Let's start this blog by answering the question mentioned above. And the answer is a resounding - YES. Here is why you need a revenue management system for your small hotel - as a small hotel owner, you are likely to run the show along with limited staff at your property. Most of the time, the daily administrative tasks, including managing reservations, housekeeping, etc., overwhelm you and your team. And then, even if you get free time, you tend to attend to guests' needs. In this course, many hoteliers like you overlook one of the most critical aspects of your operations - hotel revenue management. That’s why you will need a revenue management system since you are already short-staffed and can't even manually execute revenue management best practices.
What is hotel revenue management?
Hotel revenue management is the strategic process of selling the right room at the right price to the right guest at the right time. In other words, it is all about selling rooms at the best rates to increase occupancy and revenue. It involves many critical aspects - analysing and segmenting guest profiles, tracking and forecasting market demand, monitoring competitor pricing, online distribution, and adjusting room rates accordingly. Effective revenue management can help hotels increase revenue, profitability, and market share.
Revenue management challenges for small hotels
Although there are many differences between them, when it comes to hotel room rates, getting it right and setting it the optimum is crucial for both small and big hotels. But for two important reasons, as mentioned below, it becomes difficult for small hotels to nail it.
- Lack of dedicated revenue management team
- Expensive and complicated revenue management solution
Revenue management system for small hotels
Gone are the days when only big hotel chain brands used to deploy revenue management solutions and hire dedicated revenue management teams to work on them. Thanks to the power of the cloud, today, the revenue management system is no longer considered a luxury that only big brands can afford. With technological advancement, hospitality technology providers can help you with systems that are tailor-made just for you.
Benefits of a hotel revenue management solution
Save time with automation: Without the right expertise and solution, you may try to get it done manually. But that won't help you, as the manual process is often riddled with errors. But the whole thing changes for good when you implement a hotel revenue management system. It automates the entire data analysis process to automatically adjust room rates, eliminating time-consuming and error-prone manual effort. It tracks and analyses the local demand, your target guest segment, and your property's availability to suggest the optimum room rates that will most likely boost your occupancy and RevPAR.
Save cost and do away with budgetary constraints: Remember earlier saying that you can get a revenue management solution tailor-made for your small hotel? It means you don't have to opt for all the extensive features of a solution. Instead, talk to the solution provider, explain your requirements and get one customised for your small hotel's needs. This way, you don't have to spend a fortune on features you will not use anyway. Moreover, you don't have to hire a full-scale revenue management team, thus leading to more cost savings.
Efficiently track competitor pricing: A revenue management solution comes with Rate Shopper, a feature that allows you to track your comp set's pricing, rate parity across online channels, online ranking, etc. Such insights into competitors' pricing enable you to compare and monitor market rates so that you can adjust your rates to drive revenue. Simply saying, you can price your rooms competitively to maximise profit.
Finding the right hotel revenue management system for your small property
It could be tricky, given the fact that the market has many options to offer. But in today's highly evolving market scenario and with the rise of new technologies, you must keep an eye on a few essential features while selecting one for your property.
AI-powered hotel revenue management system: AI analyses historical data to predict future demand and adjust pricing based on availability to maximise profit. AI can also assist in dynamic pricing based on occupancy, length of stay and other relevant data to increase revenue. It includes charging more during peak periods and less during low demand periods.
Two-way integration capabilities: A revenue management solution optimises your rates by analysing tons of relevant data. But from where will it derive those data? This is where seamless integration with other solutions, including a Hotel PMS, channel manager, CRM, booking engine, etc., is crucial. It ensures that the data sharing happens in real time, leaving no room for errors.
Competition monitoring: We have already explained it earlier under the benefits section. But we would love to reiterate it for you to have better clarity. The system should come with a rate shopper feature. It will help you understand competitors’ rates by scraping data from OTAs. It enables you to adjust prices to sell at the best rates to remain competitive.
Have you heard of Revenue Management as Service?
Remember us talking about customisation exclusively for your small hotel? Revenue Management as Service is the best example of such a customised offering. We at AxisRooms offer this well-thought-out service, keeping your small hotel's needs front and centre.
In this arrangement, our expert Revenue Management Consultants will work with you to:
- Track forecast and analyse trends, demand, supply, and other critical market scenarios to spot possible revenue enhancement scopes.
- Deploy dynamic pricing based on occupancy, demand, and other factors.
- Help with competitive benchmarking.
- Monitor channel-wise cost of distribution to adjust channel mix.
- Increase rates when your brand's online reputation score increases.
- Implement effective upselling and cross-selling strategies for more room sales.
- Monitor no-shows and cancellations to adjust rates or offer discounts to encourage confirmed bookings.
An effective hotel revenue management strategy is essential to succeed in this highly competitive market. A revenue management system plays a critical role by empowering you to comprehend the market, anticipate change, and respond accordingly by intelligently and optimally adjusting room rates for enhanced revenue.