What is a hotel revenue management system?
Revenue management software automates the process of using analytics -- mainly supply and demand -- to determine the right price for hotel rooms to maximize revenue and profitability. The primary goal is to sell the right product to the right customer at the right time for the right price on the right channel. Revenue management software ingests historical and market data, combines this with forward-looking demand signals and recommends a rate for each segment and room type at your hotel, specific for each channel on which you are selling. Recently, modern software has moved from on-premise to cloud-based applications that are delivered as Software-as-a-Service, meaning multiple users can login to the applications from anywhere they have an Internet connection.
What are the primary benefits of hotel revenue management software?
- Accurate forecasting: An accurate forecast looks at all of the available data -- past history and forward-looking data -- to help hoteliers determine what their demand is going to be for every single day as far as 365 days into the future. Forecasts help each department in the hotel make smarter operations, marketing and sales decisions.
- Create operational efficiencies: Automating your revenue management with a revenue management system means hoteliers no longer have to build spreadsheets and reports, calculating the demand by hand every day, and then entering those numbers into a spreadsheet and reporting system. This frees employees up for more strategic thinking around positioning their hotel in the market.
- Improve RevPAR: Revenue management software is designed to find your hotel’s optimal business mix, balancing occupancy and ADR to ultimately drive revenue per available room.
- Improve Net RevPAR / GOPPAR: More importantly, a modern revenue management system will place an emphasis on net revenue per available room, or RevPAR after operating costs like labor and acquisition costs are deducted. It’s critically important for hoteliers to focus on bottom line profitability (gross operating profit per available room) as well as top line revenue.
- RevPAR Index: Perhaps the most important metric, RevPAR Index measures a hotel’s revenue versus it’s defined competitors in the market. If every hotel in the market sees revenue increases, RevPAR Index will show a hotel how its revenue has changed in comparison with the comp set.
What are the most important features of a revenue management system?
- Integrations - It’s important that your RMS integrates with your PMS, CRS, CRM and booking engine with a reliable, two-way connection so that the systems can share the right data.
- Open Pricing - Your RMS must be able to price room types and channels independently of each other, rather than in lockstep with a set BAR price. For example, on some days you want your AAA rate to be 10% less than BAR, on other days you may want it 1% less than BAR.
- Cloud technology - An RMS that runs on multi-tenant cloud architecture allows your systems to integrate and share data more seamlessly, and allows developers to push updates to your software in real time. No more purchasing new versions of software just to get the latest features.
- Intelligent reporting - It’s important that your RMS be able to build, export and share your most critical reports. Revenue teams must be able to share reports at the push of a button with management, ownership and other departments within the hotel.
- Data Visualization - A good RMS not only presents your data in tabular reports, but allows you to visual your data and reports in graphical form. This allows revenue teams to better understand trends, outliers and patterns in data.
What are the key integrations that I should look for when selecting a PMS?
Property Management System
A strong two-way integration with your Property Management Systems allows your RMS to pull historical information on rates and revenue, analyze the data and then return an accurate matrix of pricing recommendations for each segment and room type.
Central Reservations System
A strong connection between the RMS and the CRS helps hoteliers avoid failed updates, lost reservations and bad reports when data and files are not transferred accurately between the two systems.
Email Marketing and CRM
An RMS-CRM connection is critical when hoteliers want to price based on a guest’s value to your property. Without this connection, hotels cannot price based on loyalty or past purchase behavior.
- Without a connection between the RMS and the booking engine, the right recommended rates cannot be pushed to the guest at the time of booking.
How long does it usually take for a hotel to implement a new revenue management system?
Once the contract is signed and discovery is complete, the typical rollout timeline for a revenue management system is 8-12 weeks but some providers today are able to live in under one week.
What are the 6 most popular hotel revenue management systems serving global markets?