As a hotelier, you have a lot on your plate. From taking care of your staff and guests to managing your online presence, bills and housekeeping – it’s no easy task. But even so, it is imperative you do not overlook one of the most important things to manage: your hotel revenue. In this article, you will learn what the advantages are of a revenue management system (RMS) for smaller hotels and how it helps to increases revenue.

Revenue Management System (RMS) for Smaller Hotels

Smaller hotels are in a very different position to larger hotels and hotel chains. But one thing that doesn’t change is the need to get your pricing right. As our friend and world revenue management expert, Scott Dahl says, ‘every hotel needs revenue management software of some kind’.

Many hotels are unaware that there are solutions tailor-made for their business. The prevailing belief is that revenue management software is complicated, expensive and only for revenue managers. But let’s explore your current challenges and understand how a revenue management system (RMS) can solve these for you.

RMS – Do I Need It? – RoomPriceGenie Meets Scott Dahl

 

Challenge #1 Time Resources

Running a hotel is complicated and involves juggling many different responsibilities. A hotel owner may be the sales manager, marketing manager and receptionist all at once. From checking-in guests and organising staff to managing your accounting, there is a never-ending list of jobs for the small hotelier. Then, after all that, you have to run numerous spreadsheets and calculations just to get your prices right? Plus, your competitors are checking prices of other hotels at least two times a day. An impossible task for small hotels given the above.

How Does The RMS Solve This for You?

When you automate the revenue management process with a tool, you eliminate the time-consuming manual labour involved in maintaining spreadsheets. RMSs collect constantly changing data from multiple sources and store them in one place. This ensures data-driven price suggestions with minimal manual input.

By tracking data from the market, your internal performance and any special events in your area, RMSs recognise the current demand as well as the demand that is yet to come and maximise your hotel revenue. So you can continue focusing on the rest.

Challenge #2 Limited Budget

Running a hotel requires expense for housekeeping, maintenance, salaries and maybe even a minor renovation. Where on earth do you find the money for new technology? There are two sides to making a profit that you should keep in mind; cost and revenue. If an investment in an RMS can increase revenue by a lot more than it costs, then it will be worth the expenditure.

Smaller hotel owners may also be under the impression that with the implementation of a revenue management software comes the costly need to invest in a revenue manager as well. While in the past, it was true that technology was expensive and complicated, thus requiring an expert to navigate, this is no longer the case, particularly for the less complex pricing that smaller hotels need.

How Does The RMS Solve This for You?

The needs of smaller hotels are different than those of the bigger properties. Smaller hotels do not have as many features such as a spa, restaurant or in-room-amenities and their target guests are not that segmented, i.e. corporate business, leisure business, millennials Vs, generation Z and so on. This means you will need to look for a solution that will better suit your needs while costing you less!

When looking for an RMS, a smaller hotel will need high efficiency coupled with simplicity. You’ll need fewer features that are easy to run, resulting in lower costs and no need for the hiring of a revenue manager.

A recent case study shows that not only will investing in RMS cover the expenses of the software but will result in an average increase in revenue of 22%. Costing as little as the price of a coffee a day, companies like RoomPriceGenie offer the perfect pricing solution for small hotels facing the constraints outlined in this article.

Challenge #3 Lack of Information

By doing so many things at once, hoteliers often don’t have the time for anything extra, especially not a thorough analysis of their pricing. Not to mention, frequently checking the competitors is time-consuming and close to impossible.

By covering so many tasks at once, you are likely missing valuable information; events in your local area or booking trends, for example. You are also more likely to make mistakes. Either you are missing opportunities and failing to increase prices when needed, or perhaps you are setting higher rates for the future that aren’t attractive, don’t bring you any bookings and thus cause you to lose your competitive advantage.

How Does The RMS Solve This for You?

Revenue management software is a fully automated tool that saves you a tremendous amount of time. All of the data is calculated in the ‘back-end’, and you are then presented with a price suggestion for any given day; 365 days ahead. This collected data covers what your competitors are doing with their pricing, your guest booking behaviour and a variety of market variables. It then strikes the optimal price, perfectly placing you within your local market and, more often than not, presents it to you in a nice, colour-coded calendar view.

Challenge #4 Need for Multiple Channels

Although small in size, smaller hotels should look into the bigger distribution picture and overcome their competitive disadvantages. Being present on multiple channels, and offering multiple rates should not be a constraint in using RMS, but an advantage. Manually managing the prices on multiple channels (including your own direct booking engine) is impossible.

How Does The RMS Solve This for You?

A revenue management system can be fully integrated with your PMS/CM resolving this constraint in two ways. Firstly, being fully integrated makes it super easy to distribute your prices across channels with one click. Secondly, the way your rates are connected to one another is through established derivation. This means adjusting multiple rates at the same time should not involve any additional effort as the derivation will do the magic on its own.

Challenge #5 Capacity for Calculations

Revenue management is a complex subject that takes multiple factors into account. Not to mention, it requires extra reading, learning and understanding of complex definitions, KPIs and calculations.

It is not just that you have to establish your pricing strategy for the year ahead. But before that, you need to spend a lot of time on analysis and forecasting. Then, you need to look into what competitors are doing against your pricing and whether you will be able to compete and get your fair share out of it. Plus, you need to think ahead and consider any festivals or other special events; these all affect your pricing and the occupancy…the list of things is endless.

How Does The RMS Solve This for You?

Even with the best will in the world, it is impossible to do the millions of calculations a day to optimise your prices. RMS can take all your information and perform the complex calculations for you. It makes the complicated simple, leaving you to concentrate on the bigger picture.

Challenge #6 Complexity of the Software

Historically, RMSs have been over-complicated and dominated by heavy reporting, charts and statistics. Their complex rules and user-experience only gave hoteliers additional stress, instead of confidence in a job well done. The thought of investing in technology that is simply a burden to your operations is an understandable concern. Fortunately, the development of RMS has come a long way, and now there exists the right solution for every hotel.

How Does The RMS Solve This for You?

While the solutions in the past were indeed complicated to understand and use, today’s solutions can be pretty simple and easy to use. Not all revenue management systems available on the market are designed only to be used by revenue managers. There are solutions built specifically for smaller hotels and vacation rentals in mind. Plus, today’s RMS offer simple levels of customisation tailored to each hotelier’s needs and experience. You can have everything you need to understand the position of your hotel in one single overview.

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Everything is changing in the world of technology. Hotel technology is typically slow to adapt, but what used to be true, even three years ago, is no longer the case. RMS is now available and suitable for almost every type of property; regardless of size, location and customer base.

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Revfine.com is a knowledge platform for the hospitality & travel industry. Professionals use our insights, strategies and actionable tips to get inspired, optimise revenue, innovate processes and improve customer experience. You can find all hotel & hospitality tips in the categories Revenue Management, Marketing & Distribution, Hotel Operations, Staffing & Career, Technology and Software.

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This article is written by our expert partner RoomPriceGenie

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