What You Need To Know About Next Generation Revenue Management To Stay Competitive
Hotel organizations, under increased pressure to improve performance, are turning to revenue optimization technology. But are these systems up to 21st Century’s data demands? Intense competition, fast-paced changes in the marketplace, shorter booking windows, better-informed shoppers, and a growing number of new booking channels lead a list of information processing challenges. Analyzing all of these factors is essential for informed rate setting, but often causes data accumulations that overwhelm revenue management solutions.
Information Overload and Revenue Optimization
To continually improve operating results, hotel operators have to make rapid, intelligent rate-setting decisions. They must continually create, update, and present the best possible rate and package offerings by sifting through and analyzing a huge amount of demand, comp-set and other market information. It is also essential that operators understand how customers make booking decisions. Today’s travelers do it in real time basing choices on rates, promotions, their experiences, and online reviews. Additionally, operators now have access to customer response and sentiment data that impacts demand. All this information is essential to making the right decisions, however it is clear the data landscape has changed in the past five years and this creates a problem for many revenue management systems.
Profitable operation in today’s economy demands owners and operators efficiently use all the data at their disposal to create accurate demand forecasts that are the basis of price optimization. Many hotel companies are evaluating the volume and type of data their revenue management systems can address, and how the data is analyzed.
- By Don Wilson
The Data Overload Challenge
The first challenge to most revenue management systems is the enormous volume of data available for decisions. Everyone touts the miracles of “Big Data,” but the flip-side is data overload and the inability to efficiently use all of the available information. As the volume of data increases, the ability for hotels to extract usable information, identify trends or changes in customer and competitor behavior, and make timely, accurate decisions becomes more difficult.
To tame data overload, some operators have implemented the next generation of sophisticated demand and revenue forecasting algorithms embedded within revenue management systems. These forecasting programs are designed to automatically process huge streams of reservations, multi-market economic information and competitive data to create accurate nearly real-time demand forecasts. The best systems also incorporate sophisticated business intelligence capabilities to analyze and present the data in actionable formats. Business intelligence dashboards are valuable because they provide easily-understood key performance details, at-a-glance alerts, and action-oriented performance scanning and planning tools.
Increased Customer Choice and Growing Competition
Another significant challenge to legacy revenue management is increasing competition. Travelers have more choices and are basing decisions on a wider variety of information, including:
- Competitive property and rate options
- Online price-shopping tools
- Personal experience
- Targeted promotions.
Additionally, competitors are moving rapidly to exploit new methods to increase their market share and revenues.
Next Generation Solution Advantages
Competitive rate and marketing information is essential to forecast demand changes. To address competitive actions, next generation forecasting systems capture and analyze market rate and demand data for pricing recommendations. Rather than chase competitors’ rates, these powerful systems compute the dynamic price response of customers to hotel rates as a function of comp-set pricing and positioning. The revenue management system uses the dynamic price response information to refine forecasts and optimize hotel selling strategy to respond and stay a step ahead of the competition.
Buying behaviors and the revenue they generate are buried in the data. Verify if your revenue optimization system has the ability to collect the growing number of new data points and incorporate customer response information to create accurate buying behavior forecasts. Emerging price optimization solutions create forecasts based on a vast amount of essential data to optimize the hotel’s rates, selling strategy, and tactics. They provide a constant feedback loop that analyzes the results of their efforts and presents them for immediate action to make future rate setting and marketing strategy more effective.
Is Your Revenue Management System Up To The Task?
Hotels face enormous challenges, but can earn handsome rewards from comprehensive data analysis.
The best forecasting systems process this complex data quickly and automatically. Properties today must be able to quickly collect and analyze multiple data streams and update forecasts to optimally manage the prices and availability controls each day. Is your forecasting and revenue management system up to the task?
Don Wilson is SVP Revenue Management Development for MaximRMS
About Maxim Revenue Management Solutions (MaximRMS)
Maxim® Revenue Management Solutions (MaximRMS) provides the easiest to use and most effective suite of revenue maximization and forecasting systems available to the worldwide travel and hospitality industry. MaximRMS e.FLEX software is powered by patented mathematical algorithms that evolved from the most successful profit optimization technology underpinning airlines, car rental, cruise lines, shipping… the entire travel and transportation industry. The newest version of MaximRMS e.FLEX has the unique ability to dynamically respond to emerging travel trends, price sensitive distribution channels, competitive position, and complex customer segmentation. Operators using MaximRMS e.FLEX have been able to outpace their competitors on average over 25%. Superior performance, significantly lower total cost of ownership, and rapid large-scale deployment, maximize ROI and produce immediate payback. MaximRMS e.FLEX has been designed and built from the ground-up for large international hotel organizations with multiple brands, complex segmentation, and properties of every size, type and business mix, ranging from 5,000 room convention hotels to small select service properties. With MaximRMS e.FLEX, customers improve RevPAR from their first use, speed response to competitive actions and changes in consumer behavior, increase decision-making efficiency, and improve profitability across all properties. For more information please visit http://maximrms.com or call 1.773.665.1400
Maxim Revenue Management Solutions
SVP Revenue Management Development
Julie Keyser-Squires, APR