The Ultimate Guide to Hotel Revenue Management
Revenue Management

The Ultimate Guide to Hotel Revenue Management

Neil Prem
Neil Prem

Table of Contents

Nowadays, hotel revenue management is more vital than ever for operating a successful and lucrative business in the hospitality industry.

So, what is the apt definition of revenue management in hotel industry?

Revenue management refers to the pricing techniques and strategic distribution hoteliers implement to sell their perishable inventory.

This also includes selling their hotel amenities and food and beverage selections to the respective customers at the right time to increase revenue growth.

In other words, revenue management means selling a specific product to a specific client at the right price through the appropriate sales channel at the right time.

Now, why is hotel revenue management paramount for the hospitality industry?

Effective revenue management tactics can also benefit hoteliers in the following ways:

  • Ensuring enough employees working during the peak seasons
  • Avoid rostering too many employees during slowdown seasons
  • Improved resource management

Keeping these factors in mind, when implemented right, hotel revenue management can be the driving force behind the whole business strategy.

Hoteliers, who are calculative business owners, always seek new and more effective ways to accomplish things in order to outperform their competitors.

Surprisingly, the majority of independent hoteliers don't employ best practices for revenue management, which reduces their capacity to boost revenue generation.

Like every other business, hotels have set expenses that must be covered no matter how many rooms are booked or how much revenue is brought in by guests.

Hence, hotel owners must implement a revenue management strategy to ensure that their expenses are met and that their rates and offerings are dynamically adjusted.

In this blog, we’ll cover the following:

  • Best practices for effective revenue management in the hotel industry
  • Top revenue management software that hotels must leverage to automate their work and increase revenue
  • What the future holds for revenue management

Let’s dive in!

Best Practices for Effective Hotel Revenue Management

Now, let's get to the meat of the matter: How can you increase hotel revenue?

If you look up on the internet, you'll find tons of resources on hotel revenue management.  However, the majority of them are general information and don’t cover the basics of hotel revenue management.

That’s why we bring you 5 effective hotel revenue management strategies that you can implement right away to leverage its benefits.

1. Dynamic Pricing

Dynamic pricing, commonly referred to as time-based pricing, entails daily or more frequent rate adjustments for rooms based on current market information.

This kind of strategy takes into account supply and demand as well as additional elements that could influence market demand, such as competitive pricing, seasonality, room availability, and other external factors.

For instance, a hotel may raise its room rates to capitalize on the increased demand during peak tourist season or when a significant event is taking place nearby.

On the contrary, the hotel might decrease its tariffs during times of low occupancy or the off-season to draw in more guests.

Another instance of dynamic pricing is when a hotel business charges different rates for different kinds of guests.

A hotel may charge less for reservations made in advance or bookings made for longer stays while charging more for reservations made at the last minute or for stays of shorter duration.

An effective revenue management system can assist hotel revenue managers in better understanding industry trends. It will also enable them to modify room availability and adjust the pricing structure in which tariffs are established to increase sales and profitability.

2. Forecasting

Forecasting is an essential strategy that not only helps in budgeting but also in setting rates. Accurate and successful forecasting necessitates a solid foundation in existing data.

By forecasting ahead of time, you'll have ample opportunity and time to implement changes to your budget plan and rates. If you know a time of year is particularly significant to your hotel, prepare for that occasion in advance.

One instance of forecasting in the hospitality industry is estimating the occupancy rate for a specific day, week, or month. Hotel managers can use this prediction to make guided decisions about staffing levels, inventory control, and pricing schemes.

A hotel can compile information from prior years, such as past booking records, cancellation rates, and average stay duration, to create a prediction for occupancy rate.

They can also consider external variables, like regional events, public holidays, and seasonality that could affect occupancy.

3. Demand Management

Demand management is a comprehensive strategy for finance, distribution, marketing, and revenue in the hospitality industry.

Risks in the decision-making process are significantly decreased by effectively leveraging the hotel's data and consolidating it into meaningful and comparative data points. All thanks to the concept of demand management!

Take the example of a hotel that has a big conference booked for the next week. It is estimated that that conference would help fill a substantial number of the hotel's accommodations.

The revenue management staff at the hotel can utilize past data and demand forecasting tools to make predictions about how many rooms will be reserved for the conference event and how many by other visitors.

Based on those forecasts, the hotel may adjust its price and inventory levels to increase profits.

