Revenue management systems (RMS) are a new way of working for the vast majority of hotels – in fact, for most, this kind of software was not even an option before. But times are changing. Property management systems (PMS) are becoming more user friendly, and such systems can help you to simplify your life, save you time and result in more revenue. Dynamic pricing automation is now available for even the smallest hotels. This article can help you to choose the best RMS for your property.
Revenue Management Systems
What is a revenue management system? A revenue management system is a system that recommends prices for you and updates your PMS or channel manager directly. Rate shoppers that simply show you the prices of competitor hotels or other analytical tools to help make your decision are not considered in this article.
There are many different options for revenue management systems, and there is no such thing as the ‘best one’. But which type of RMS is the best fit for your hotel? To answer this, we have divided your hotel into four sizes/revenue brackets.
1. Large Hotel (80+ rooms with $10m+ revenue)
With a large hotel comes a variety of needs; you will have complex market segments, as well as changing demands across several room types. Therefore, your revenue management software must be as dynamic as your high-flying clients.
Several sources of revenue are often available for larger hotels; revenue from the Food & Beverage department, conference rooms, casino, etc. All revenues need to be considered in a ‘Total Revenue Management’ approach. Large-hotel-oriented solutions are heavy on analytics and reporting tools, with a lot of data and many manual formatting rules.
Most of the original revenue management software packages were specifically designed and pioneered with precisely this kind of large property in mind. There is one famous market leader here, and several newer companies vying to take over.
This type of system is excellent, but the drawback is that complex software requires complex implementation. It often requires a revenue manager trained by the software provider. Many hotels won’t accept a candidate that is not experienced in such a solution. Furthermore, these systems are expensive. Paying for both a costly system and a revenue manager may not be for everyone, but if you have enough revenue, it’s worth it.
2. Medium-Sized Hotel (50-100 rooms or $2m to $10m revenue)
As a medium-sized hotel, you may still have very similar needs to that of a larger business. If you have a lot of group bookings, you are juggling tour companies and then trying to include restaurant revenue too, you need a more complex and intelligent solution.
In this case, you may be tempted to go for one of the newer solutions on the market. Although you would miss out on some of the advanced functionalities compared to the market leader, you would gain a lot of usability. This is especially true if you’re working with a new team and perhaps don’t have the dedicated time for implementation and training.
Despite the rise of intelligent software, it is important not to think the role of a revenue manager is made redundant. Software is useful for calculations, but the revenue manager adds a vital level of knowhow and can formulate the strategy. With a revenue manager on your side, having software in place to aid their decision-making process can bring you the best of both worlds. These newer systems offer highly intelligent companions to your in-house revenue manager. This allows your revenue manager to have data that is renewed multiple times a day, using an algorithm that is continually learning and improving its analysis.
As an alternative, more basic pricing software can be a great and inexpensive option for revenue managers who want to control their strategy and not be simply told what to do. With transparency on given price suggestions and excellent recommendations, revenue managers can set up the strategy they want, while the software crunches the numbers and executes it multiple times a day for them.
3. Small hotel (5-50 rooms with less than $3m revenue)
If you’re a small hotel, you still want to be able to compete with the larger hotels around you when it comes to competitive pricing. Your needs, however, are entirely different. With a restricted budget and fewer internal data points, you need your software to be quick, easy and provide well-supported automation.
RoomPriceGenie provides such software, unique in a sense that it is an RMS designed specifically for smaller hotels. Instead of relying on booking data (which small hotels have less of), this software is more of a positioning algorithm. You will be placing your property at the right price-point compared to the other local hotels, in order to get you to higher profits. With high-quality pricing and full automation, it can take the work and stress out of pricing.
Almost equally important for a smaller hotel is the support you get from the people behind the software. This support means that you have more reassurance that your rooms are well priced and trust in the system.
4. Tiny Hotel (1-4 rooms)
Running a hotel with fewer than five rooms means you are more limited in the revenue management aspect of your business.
If you have one hotel room, then your price won’t change with occupancy, as you only have one room. Likewise, market segments are not all that relevant to your business. None of that is to say, however, that there isn’t a need for revenue-management software in your hotel. Simply put, you need a system that is going to prioritise the same factors you do.
There are a number of options available for those tiny properties as well as Airbnb vacation rental managers. Similarly to more complex software, they evaluate market factors around your business. Whether it be the weather, local events or flight patterns, these systems create smart pricing solutions that aim to ensure you are offering your rooms at the best rate possible.
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Whether you’re a large chain or a small Airbnb manager, there is something for everyone when it comes to revenue-management software. Picking the right one is simply a matter of knowing where the complexities of your property lie and how efficiently the software you choose can address them.