A Brief Overview Of Revenue Management Systems In Hotels Today – What To Look For
I have been working in hotels of all calibers for more than 23 years. Luxury hotels, full-service hotels and mid-scale hotels. I have held roles in Operations, Sales & Revenue Management up to and including leadership roles as well. All of this across four cities on both the East & West Coasts of the United States of America. I am quite comfortable dealing with both the owners and the corporate teams alike. Usually, in my experience, everyone is looking for the same thing – more profit, with less costs, greater efficiency and fortune teller forecasting skills. Enter the world of Revenue Management Systems.
Systems today do a multitude of things very well, they do learn over time, they do assist with profitability and they can be very efficient. Things start to get convoluted though when you begin to ask a machine to forecast for you. I have found in my experiences that before venturing down the RFI & RFP road for one of these systems you would be wise to conduct a detailed evaluation of your distribution capacities, your operational procedures (particularly the number of room types available to the public) and current IT ecosystem (generally distribution related).
Determine exactly what you are looking for from these systems. When conducting your RFI & RFP, the questions which you ask up front will be the most critical in determining the direction in which you go. One system may be a godsend in one hotel, or chain while nearly catastrophic in another. One thing that I see which is constantly overlooked during this process is the failure to ask a surprisingly simple question – who will maintain this investment once it is installed? What happens if the person in charge of maintaining the system leaves? Now is a key time to note that human interaction here, or lack thereof, is the most likely reason this investment will fail.
These companies can offer increased learning and profitability over time, however it’s important to remember that these systems are dependent on the information in which you feed them. Here are a few basic questions to get you started:
• How do you define to a Revenue Management System high demand, medium demand, low demand?
• What is the difference between a high demand date and really high demand dates?
• What criteria are used to develop and deploy these rationalizations?
• Who is monitoring these criteria for change?
• Are they notifying anyone if or when there is a change?
• How do the Revenue Management systems differentiate from your definitions?
• We are not even mentioning the sell prices yet.
If the person responsible for answering all these questions installs your new system – then leaves, how do you know how to find someone who can work with your system, step in and be successful? How do you know if the replacement candidate has the same views on Revenue Management and your Revenue Management System’s criteria as his or her predecessor? There is that pesky human interaction piece again
The primary solution to resolving most of these issues is for Executive Management (C – Level primarily) to determine the defining criteria broadly for the data entering the system. With whomever you choose to move forward with for your Revenue Management System their implementation representative will work with you to determine your demand definitions. Look at the criteria in its most basic sense, what definitions can you apply across all your hotels vs just a single hotel? Leave it to your Regional teams to determine how to interpret your defining criteria to their respective region. Just ensure that they have a verifiable tracking process for when times are both good and not so good.
Ironically, in an industry which has historically, sold itself on how important a human interaction is when it comes to selling hotel service – the future is requiring us to rethink how important human interaction is when it comes to figuring out how to instruct our machines too.