There are automated revenue management decision-making systems, and then there are revenue management support tools that rely on a rules-based approach to setting and changing prices. While perhaps an efficient method for some proficient users, rules-based technology requires consistent manual intervention and will undoubtedly struggle as market conditions shift and staffing changeover occurs.
Keep reading to understand the limitations of a rules-based system and the undeniable benefits of full RMS automation.
Greater Automation Equals Greater Agility
With historical data rendered unreliable due to the pandemic, rules-based revenue management creates a labyrinth of boundary cases that must be considered when making adjustments to pricing strategy. If executed improperly, your hotel’s revenue will be negatively impacted until operators notice.
Truly automated revenue management technology helps hotels create and execute a consistent strategy, informing critical decisions without being dependent on individual user expertise. Skilled employees move on, job roles shift, and due to the pandemic, many talented workers have either been furloughed or left the industry altogether. That’s why a good RMS must be equipped to serve all job roles and hotel types, regardless of user background.
Hotels with an Automated Decision-based RMS Were Able to Transition to Profitability
While hotels with a decision-based, automated RMS were able to transition to profitability as bookings resumed quickly, hotels using limited systems were forced to reanalyse the reasoning behind their rules – often requiring a seasoned data expert to decipher their complexity—and hope for little turnover.
The goal of revenue management today is to remain active in forecasting shifts in the market and identifying new pricing strategies. By comparison, many hoteliers are stuck remaining reactive due to the nature of their subpar RMS.
For example, an advanced, automated RMS will assist with overselling strategies to reach peak revenue. An automated system can anticipate no-shows and cancellations based on real-time data analysis, allowing operators to overbook in response. Strategies such as these are limited in a rules-based environment and require a great deal of experience and technical finesse to execute properly.
An Automated Room-type Pricing Strategy can Help Optimise Your Booking Mix
Standard rooms are currently selling out faster than deluxe or specialty rooms in other hotels. These higher-value rooms are then used as overflow options for standard bookings, helping hotels fill rooms in the short term while negatively impacting profitability over time. In this scenario, an automated RMS can assist with narrowing the gap between overselling rooms and pricing higher-tier rooms correctly. An automated, room-type pricing strategy with superior length-of-stay controls and strategic upgrade paths can help optimise your booking mix in a way manual, rules-based pricing cannot replicate.
The Future of Revenue Management Is Automation
When introducing new technology at the property level, it’s essential to consider how it is integrated into the hotel ecosystem. If your revenue manager is going into the property management system to manage restrictions, what’s the point of even having an RMS? The purpose of technology is to create less work for operators, not more, particularly during complex or limiting environments such as those we are faced with today. This is necessary for achieving new heights of profitability in the future. While an automated system can update itself based on further information, a limited pricing tool can force a hotel’s revenue management team to spend precious time adjusting the system to succeed.
As the deluge of information revenue managers are forced to wade through continues to reach a new high water mark each month, and finding workers to staff hotels remains a challenge, hoteliers will have to adapt. Suppose revenue managers spend all their time looking at data points and adjusting their tools to react to minor changes in market conditions. In that case, they will not have the time to come to meaningful conclusions about the nature of this data. Sophisticated automation overcomes these restrictions.
Free Report: Revenue Management Outlook Survey Results 2022
Despite the challenges of shifting market conditions, hospitality has entered a new era of adaptability thanks to innovative technology. Revenue management has far outgrown the early epoch of “yield management,” allowing true revenue leaders and commercial strategists to tap into the full potential of each booking, across multiple properties, markets, and segments. The secret lies in automated decisions and a willingness to break the rules.