Top 4 advantages of Revenue Management Systems (RMS)

22nd June 2021

Posted in: News

Hotel Revenue Management Strategy

Hotel owners are very much aware of how important their revenue management strategy is to the success of their business. Put simply, selling the right room, to the right guest, at the right moment, at the right price and on the right platform is the real key to optimising results and facilitating the overall growth of a hotel. With the right revenue management strategy hotels can prosper, and win against local competition.

Of course implementing a good revenue management strategy is easier said than done. Effectively meeting your hotel’s goals involves a mix of analytical skills, market research, gut instinct, a little logic and some critical thinking. Plus, pricing – the main component of revenue management – isn’t a once in a blue moon activity. It’s ever-changing and needs constant attention. For example, your strategy should involve: developing and implementing various promotional activities, keeping a constant pulse on competition and monitoring major local events and holidays. All in all, hotel revenue management is no easy feat.

Hotel Revenue Management Systems

For all of the above reasons, working with a Revenue Management System – or RMS – is highly recommended. Efficiently and effectively carrying out important revenue management tasks, an RMS will take care the hard work. Using data from your hotel and the market as a whole, an RMS informs your decision-making process. Specifically, it uses real-time analysis of supply and demand to calculate ideal room rates. Choose to work with an RMS and you’ll see complex calculations (almost impossible to figure out manually) carried out in minutes.

Surprisingly, only 17% of hotels worldwide use RMS technology (this equates to 50% of global room revenues, with large hotels and chains taking advantage of RMS more than smaller ones). What makes this even more surprising is that RMS technology is decreasing in cost and becoming absolutely feasible for smaller hotels and family run businesses. Now seems like the right time to take up the opportunity and streamline your processes.

Not yet convinced? Aside from the obvious benefit – quick pricing decisions – what are the other advantages of working with an RMS? In this article, we outline four main reasons why you should make the switch today.

Advantages of Revenue Management Systems

1. Increase your accuracy.

One major advantage of Revenue Management Systems is that they can increase the accuracy of your rates, putting you right up there with your competition. Information required to yield your rates is received directly from your property management system (PMS), guaranteeing accurate information. Plus, since an RMS works with live data not only from within your business but with external factors, guesswork is entirely eliminated. Having access to hoards of accurate information at all times, means that your decisions become informed every single time. Accuracy equates to avoiding risk in the hotel industry and can help squeeze out the most revenue from your business.

2. Understand guest’s booking behaviour.

With constant analysis, comes better understanding of your customer. When do guests book? Where online do they do it? How early do they book? Why do they visit at certain points throughout the year? Gradually, over time you will gather more and more information upon which to make decisions. Very simply, once you know a little more about your hotel and its customer base you can begin truly ‘setting the right rate for the right customer, at the right time and through the right channel’.

3. Forecast your demand.

Demand forecast is an estimate of customer demand during a specific period of time. So why is it important to understand this in-depth? Essentially, hoteliers need this information in order to predict the times throughout the year when the demand for their hotel rises and then falls. Adjusting room rates to this is absolutely key to success and to staying on top of competition. Meanwhile, forecasting demand is also useful for management and those planning for things such as budget and goals.

Of course forecasting also generates vital information for marketing teams and can help to direct new campaigns. For example, if your RMS calculates that a certain period should be particularly productive, but sales aren’t matching predictions, your hotel’s marketing team can alter their approach. Deploying targeted campaigns, your hotel can begin working in harmony with RMS data.

4. Increase your revenue!

The words Revenue Management speak for themselves. Naturally, the number one advantage of Revenue Management Systems is their ability to generate more revenue for your hotel. Hoteliers might like to know, that strategic revenue management in the hospitality indsutry sees approximately 2 to 10 % revenue increase.

On top of this, it’s easy to forget that time equals money. Revenue management is an arduous task comprised of constant work. Relieve hotel management from such work and you’ll see other areas of your business receiving attention where it’s required, helping to increase the overall efficiency of your hotel.

Revenue Management Systems made simple.

At 1834 Hotels, we know revenue management like the back of our hand. As one of the most important operations of a hotel, it’s crucial to our work. When managed effectively there is no money left on the table. We extract maximum profit out of your hotel and don’t settle for anything less.

1834 Hotels partners with Key Revenue Management software providers and provides management support to help your hotel with the tools, data and systems to effectively manage your hotel. Our decisions are always educated and data-driven. Not only do we provide your hotel with an RMS system, but we:

  • support your hotel as you learn about how to work effectively with your new revenue management system,
  • offer distribution and mapping support,
  • provide detailed reporting and use data to make informed decisions,
  • help streamline your process and fuse systems for optimal functioning.

Find out more about hotel revenue management here.

Otherwise, got a question? Contact us. We’d love to help.