Four Opportunities for
Hotel Owners
Article previously published via Tnooz
© Copyright Integrated Decisions and Systems, Inc. (IDeaS – A SAS COMPANY)
Technology has become an influential player in the
development and refinement of hotel business
strategies.
And while the practice of revenue management may
sometimes find itself branded as “micro-level” from an
owner’s perspective, it provides many opportunities to
increase asset performance and value.
© Copyright Integrated Decisions and Systems, Inc. (IDeaS – A SAS COMPANY)
Here are four opportunities that revenue
management brings to the table for today’s hotel
owners
© Copyright Integrated Decisions and Systems, Inc. (IDeaS – A SAS COMPANY)
Going Beyond the Guestroom
Over the past few years, the practice of revenue
management has evolved beyond simple and
tactical approaches for managing guestrooms and
pricing alone.
As revenue management and its technology has
continued on this evolutionary blaze, the opportunity
for a holistic revenue management approach has
emerged from yesterday’s ashes.
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© Copyright Integrated Decisions and Systems, Inc. (IDeaS – A SAS COMPANY)
Going Beyond the Guestroom
The effects of a robust revenue management culture
are found permeating into different hotel
departments, from marketing to sales to operational
teams. Today’s revenue managers are beginning to
evaluate total revenue contributions. This includes the
management and pricing of meeting and event
spaces, group business and ancillary revenues.
Revenue managers are also evaluating costs to help
the hotel focus clearly on profits – not just revenue.
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© Copyright Integrated Decisions and Systems, Inc. (IDeaS – A SAS COMPANY)
Going Beyond the Guestroom
While hotel owners don’t need to be heavily involved
in day-to-day operations, there is a huge opportunity
for them to communicate overall hotel revenue goals
to senior management. This kind of open
communication can directly influence the strategic
role of the revenue manager.
Consider this scenario: The hotel in question is a new asset and
the owner is interested in making a quick return on the
investment – intent on selling the hotel after a couple of
successful years. Communicating this plan allows the hotel team
to focus their strategy around achieving that objective.
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© Copyright Integrated Decisions and Systems, Inc. (IDeaS – A SAS COMPANY)
The Operational Opportunity
Hotel owners have a huge operational opportunity to
understand how accurate revenue management
forecasts can not only positively influence their
property’s profits but also help in the planning of
staffing levels and inventory.
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© Copyright Integrated Decisions and Systems, Inc. (IDeaS – A SAS COMPANY)
The Operational Opportunity
Accurately anticipating demand allows the hotel to
allocate staff across departments in response to low
and high periods of demand. This helps optimize
wage costs and also increases guest satisfaction since
departments are staffed to handle the flow of guest
traffic.
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© Copyright Integrated Decisions and Systems, Inc. (IDeaS – A SAS COMPANY)
The Operational Opportunity
Detailed forecasts also help anticipate expected
demand in restaurants and spas – so the levels of
perishable inventory (such as fresh food) can be
accurately ordered, with waste minimized.
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© Copyright Integrated Decisions and Systems, Inc. (IDeaS – A SAS COMPANY)
It’s All Business. It’s Just Not Always Good
Business
Rather than only focusing on occupancy levels, the
hotel’s average daily rate (ADR) and revenue per
available room (RevPAR) are good financial indicators
of hotel health and have a direct flow through to
bottom-line performance.
To help improve a hotel’s RevPAR or ADR, the right
customers need to be attracted at the right price.
Revenue management technology can provide
analysis in identifying the highest valued customers.
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© Copyright Integrated Decisions and Systems, Inc. (IDeaS – A SAS COMPANY)
It’s All Business. It’s Just Not Always Good
Business
Hotels can be tempted to sell out their rooms to lower
rated business, but they end up losing out on higher
rated business that would have stayed more nights
and made them more money. This is a complexity of
revenue management that owners may find difficult
to appreciate because it may seem
counterproductive to turn down any kind of business.
Trusting forecasts and market pricing will demonstrate
over time that turning down the wrong business can
lead to significant increases in revenue.
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© Copyright Integrated Decisions and Systems, Inc. (IDeaS – A SAS COMPANY)
Does Timing Really Matter?
Investing in revenue management technologies from
an early planning stage - even before a property
opens its doors for business – is important. When
effective revenue management is established in the
early stages of a hotel’s lifecycle, it informs everyone
about the hotel’s direction and how it’s going to get
there.
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© Copyright Integrated Decisions and Systems, Inc. (IDeaS – A SAS COMPANY)
Does Timing Really Matter?
The investment stage is the ideal place to introduce
revenue management since it can be capitalized to
its fullest through feasibility studies, revenue projections
and the resulting flow-through. It can further be used
to set strategies and establish a long-term action plan.
However, any time in the lifecycle is a good time to
start taking advantage of revenue management.
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© Copyright Integrated Decisions and Systems, Inc. (IDeaS – A SAS COMPANY)
Does Timing Really Matter?
There’s a huge opportunity for hotel owners to take an
active interest in the principles of revenue
management and its effective implementation at
their hotels. These four opportunities will help owners
begin maximizing their returns and increase the
lifetime value of their hotels.
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© Copyright Integrated Decisions and Systems, Inc. (IDeaS – A SAS COMPANY)