Furthermore, it can ensure that there are no overbookings or underbookings and that the maximum number of rooms are sold at the highest prices.

4. Competitor Analysis

It is pointless to discuss the topic of revenue management for the hotel industry without addressing competitor analysis. After all, a successful hotel revenue management strategy must begin with a thorough analysis of the competitors.

In essence, competitor analysis allows you to comprehend the strengths and weaknesses of both you and your rivals. Knowing where you stand in the market can help you work toward standing out.

One example of performing a competitor analysis in the hospitality industry is collecting data about the rates, hotel amenities, and customer feedback of rival hotels in the same market.

Now, let's get one thing straight: not every hotel business in the industry or in your town is your rival.

You must specify your competition parameters (AKA compset). When evaluating any property as one of your competitors, you should take into account a few factors:

  1. Size of property
  2. Accommodation type
  3. No.of rooms
  4. Room types
  5. Types of services
  6. Number of OTA connections
  7. Average customer reviews and ratings

After the right compset is established for your hotel business, you can evaluate their existing pricing strategy, review their rates, and adjust your rates as needed.

This will not only assist you in organizing and overseeing your revenue but also, give you accurate projections. As a result, you can maximize your earnings and draw in your target customers/visitors at the right time.

5. OTA connections

To sell your hotel rooms at the appropriate pricing, you need to work on the proper distribution of accommodations. Therefore, when it comes to hotel revenue management, you must review all of your OTA connections:

  • Choose both regional and international OTA platforms
  • Think about your target audience and the type of property you own.
  • Take into account OTA connections that fit your budget.

Imagine there is a hotel business called "The Paradise Guest House" in Pondicherry, India. The hotel wants to improve its digital presence and draw in more guests.

So how does the hotel do it?

The hotel can accomplish this by connecting with several OTAs, like MakeMyTrip, Agoda, and

The hotel must register with the OTA channels to establish connections and submit information about its property, such as:

  • Room availability
  • Accommodation rates
  • Room categories
  • Hotel policies
  • Images of the rooms and other areas of the hotel property

The OTAs will then publish the hotel on its websites so that visitors can look it up and make reservations there.

Any reservation made through any OTA platform will entail a commission charge which is generally a portion of the accommodation cost. The hotel can raise its room prices to compensate for the commission charge while still retaining market competitiveness.

Top Revenue Management Software to Streamline your Hotel Revenue Management

A bonus idea to optimize your hotel revenue is to invest in a hotel revenue management software.

For hotels looking to maximize revenue and profitability, a hotel revenue management software is a great investment as it can automate the usage of analytics.

It forecasts consumer behavior and establishes the appropriate pricing for your hotel rooms using market analysis, historical data, and demand indicators.

Hotel revenue management systems automate collecting and analyzing information so you can focus on creating the most effective revenue management strategy possible.

Here are 5 revenue management tools that can help you maximize your hotel revenue and grow your business:

1. Pace Revenue

Pace Revenue offers top-notch pricing assessments for multiple sorts of properties around the world. It employs hourly pricing adjustments that are optimized to keep the rates for your hotel rooms competitive.

The Pace Review organization also has a specialized data science division that does its best to keep its machine learning algorithm current and accurate.

The fact that Pace Revenue doesn't mimic its rivals is one of its key traits. Instead, the organization attempts to set market pricing standards by predicting room reservations. It also employs segmentation to establish reservation rates across hotel rooms based on days and categories.

Pace Revenue Benefits

  • User-friendly user interface
  • Easy to implement
  • Superior client service
  • Boasts countless satisfied clients

Pace Revenue Drawbacks

  • Offers inadequate data on future market demand
  • Offers inadequate long-term forecasting

Pace Revenue Pricing

  • Offers free Demo
  • Hotel $6 per month per room
  • Hostel $2 per month per room

2. GameChanger by Duetto

Compared to other revenue management tools on the market, GameChanger by Duetto analyzes more data to assist you in creating a successful revenue management strategy. The brand is based in the city of San Francisco, although it has a global footprint.

Duetto employs micro-segmentation to provide you with current pricing data for each room type, channel, and segment. You can maximize your revenue from each reservation thanks to its collection of comprehensive analytics tools.

GameChanger by Duetto is one of the best software solutions for accurate data analysis because it can account for and forecast even the smallest changes in the industry.

