Every hotel has its size, requirements, and budget. The revenue created per room has the potential to grow and increase profits for any hotel business. To create a profitable business and make a statement in the hospitality industry, hotels need to have efficient revenue management.
Before the pandemic, the average revenue for each available room in a hotel was $36.67 in the US, with an average daily rate of $97.61. This was made possible by the state of the economy and the checks and balances of the property’s inner workings. From inventory to strategic cost distribution, hotel revenue should be managed at all costs.
This is where Revenue Management Software (RMS) comes in. We’ve stepped away from the pen-and-paper way of operating a business. With hefty responsibilities comes hefty technology created to streamline hospitality practices.
What is a Revenue Management Software?
An RMS is a technological solution for handling dynamic revenue data. This intelligent software logically solves revenue issues like prices, inventory, vendors, and timing. It factors in historical data to create analytical predictions and recommend the next steps toward profitability.
Revenue management performed correctly can help scale a business and keep up with guest demands. Before a tried-and-true revenue management software was created, revenue management was left to analytic and mathematical teams. This ancient method leaves room for human error, financial gaps, and unhygienic data practices.
Revenue management software effectively fills the voids, answers questions, and paves the way for a business’s success with relevant, streamlined data. By diminishing the time spent on manual analysis, more room is made to facilitate more data points and areas of attention. Essentially, RMS was created to help managers turn more profits by pricing the right rooms for the right people at the right time.
Why Do Hotels Need an RMS?
Any company in the business of accommodations or hospitality will benefit from an RMS. Hotels are no exception, as they each have many moving parts that directly impact areas of revenue. Hotel revenue management software can analyze all the factors associated with a hotel’s well-managed revenue system, such as:
- Competitor rates – many RMS have features that allow you to check and compare competitors’ prices. Knowing what you’re up against lets new and established hotels on the market understand the “acceptable rate” of a hotel stay from a guest’s point of view.
- Inventory levels – from perishable inventory and furniture in every room and then some, the balance of the hotel’s inventory can be tracked. Regardless of the room’s size or the hotel’s amenities, RMS can oversee inventory costs on a daily basis.
- Marketing dynamics – RMS handles all the impactful forces that drive the hotel’s presence, such as guest relations or supply and demand. With the most recent data at hand, hotels can keep up with the latest trends in customer experience and the hospitality industry.
- Historical rates – By overseeing all historical data, RMS can make informed predictions for the financial future of a hotel. Many RMSs come with the ability to create statistical models and other visualizations to drive future projects and business expenses.
Seeing these facets in real-time allows for an automated process and more streamlined workflows. As a result, RMS helps hotels generate accurate rates to optimize revenue and maximize profits.
If you believe your hotel suffers from inaccurate guesses, RMS will be just the fix you need. Not only does it update you with the most up-to-date information, but it also analyzes it and recommends the best next step for you too.
RMS is also a great asset for hotels needing a better presence on the market. This is, in part, because the same analytical software used for revenue forecasts can be used to leverage seasonal demands and trends. Essentially, RMS can drive your hotel marketing strategies at every turn.
How Do Hotels Benefit from RMS?
Hotels arguably benefit the most from RMS. Revenue analysis, forecasting, and management contain many continuously moving pieces for these businesses. RMS is robust enough to oversee all these factors and effectively take the weight off revenue managers. Here are just a few ways a successful RMS can benefit hotels:
Better Guest Experience
When you integrate CRM software with RMS software, you can facilitate the most personalized guest interactions. With this solution, you can accurately track your guest’s relationships with hotel amenities. When you can determine the best calculations regarding guest interactions, you can keep a collection of returning guests.
Whether you have a myriad of amenities or just a few convenient ways for guests to interact with your services, RMS can find the best inventory costs to continuously ensure their happiness.
Leveraging guest insight makes it easier to target the high-dollar portion of your most valued clientele. This can be said for cost-effective marketing as it correlates with campaigns based on seasonal interests, or for the relationship of guests and staff at the employee level.
Enhanced Employee Satisfaction
Speaking of the employee level, hotel revenue management software is equipped with the tools that help increase employee satisfaction and retention. After studying revenue as it relates to employees, it became clear that higher revenue in a customer-facing business is directly associated with tenured, skilled, and experienced staff.
The level of highly streamlined and automated manual workflows saves employees several hours a week. With the cumbersome calculations being handled in minutes by RMS, the extra time saved can be used to supervise other projects.
As a result, employees are less bogged down, less stressed out, and more enthusiastic about their duties as vital team members. When employees are happy, guests are happy, and when guests are happy, they’ll gladly spend more money with you.
Upper Hand on the Competition
As the owner or manager of a hotel, one of your best assets is how you create an establishment that is more profitable and attractive than other hotel chains. When you get the “down low” on competitor prices, you can see the standard for pricing in your area for hotels that are similar to yours.
Getting insight from the perspective of another hotel is one of the features of many RMSs. This factor lets you set the bottom line of rates that customers are comfortable paying, for one. It also allows you to find where your competitors left crumbs for you to scavenge.
Another hotel may not have the same budget as you and can’t accommodate better guest services that you can provide. In this case, you can begin to adopt a game plan centered around the best practices for creating a more inclusive location for the right price that your guests will be happier to pay for.
A Stronger Grasp on Market Demand
Sifting through large datasets presented by the moving parts of a hotel can be a burdensome task without hotel revenue management software. Thousands of historical data records can be pulled, categorized, analyzed, and visualized in no time at all with RMS. This feature saves your data and marketing teams the time and extra legwork necessary to deliver the most logical predictions and future money moves.
Regardless of how many rooms your hotel contains, the demand for them can easily be matched regarding the length of stay and demands for customization. Flat rates are a thing of the past as RMS simply adjusts daily rates according to informed analysis from the most recent data.
These data-leveraged forecasts can keep your hotel in the green and prevent costly mistakes otherwise created by human error. This gives you a competitive edge in the hospitality industry as you consistently stay on top of moving targets and fluctuating trends.
More Revenue!
All these features go hand in hand with providing your hotel with the best rates and expenditures for optimized revenue. Think of RMS like a domino effect. It takes care of employee inconveniences, which makes them happier. Happier employees provide better experiences for guests, and better guest experiences create more regular stays. Regular stays automatically create a steady stream of revenue, and with the RMS’s ability to weigh in on future costs and marketing, the revenue gets greater with time!
Understanding where your hotel stands in the vast hospitality industry is key to finding avenues for success and growth. From here, you can scale your hotel by meeting more demands, catering to a variety of personalized experiences, and profiting from the happiness of your customers.
Final Thoughts
With RMS, streamlined operations, accurately forecasted financial endeavors, and optimized marketing efforts are combined to create the smoothest revenue processes. Many businesses can benefit from software like this. RMS can be an all-in-one solution or built to withstand a bevy of integrations.
Hotels are one kind of business that requires meticulous attention to revenue affairs. RMS can help hotels manage their massive inventory, connect data with guest interactions, and perform all the duties needed for the best practices in revenue management. Finding the right tool for your hotel is necessary to facilitate informed decision-making for the betterment of your business.