price variations. This aids us decide optimum rates for the room type to capture maximum demand,” he added.
RMS has been a dramatic success, no one can deny that. But its true success can be underlined only in its effective use. This takes understanding its nuances, and finding out the best way to integrate it into the property’s overall profitability plans.
