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Future for Hoteliers is Revenue Management


Airlines miss out on revenue if the seats are not filled. The railways lose money if trains have empty seats. Similarly, hotels can be at a loss if heads are not in beds leaving rooms unoccupied.

The aviation and hospitality industries are increasingly using new revenue management techniques to achieve better results by introducing innovative pricing strategies. In the last few years, revenue management in India has become paramount, especially in the hospitality sector.

Today’s complex multi-channel distribution landscape requires hotels to match the needs of diverse customer segments with a fixed supply of rooms, thereby driving the increased adoption of advanced revenue management technology.

Understanding Revenue Management

The travel industry is regarded as one of the most efficiently managed e-commerce sectors, particularly for its use of various technologies in securing conversions across several booking platforms. One of our recent infographics showed that 65% travellers choose their mobile phone for same day hotel bookings. The rise of mobile users have impacted the business strategy and changed customer behavior largely. While this provides an additional platform for hoteliers to reach out to newer target segments, it also brings along the challenge of understanding what makes these travellers tick. Mobile is certainly gaining ground across the travel space especially in relation to last minute reservations. High end smartphones and intelligent mobile apps have made it easier for users to experience on-the-go shopping and travel booking. Hotels should pick up a trick or two from channel partners and travel intermediaries in this respect - Kayak’s mobile apps, for instance, are very popular and have a high download number. It is unlikely that a hotel’s own app will attract anywhere near this level of interest but hotels still need to take notice and ensure they add mobile as an important channel for distribution without falling prey to heavy discounting to capture their share of those same day bookings. Smart phones and tablets are going to be the game changer in online travel booking

OTAs - You just can’t live without them

Revenue management is combination of market research, competitor benchmarking and customer relationship management that categorizes customers into price bands based on various services to optimize revenue. It is the science of maximizing profits through market demand by forecasting and maximizing rates and availability.

If applied correctly hotels should be able to expand their market size and increase revenues. In simple terms, it is the art of selling the right room to the right customer at the right time and for the right price.

Leveraging Dynamic Pricing

Hotels can achieve a greater market share by using intelligent revenue management systems that base room rates on real-time changes in the marketplace. Managing prices by demand allows hotels to fill rooms that would otherwise remain empty. Through dynamic pricing models hotels can gain a competitive advantage basing rates on a calculation of occupancy, competitors and season.

Effective distribution is particularly important because of the perishable nature of the product and the industry's high fixed costs. The sale of every room each night at an optimum price is critical to a property's long-term profitability. To achieve this, hotels are using a variety of different distribution channels to sell their product.

Optimum Distribution

There are a plethora of booking channels that require different approaches; the phone, front desk and global distribution systems have now been joined by a host of online travel agencies, internet consolidation companies and the hotel’s own website. As hoteliers use more channels to gain market share, distributing accurate data is essential to maintain the highest rates and occupancy.

The increasing challenges from new travel booking channels and procedures are putting more demand on how hoteliers manage their properties. More and more hotels are recognizing the need for a single, integrated set of solutions in which property and revenue management systems work seamlessly together with central reservation and distribution solutions.

Choosing the Best Fit Technology

By deploying automated revenue management tools, hotels are keeping track of the continuously fluctuating data that make up a hotel's 24-hour cycle of supply and demand. Automated systems are eliminating the day-to-day manual data-crunching tasks. With integrated software in place, hotels gain visibility on niche travel sites, major OTAs and outshine competitors by beating their rate offerings.

Over the last five years, there has been a remarkable change in hoteliers’ perception and acceptance of technology products for enhancing online sales. In India hotel technology adoption has considerably increased; the pressure to sell inventory online is increasing by the minute, making online booking a key factor in assertive revenue management.

Online channel management technology is giving hoteliers the chance to gain control of extensive markets and global audiences. Hoteliers can introduce channel management tools like RateTiger that will help them become more confident with OTAs, third-party websites and the new challenges the market will provide tomorrow or the day after.

For students pursuing hotel management courses, it is important to focus on revenue management and online distribution aspects. This will help them excel in this field and ensure they have an idea of how technology can help them achieve quicker and smarter results in the long run.