Managing revenue has become a pivotal element for every industry, and hospitality is no exception. The success of a hotel is not determined by the volume of guests; rather, it’s about how much revenue that hotel makes.
A hotelier can maximize revenue and occupancy rates by investing in revenue management software for hotels. By leveraging such a digital tool, revenue managers can add value to the guest experience by running targeted campaigns.
Hotel revenue management software is popularly known as a yield management system because it tells you the best possible price for each hotel room and a specific guest segment so that you can get the most out of every room.
As per the statistics, the Revenue management system market will boom to USD 29.43 Billion by the end of 2030 with a CAGR of 8.7%. So it is right to invest in the RMS for your hotel’s bright future.
What is Hotel Revenue Management Software (RMS)?
The revenue management system refers to digital software for hoteliers to help them calculate the best price for each hotel room.
This dynamic pricing strategy focuses on selling the right room to the right customer at the right time, leading to an increase in revenue per available room (RevPAR).
It analyzes various metrics such as occupancy rate, historical data, market conditions, etc., to determine the best possible price for your hotel room, which is neither underpriced nor overpriced.
Additionally, you can connect your hotel revenue management system with a property management system and channel manager.
Having such a system in place puts an end to guesswork and bids farewell to those complicated Excel sheets as it comes with in-depth real-time analysis and easy-to-read graphs, helping you make better pricing decisions.
So, you need an RMS to handle all revenue management tasks and cut the hard work.
Why does every hotel need an effective RMS?
The Revenue management system getting more recognition it ranks 4.8 out of 5 in 2024, which was 4.4 out of 5 in 2023.
Here’s why investing in RMS is a profitable choice for a hotelier:
Provide accurate results:
Hoteliers require revenue managers to become more observant when it comes to managing revenue operations. They need to spend the majority of their time tapping into trends or making informed decisions.
With RMS, revenue managers get everything done with just a few taps away. It provides accurate results by capturing relevant data and offers immediate computations.
Saves your time:
Someone has rightly said that time is money, and RMS supports this by automating revenue operations, eliminating the need to spend extra hours analyzing those records.
A study from the hotel tech report found that a revenue management system automates the workflows of hoteliers and saves around 20-40 hours per month.
With this digital tool, hoteliers can focus on other important tasks such as generating reports and assessing the occupancy rates of hotels either daily, weekly, monthly, or yearly.
Gives you rate recommendations:
A hotel revenue management system uses advanced technologies such as AI/ML to decide the optimal prices for hotel rooms. It determines the best possible price by analyzing various factors such as real-time market data, historical data, competitor rates, etc.
Instead of sticking with flat rates all the time, RMS tells you the best possible price per room, per day.
Helps in forecasting demand:
Demand forecasting means predicting the future demand for a product/service. Once you analyze booking trends and historical data, you get an estimate of how many customers are expected during a particular period.
Based on available data in RMS, you can frame smarter pricing and sales decisions, plan other marketing activities, or come up with promotions to attract more guests. All such activities lead to an increase in occupancy.
RMS analyzes competitors:
Most hoteliers focus on their pricing strategies, and they ignore what competitors are doing. When you have an RMS tool with you, you can monitor competitor rates on various OTAs and track the price trends.
Investing in a good RMS provides you with real-time insights into how competitors are pricing their rooms and how you can price your property properly.
There are plenty of RMS available in the market, and out of which only a few of them have an inbuilt rate shopping feature.
The rate shopping feature at BOTSHOT helps hoteliers check and compare the room rates of other hoteliers in their area and formulate pricing strategies accordingly.
To check the effectiveness of the RMS solution provided by BOTSHOT, you can head over to Capterra to see how this software has helped other hoteliers fulfill their hotel requirements.
Collection and storage of data:
As a hotelier, you might be dealing with massive amounts of data every day, and analyzing such data is important for you to create yearly sales reports, forecast revenue projections, and compare hotel performance across varying time frames.
RMS makes it easy for you by collecting and storing relevant data in a single place. It then organizes such data in the form of visualizations and reports that are easy to read.
Such interactive reports help hotel managers make informed decisions in the future and work on improving the performance of the hotel.
Helps you segment the market:
Revenue management software for hotels helps you with doing hotel market segmentation so that you can focus on that specific segment having similar characteristics. Post that, you can tailor your pricing strategies resulting in more bookings and revenue generation for hoteliers.
A hotelier, for instance, wants to target specific groups of customers, say business travelers. Based on the past data stored in RMS, they get to know that corporate travelers used to plan their trips during weekdays.
To tap such a segment, you can customize your offerings through early check-ins/late check-outs, breakfast menu for business class, etc.
Automates and integrates tasks
Revenue management software plays a big role in automating most of the manual tasks, which is challenging for hotel staff on a day-to-day basis, so they could focus on other aspects of hotel management.
Tasks like guest data collection, data analysis, pricing rate adjustments, minimized overbooking, and promotion offers on special occasions to boost revenue.
It can also integrate with other software like PMS to streamline front and back office operations, ensure data security, reduce manual task errors, and enhance guest satisfaction and work efficiency.
Gains Competitive Advantage
Gaining knowledge of your competitor’s strategy is always helpful to running a successful business, with the help of a robust revenue management system you can get insights into your competitor’s rates, analyze market conditions, and make real-time pricing decisions.
By implementing RMS, you can also set a strategic stage by adapting to market changes and implementing data-driven decision-making to attract customers and boost your hotel occupancy.
Using RMS, hotels can constantly stay one step ahead of their competition and ensure that they reach their target audience.
Improved Decision-Making
It’s easier to make a decision when you have all the data, which is necessary to make the decision. That’s what a revenue management system does, it helps you to improve your decision-making process by providing data of guests based on past and current bookings or by analyzing their preferences every time they book a room. It also gives you insights into market conditions, when the demand is low or high and suggests promotions and marketing strategies increase your overall hotel revenue.
How Revenue Management Tool Works
Revenue management software works by calculating ideal rooms, service cost, demand in the market, overvalued or undervalued rooms, and by analyzing all this information, it customized strategies that surely boost revenue.
It also carries out revenue management tasks more efficiently than done manually. It helps to align all your data (guest’s booking history, market conditions, competitor’s pricing, etc) in real-time and helps you to make more data-driven decisions.
Revenue management also manages hotel inventories by setting restrictions and controls. for example, limit the available rooms at a set fee or close out specific room types during peak demand periods.
Overall, the revenue management system plays a crucial role in maximizing hotel revenue and attracting customers by adjusting real-time pricing.
The Bottom Line
Going for a revenue management system is very beneficial for hotel management over a longer period. It has several benefits and can also integrate with existing software like PMS, booking engine, CRM, etc. boosting the efficiency of staff members. Its primary function is to manage room rates according to market conditions, competitors’ pricing, and demand structure. By analyzing data, it gives suggestions for implementing a data-driven strategy to optimize booking and fill the occupancy.
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