GameChanger Benefits

  • Boasts a decade-long experience in the industry
  • Excellent customer support
  • Easy to use
  • Fast implementation

GameChanger Drawback

  • Does not offer a mobile app for users
  • Lack of hypothetical forecasts

GameChanger Pricing

  • Offers free demo
  • $10/room per month

3. RoomPriceGenie

RoomPriceGenie is a reliable revenue management software suitable for small-business owners who want to level with larger hotel chains using strategic pricing.

This software provides dynamic pricing that is updated several times a day in real time. By selecting minimum and maximum prices, users can always maintain complete control. Users can also manually change prices at any time for any day.

Since the company focuses primarily on smaller enterprises, the majority of its clients are small hotels, lodges, and hostels that want to completely automate and streamline their pricing strategies. Revenue managers can optimize their work by automating complex tasks owing to the advanced capabilities of this software.

RoomPriceGenie Benefits

  • Superior client service
  • Easy to use and implement

RoomPriceGenie Drawbacks

  • Less comprehensive than a lot of other RMS in the sector
  • Compared to other RMSs, has fewer PMS integrations

RoomPriceGenie Pricing

  • Offers 30-day trial period
  • Hotel $6 per room per month
  • Hostel $3 per room per month
  • $500 per month subscription

4. IDeaS

For the past 30 years, thousands of clients around the world have benefited from IDeaS. It is one of the most robust revenue management systems and has a remarkable reach and long-standing reputation in the hospitality sector.

This software can automate a large portion of work processes and forecast various trends in the hotel industry. The changes and forecasts made by the organization are highly accurate. It caters to all types of hotels, from large chains to small boutique hotels.

To generate optimal pricing predictions, its algorithm takes into account the impact of rival hotels and the demand profile of different products. It also controls pricing and overbooking in order to maximize profits.

IDeaS Benefits

  • Accurate analytics
  • Offers multi-property management
  • Reputed in the hotel industry
  • Exceptional user experience
  • Offers a mobile application to its users

IDeaS Drawbacks

  • Complex to use
  • Higher on the pricing side

IDeaS Pricing

  • Offers free Demo
  • Monthly subscription starting at $10 per room per month
  • One-time purchases starting at $1000 up to $10,000

5. Atomize

Atomize is a fast-growing and innovative revenue management software in the hotel industry. It enables hotel businesses of all sizes in more than 40 countries to determine the best room rates.

Atomize's core principle is to achieve more with less effort, having created a relatively streamlined revenue management software. As the first business to provide real-time price optimization and assimilate future demand data, Atomize has earned a reputation as an innovator.

Several small hotel businesses and chains employ Atomize to streamline their revenue management strategies and increase growth and productivity. The software ensures that you profit from even the slightest market changes to draw in more room bookings at the best prices.

Atomize Benefits

  • Easy to use
  • Known for user satisfaction
  • Multi-property management
  • Offers a mobile application for its users
  • Integrates well with property management systems

Atomize Drawbacks

  • Does not offer long-term forecasting
  • Hard to implement (stated by some users)

Atomize Pricing

  • Offers free Demo
  • Basic package of $7 per room per month
  • Upgrade package of $10 per room per month

The Future of Hotel Revenue Management

While revenue managers and hoteliers are aware that it could be challenging to remain abreast of what is required to thrive today, what will the situation be in the coming five years?

Well, hotel business owners and revenue managers must begin to focus on where the hospitality industry is heading if they haven't already yet.

Owing to the Indian hospitality sector competitiveness, Indian hotels must strive harder to ensure they have the right team of industry professionals, work processes, and hotel revenue management strategies in place.

This will help them to increase revenue, capture market share, and eventually return value to shareholders.

Additionally, hotel revenue managers globally are needed to learn additional skills to stay competitive, given the constantly evolving expectations of today's travelers.

This change has been significantly driven by advancements in technology.

Revenue managers, in particular, have been embracing technology to enhance their ability to manage pricing across various channels and hotel revenue.

They are also leveraging the benefits of employing technology by upgrading their capabilities to evaluate data about client preferences and incorporate it into upcoming marketing strategies.

Let’s answer some questions on how employing new technologies and innovations can help revolutionize the ways hotels manage their revenue.

1. What Is the Impact of Machine Learning on Hotel Revenue Management?  

Typically, a hotel makes over five million decisions annually regarding pricing. Any revenue manager would find it impossible to make the correct decision every time.

