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It used to be that the price of a room could be set based on seasonality and keeping a keen eye on the competition. Today, reaching travellers means being where they are — on all platforms all the time. A myriad of factors that update and change by the minute now impact the value of a room.

Thankfully, a Revenue-Management System (RMS) can converge crucial data points into an algorithm to identify options that will create the most revenue for the hotel.

A CLEAR ADVANTAGE
According to Raul Moronta, senior vice-president of Revenue Strategy, Crescent Hotels & Resorts, the most obvious upside to an RMS is that it takes the guesswork out of a very complicated puzzle. As he explains, most systems can optimize revenues up to the hour, removing ambiguity and presenting information at a more granular level. “A revenue-management system can do greater analytics at a faster rate and more consistently than an individual can,” he says.

However, Moronta maintains that although the systems have automated predictable outcomes, there is still need for a dedicated individual to have final say. “What sets a hotel apart is [when] the revenue manager is using an RMS in a better way than their competitors.”

THE IMPORTANCE OF INTEGRATION
This “better way” often means integrating with other products. Dai Williams is the SVP of Global Partnerships for SiteMinder, a U.S.based guest-acquisition distribution platform used by more than 30,000 hotels. Williams explains that though an RMS may run an algorithm and come up with an optimal price, if that information can’t get in front of potential customers, there’s not much point. “SiteMinder is the way that information gets in front of the consumer. A hotel will connect its RMS and [our platform] will then send their rates out to all of the channels the hotel is on” — channels, such as TripAdvisor, Expedia, et cetera.

An RMS must work well with others. Monte Gardiner, managing director of Revenue Management at Best Western Hotels & Resorts, explains how Best Western uses both outsourced and proprietary software: “Basic ARI (Average Rate Index) functions, like setting inventory, opening and closing status, et cetera, are performed within our proprietary system. We receive rate-shopping data from Revcaster — a service of Rainmaker Hospitality — and demand forecasting and rate optimization are conducted in partnership with JDA Software, which hosts the solution we refer to internally as BestRev.”

Moronta adds it can be beneficial for an RMS to integrate with a hotel’s CRM (Customer Relationship Management). “Here, the price of the hotel is based on the value of the customer rather than market pricing, [using] information on loyalty, tendency to buy and room types.”

WHAT TO CONSIDER
Williams reminds operators that when shopping around, make sure the system is appropriate for the type of property and its objectives. For example, “if you run a casino, there are many data points you have to take in: guest profile, spend on the floor, beverage spend. If a boutique hotel were to put in that system, they would essentially be breaking an egg with a hammer and paying for it,” he explains.

NEXT UP IN INNOVATION
RMS are only going to get more powerful. “The fundamentals of demand forecasting and rate optimization are mature, but what continues to evolve are the algorithms and models that drive these functions,” says Gardiner. “At Best Western, we have observed hotels that regularly utilize RMS outperform those hotels that don’t in RevPAR by a wide margin. This is why we’ll continue to make significant investments in the technology.”

 

Written by Andrea Victory

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