5 Guides to Master the Basics of Revenue Management
If you’re new to revenue management, or just looking to get back to basics or gain a deeper understanding of the field, we’ve collected 5 great guides from around the web. These guides cover setting up a RM program, the key trends to know for 2016, the history of the role, and more.
They’re all written by experts, so pick your favorite topic and dive in to start mastering the subject:
This article covers the basic principles of revenue management, and why it gained traction in its early days.
A general and widely accepted definition of Hotel Revenue Management goes as follows:
Selling the Right Room to the Right Client at the Right Moment at the Right Price on the Right Distribution Channel with the best commission efficiency (Landman, 2011).
Hotel Revenue Management is about becoming the architect of your own fortune. It is all about balancing demand and capacity by forecasting prices for the purpose of maximizing the effectiveness of hotels’ resources. However, the rise of the internet during the 21st century (and with it the rise of Online Travel Agencies and Review Portals) has added another dimension to this field. This development has made traditional Hotel Revenue Management much more complex, while providing new ways to cheaply and objectively measure both customer satisfaction and pricing.
Although the world of hotel revenue is very complex, there are just 8 key steps to setting up a revenue management program in a property for the first time. It is also helpful to review these steps from time to time to keep your property following best practices to optimize revenues. All these steps are essential, but we like to approach them in the following order:
- The Basics
- Historical Results
- Booking Pace
- Channel Management
- Budgets and Forecasts
- Group Revenue Management
The past few years have given birth to a wide variety of revenue management ‘best practices’ and tools. What’s the equation for success? Two of the major factors affecting a modern revenue manager’s success are the tools they are using, and how well RMs are integrating their knowledge with the ‘big picture’.
Today, we’re going to take you through 10 key trends in revenue management today. We won’t be looking at the timeless fundamentals, like pricing strategies, but rather at current trends and strategies. These are the ones that we think are vital to strong revenue growth and growing your direct bookings, and they are the ones you should take advantage of if you want your profits to do more than just hold steady.
Back in the day, revenue management meant opening and closing availability and rates. When Online Travel Agents entered the scene, the industry became obsessed with simple adjustments of rates.
Today, the playing field is drastically more complex. Modern revenue managers are experts at analyzing, forecasting, and optimizing hotel inventory through availability restrictions and dynamic rates and have, appropriately, become instrumental in managing a hotel’s demand.
Q: So, how do everyday hoteliers, general managers, and marketing staff wrap their heads around the technical, complex world of revenue and work as a team to move their hotel into modern age?
A: By understanding the basics. Here they are:
Revenue management is a core element in working to build direct website bookings, setting out the right goals to achieve this, being committed to implementing the strategy and staying the course when doubt creeps in. Ultimately, it is about optimizing the revenue potential of a given asset through all market conditions. he consequence of a good revenue strategy for your hotel is direct bookings.
Although OTA channels are ever present, there is not only the capacity to build direct bookings but also the demand for consumers to book direct.
So let’s delve into the reasons good revenue management helps build direct bookings.