Due to this, you must adopt an automated revenue management software solution that makes precise pricing decisions by employing cutting-edge revenue analytic tools.

Hilton Worldwide (an American multinational hospitality company) uses machine learning to streamline pricing strategies and analyze pricing patterns. Additionally, they customize the guest experience and optimize loyalty programs using machine learning.

Today's technologically advanced revenue management systems that incorporate predictive analytics for the future and are powered by machine learning enable hoteliers in discovering new trends and more profitable business prospects.

In addition to setting prices that accommodate market changes, a revenue management software solution driven by machine learning also predicts these fluctuations in advance.

2. Is it Time for Hoteliers to Adopt Artificial Intelligence (AI)?

The two pressing issues hoteliers face nowadays are increased labor expenses and the accompanying strain on operating profits. Additionally, the volume of data that hotel businesses produce and gather will continue to expand.

This is where automation and AI come into the picture. They will enable a hotel to become more successful by assisting front-line hotel professionals in performing their duties more effectively.

Customers desire personalized offerings more tailored to their requirements, which is why several of them are willing to share data in exchange for that.

Since 2017, Marriott International ( a world-famous lodging company) has been using "Optimize," an AI-driven revenue management solution. This software solution predicts demand and instantly adjusts room prices using machine learning techniques.

AI offers an extensive range of possibilities to improve and reduce the workload of business operations that are now burdensome. It does it via system upgrades that are automated but remains personalized.

It enables your employees to dedicate more time to engaging with visitors and creating extraordinary and unique experiences, resulting in higher rates of guest satisfaction and customer engagement.

Hoteliers wanting to adopt AI-based solutions in their properties should assess their current operations and systems first to identify repetitive tasks with many potential outcomes.

3. How Is Blockchain Shaping the Hotel Sector?

Although blockchain is a modern technology, no one can accurately forecast how it will affect the hospitality industry. However, top hoteliers are embracing this technology. This means it may not be long until blockchain technology adoption becomes more prevalent.

TUI Group (a German leisure, travel, and tourism company) has moved all of its contracts to its blockchain platform. It is researching and exploring how blockchain technology could be employed for a variety of purposes, including revenue management.

TUI Group even collaborated with Winding Tree, a blockchain company, in 2019 to test a blockchain-based hotel booking system.

Unquestionably, the distribution channel could be optimized using blockchain technologies. Some examples of use cases include streamlining loyalty programs, rate, availability, inventory, and payments for reservations, descriptive content updates, and enabling direct reservations.

A matter of concern for all hoteliers employing blockchain should be what the OTA platforms are doing. According to some industry experts, blockchain could eventually make several OTA channels out of business.

Automate Your Revenue Management System with AxisRooms!

Revenue management is critical for hoteliers because it enables them to increase revenues by employing advanced technology and big data.

There is no doubt that the hotel sector is facing a challenging shift right now since travelers' needs are changing with time.

From that perspective, it is crucial to shift our focus to implementing cutting-edge technologies and robust solutions that employ AI and machine learning to increase yield, boost income streams, and improve the guest experience.

As a result, for the hospitality industry to redefine itself and continue to thrive, it must embrace new revenue management strategies and solutions, such as robust and reliable revenue management software.

You, being a part of the industry, can implement the strategies discussed in this blog to generate more income and increase profitability. Additionally, you must consider adopting a hotel revenue management software to streamline your work processes.

When you charge too much for your hotel rooms, you lose business. When you set your room rates too low, you, again, incur losses.

So, when it comes to increasing your profitability, a smart revenue management software can assist you in determining the ideal rate for each room at any given moment.

But hoteliers often fail to leverage all the benefits a revenue management system offers. So how do you ensure that it doesn’t happen to you?

Simple: By partnering with AxisRooms

With the aid of AxisRooms’ RM as a Service offering, you can achieve the following:

  • Leverage the benefits of a revenue management software
  • Implement hotel revenue management best practices into action
  • Manage all the critical aspects of your hotel business operations
  • Increase your digital footprint across all distribution platforms
  • Monitor trends, demand, and supply
  • Establish rate parity throughout all sales channels
  • Analyze reports such as target markets and channel performance
  • Employ dynamic pricing techniques to increase RevPAR

So, what are you waiting for?

Get your hands on AxisRooms’ revenue management service today to optimize your hotel revenue management.