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Mr. van Meerendonk

Revenue Management

Revenue Management in an Increasingly Networked World

By Paul van Meerendonk, Director of Advisory Services, IDeaS Revenue Solutions

In recent years there has been a steady increase in the use of internet sites by customers, especially the use of third party booking programs to assist them in planning their holidays. This has helped to dramatically change the way in which hotels manage their room rates and occupancy levels around the clock. In 2008 alone, it has been estimated that 40% of all hotel bookings will be generated by third party internet booking sites.

A figure of such potential magnitude as this obviously represents a large slice of a hotels potential clientele base. As the majority of hotels are continuing to embrace this new technology, many are forgetting to ensure they have the correct revenue management support in place beforehand.

The nature of implementing effective revenue management and pricing strategy's is constantly evolving due to the advent of new technologies, which are continuing to change the face of the hospitality industry. With the increase in the various choices of distribution channels for Hotels, it is no longer appropriate to expect a Reservation or Revenue Manager to handle a multitude of manual Extranets to ensure revenue management and pricing integrity.

Hoteliers are now faced with a key decision, of which the outcome will directly affect their hotel's overall revenue potential. The choice involves having key staff spending a number of hours per day updating these channels manually or creating an environment where the implementation of any pricing decisions is largely automated.

The second option actually means that resources are freed up to focus on strategically important issues aimed at enhancing a Hotels performance. The Hospitality industry is continuing to steadily move towards a more dynamic pricing environment, which means it is vital that the correct technology infrastructure is in place to meet the growing needs from day one.

With the advent of the internet and other online customer forums, consumers are becoming more aware of factors that influence the prices they are offered. With this increase in consumer awareness, there is a growing imperative for hospitality organisations to be aware of the effect that pricing can play on their overall revenue potential and their ability to reach financial stability.

While it is widely accepted that poor marketing can ultimately damage the reputation of a hospitality business, hotels throughout the world are only now beginning to recognise that poor pricing strategies have the potential to not just negatively impact on the revenue of an individual business, but can damage an entire market. This can cause long term financial instability for their own hotel, but also for their region and industry.

Technology used in hotels needs to be able to guarantee Hotel Owners and Hotel Managers a seamless flow of revenue management and pricing decisions throughout their integrated system. This will allow for a reduction in the need for any form of human intervention at the tactical level, saving hotels time and in turn money. The time saved in this area can then be re-directed to other equally important jobs, including sales and marketing development and implementation.

All revenue decisions will now be significantly optimized by a Revenue Management System based on internal and external data as well as some level of human input. The decisions then flow from the Revenue Management System and are implemented across the various internal and external channels in real time.

The advent of the third party booking sites now means that an automated and flexible pricing system needs to be in place to meet the ongoing and fluctuating levels of demand.

The growing popularity of third party booking sites, now means customers throughout the world can book their hotel visits around the clock. This also means they have access to the prices on offer at numerous hotels in any one city or country simultaneously. This second point is of particular importance and needs to be understood before choosing to sign up to numerous third party booking sites.

Some Hotel Owners and Hotel Managers see the option of signing up their hotel with as many third party booking sites as they can find as very appealing, searching for safety in numbers. However if a Hotel Owner or Hotel Manager does decide to do this, they need to carefully plan their strategy, and need to execute it with the appropriate systems in place to support it effectively.

The appropriate in-house revenue management structure needs to be in place before this is done, or else the resources and money being spent will heavily outweigh any potential financial benefits. If the correct system is not put in place to meet growing levels of demand, the hotel may not be able to meet the customer expectations.

Also, if the correct pricing strategies are not in place to match the exposure to other hotels, the long term effects could be disastrous for a small to medium sized hotel.

Many hotels often find that they are actually underprepared for the steady increase in workload that comes with having to manually update multiple rates according to information being received from different channels.

As a result of the increasingly networked operating environment, hotels that still manually operate their room rates can often find themselves lagging behind the competition - both when attempting to meet their revenue potential and also when attempting to deal with different periods of patronage that may occur.

Through using a trusted revenue management partner like IDeaS Revenue Optimization, all the various hotel and third party booking systems and distribution channels are integrated and interfaced so that the information seamlessly flows between all systems in a timely and efficient manner.

When Hotel Managers and Hotel Owners decide to pursue certain market segments, they need to have the confidence that they have the correct revenue management systems and procedures in place to help support them. By ensuring the correct systems and strategies are in place, hoteliers will be prepared for whenever customers decide to book with them.

This will mean the hotels will have a greater chance of reaching their own revenue potential and achieving greater financial stability. This is of great importance for hoteliers who are currently feeling the pinch as a result of the present economic conditions.

As Director of Advisory Services for IDeaS Revenue Solutions, Paul van Meerendonk leads a global team of revenue management advisors focused on hotel revenue optimization projects. Mr. van Meerendonk is responsible for global development, management and operations of the Advisory Services team. He oversees the hiring, training and management of industry-leading consultants located in London, Beijing, Singapore and Atlanta. Mr. van Meerendonk also represents IDeaS on industry thought-leadership initiatives related to trends and best practices within revenue management, including authoring a number of white papers, conducting public speaking engagements, as well as leading key client webinars with an average audience of over 200 global representatives. Mr. van Meerendonk can be contacted at +44 (0) 118-82-8100 or Extended Bio...

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OCTOBER: Revenue Management: Technology and Big Data

Gary Isenberg

Hotel room night inventory is the hotel industry’s most precious commodity. Hotel revenue management has evolved into a complex and fragmented process. Today’s onsite revenue manager is influenced greatly by four competing forces, each armed with their own set of revenue goals and objectives -- as if there are virtually four individual revenue managers, each with its own distinct interests. So many divergent purposes oftentimes leading to conflicts that, if left unchecked, can significantly damper hotel revenues and profits. READ MORE

Jon Higbie

For years, hotels have housed their Revenue Management systems on their premises. This was possible because data sets were huge but manageable, and required large but not overwhelming amounts of computing power. However, these on-premise systems are a thing of the past. In the era of Big Data, the cost of building and maintaining an extensive computing infrastructure is incredibly expensive. The solution – cloud computing. The cloud allows hotels to create innovative Revenue Management applications that deliver revenue uplift and customized guest experiences. Without the cloud, hotels risk remaining handcuffed to their current Revenue Management solutions – and falling behind competitors. READ MORE

Jenna Smith

You do not have to be a hospitality professional to recognize the influx and impact of new technologies in the hotel industry. Guests are becoming familiar with using virtual room keys on their smartphones to check in, and online resources like review sites and online travel agencies (OTAs) continue to shape the way consumers make decisions and book rooms. Behind the scenes, sales and marketing professionals are using new tools to communicate with guests, enhance operational efficiencies, and improve service by addressing guests’ needs and solving problems quickly and with a minimum of disruption. READ MORE

Yatish Nathraj

Technology is becoming an ever more growing part of the hospitality industry and it has helped us increase efficiency for guest check-inn, simplified the night audit process and now has the opportunity to increase our revenue production. These systems need hands on calibration to ensure they are optimized for your operations. As a manager you need to understand how these systems work and what kind of return on investment your business is getting. Although some of these systems maybe mistaken as a “set it and forget it” product, these highly sophisticated tools need local expert like you and your team to analysis the data it gives you and input new data requirements. READ MORE

Coming Up In The November Online Hotel Business Review




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