Almost every industry out there follows some form of revenue management – some call it business analytics or pricing strategies, but the goal is the same: To maximize profit for the company by effectively using available resources.
The ultimate goal of each hotel is to generate more revenue, achieve a high level of guest satisfaction so that they keep coming back and to beat their competitors.
In straightforward terms,revenue management is a technique to optimize revenue from a fixed, but perishable inventory. Any room that does not sell for the night, unlike a product on the shelf in a store that can be sold another day, is revenue that is lost.
Yield management is about making sure those rooms are filled in the most profitable way possible, based on supply and demand. A hotel will maximise its revenue through a process of frequently adjusting the price of a product in response to various market factors.External factors like seasons, venue, events in the area, conferences all influence the revenue of a hotel. So too does the mindset of the customer – with Online Travel Agencies such as Booking.com, guests who book far in advance generally expect to pay a lower price than those who book on impulse, close to their desired check-in date.
To get more profit, you need to sell enough rooms to cover your fixed operating costs, then sell the remaining rooms at higher rates to maximise revenue and profits.
Without using yield management strategies, the hotel misses out on the opportunity to get more bookings, offer competitive rates and promotions, get more revenue per booking, and forecast the upcoming booking season. In simplified terms what a Revenue Manager does is understand, anticipate, and react to market demand in order to maximize revenues.
The ever-changing dynamics of hospitality means that revenue management today is a lot more complex and analytical. A few years back, the revenue manager’s job consisted of collecting and compiling data into Excel spreadsheets, analyzing the data to identify trends and making a decision about hotel rates. Now it’s an incredibly complex process that involves online travel agencies, mobile marketing, hyper-interactive consumers, and direct competitors who consistently undercut their prices.
Revenue managers are fast becoming corporate leaders who chair rate strategy committees, train property managers in pricing strategies, and guide sales and marketing teams in the most effective positioning for their selling strategies and campaigns. Every decision they make affects hotel profitability and because of this the position demands a professional competent in their ability to manage both people as well as revenue.
International Hotel School’s Online Campus has a 10 week Hospitality Revenue Management course. This course will give students a basic understanding of the revenue management process. It addresses the proper use and importance of revenue management in hospitality operations and describes the wide range of elements that must be considered in order to use revenue management effectively.
Based on materials from the American Hotel and Lodging Educational Institute, the course is examinable and graduates receive the IHS Short Course Certificate as well as an American Hotel and Lodging Educational Institute certificate.