How to Choose the Best Revenue Management System for your Hotel
Whether you're the owner of a small hotel, or the revenue manager for a major chain, at some point in time, you'd be looking to maximise business revenue and impact. Therefore, it's imperative to focus on a comprehensive revenue management strategy.
A high quality Revenue Management System (RMS), can lead you to the path of success.
Thinking that just purchasing a RMS will boost your sales, you'll be up for a surprise. While it helps a lot in the long run, purchasing is only the beginning of the journey. As it goes with everything, the beginning can't be shoddy, and you need to understand the key benefits, USPs, and shortcomings of the software you're considering.
While buying such an important tool, you shouldn't be investing in the dark.
In order to make things easier, we've not considered Rate shopping and market intelligence tools (like: BeOnPrice, OTA Insight, etc.), which only show the prices of competitor hotels and leave everything else up to you. We’ve taken the time to detail some thoughts that could actually help you devise the right revenue management strategy for your property to boost sales.
Your choice will depend on several factors, out of which the most important one is the property size:
Big Hotel → 50+ Rooms
Medium Hotel → 16 to 49 Rooms
Small Hotel → 5 to 15 Rooms
Micro Hotel → 1 to 4 Rooms
But regardless of the hotel size, a good RMS will put you ahead of the competition, and give you a substantial advantage in attracting more guests.
So, what's the fuss about?
How do you make the choice?
How will the tool help?
What’s a RMS ?
For most hotels, a RMS is a new addition to the set of tools. With changing times, these systems are becoming more flexible, open, and useful. They not only save a good amount of your time but lead to higher revenue. In fact, with a RMS, even the smallest hotels can leverage dynamic pricing!
These systems consider many important data points, including customer demand, market supply, and internal data. This information is used to calculate the right price for the rooms. It helps you optimise pricing across distribution channels from a single central dashboard.
In the simplest form, a RMS recommends the right prices, and allows you to update the inventory accordingly. It also sends updates to your Channel Manager or Property Management System. Most importantly, you're able to use the power of technology to automate time consuming processes, leading to higher efficiency in business operations.
A good RMS uses the data provided and a set of complex algorithms to conduct real-time analysis of the market and demand.
With many RMS’s available for hotel owners and property managers, there's no such thing as the 'best choice'. There isn't a one-size-fits-all approach.
What are the benefits of using a Revenue Management System?
It goes without saying that a high quality RMS can help you calculate ideal room rates. You can use the software to adjust rates in real-time, consider projections of future profit and demand, and get crucial information about competitors. Overall, these details can help you adopt a strategic approach to maximise revenue.
Regardless of the size of your hotel, the main reason why a RMS is important is the ability to perform complex calculations quickly, efficiently, and accurately. It's the perfect tool to assess real-time market data, which is impossible to replicate manually. Most importantly, unlike the staff on duty, the tool works 24/7, 365 days a year.
While your Channel Manager makes it simple to distribute availability and prices to the different OTA’s your hotel sells inventory on, a RMS makes it even easier to adjust prices across channels simultaneously. Once everything is connected, there's no need to log in to each tool manually.
As a result, you're able to improve key performance indicators most importantly revPAR.
The calculations made by the software determine ideal rates by day, audience, and room type, instantly adjusting prices across distribution channels from a single dashboard. This will also impact positively on your hotel's GOPPAR (Gross Operating Profit per Available Room).
Contrary to popular belief, RMS’s are even more important in smaller hotels, since fewer rooms require you to maximise revenue for each room. In larger hotels, it's an essential tool, since it's almost impossible to manually handle the workload of revenue management, which could eventually result in more errors and poorer decisions.
What are the Top RMS Features?
RMS’s are full-fledged software packages, which come with a wide range of features and functions.
Integration into Your Tech Ecosystem
A RMS should integrate well with a wide range of applications, including Property Management System, Channel Manager, and Website Booking Engine.
While it's not necessary to connect the RMS with everything, you need to make sure all the prices get updated from a single place. Two systems should be able to communicate with each other and share data without disruptions.
Individual Channel Management
The RMS should allow you to optimise pricing across distribution channels through the Channel Manager. With a high quality RMS, you're able to leverage per channel pricing, discount prices, commissions, and generally optimise pricing opportunities to maximise revenue.
Open & Dynamic Pricing
A solid RMS lets you price distribution channels and room types independently of each other. While it's always better to set BAR pricing as a guide to manage room rates, the software should be able to calculate and suggest rates dynamically.
Additionally, it should be able to leverage complex algorithms, current market data, past performance data, and other crucial information to offer optimal room pricing.
Automated Rates Updates
With a lot of manual workload, revenue managers aren't able to work effectively and efficiently. With a good RMS at their disposal, managers and owners can automate routine tasks, such as uploading rates to Channel Managers. Ideally, your revenue management strategy should be running on autopilot. At the same time, it should be controlled with minimal scope for erroneous rates.
Monitoring Competitors
With proper monitoring of the competitors' rates, you're able to adjust your own pricing accordingly. A good RMS is able to find competitors' pricing on OTAs, track the price trends, and report the information in real-time. This helps you make price adjustments swiftly, allowing you to attract budget-conscious guests.
A lot of RMS’s come with a built-in rate shopping feature, allowing you to check room rates of other similar hotels in the area.
Data Collection
If you're able to securely collect and store data, you're at an advantage to know exactly what's been working for your property.
In order to adjust pricing or make crucial decisions about inventory, you should be able to leverage accurate and extensive data.
It's always better to choose a RMS that collects, stores, and organizes data from across business operations, and provides everything in the form of easily understandable reports, charts, and graphs.
Intelligent Reporting, Monitoring & Alerting
A high quality RMS learns to automatically notify you about various things that could or should require your attention. This includes drops in important KPIs, special events influencing sales, or actions you could take to improve RevPar.
It's pointless to use a RMS without Intelligent Reporting. The platform should be able to build, export, and share important data, providing you with more time to focus on strategic decisions. These could include insights and KPIs, including RevPAR, occupancy rates, average daily rates, etc.
Forecasting & Revenue Estimations
Last but not least, apart from displaying historical data to help you set room pricing, a good RMS provides estimates for both the profit and the revenue you're likely to generate with the current strategies. This allows you to consider alternative strategies to maximise sales.
Your RMS should allow you to identify the most lucrative up-sell opportunities, and even send out an email campaign to promote them.
Trust me, I would have wanted for things to be that simple, but they really aren't.
Feel free to contact me to discuss how we can work on finding an ideal solution for your property.