The robots are coming! They’re taking over! No job is safe!
That’s the hype we keep hearing, and revenue-management software companies definitely want you to believe that a computer is better than a human. But is it true?
It’s clear that if you want to make the most out of your hotel and increase your revenue, you should be using some form of revenue management. But exactly what to do may not be so easy. This article will talk you through 3 options available to you.
1) Hiring a full time revenue manager (human)
2) Using fully-automated revenue-management software (machine)
3) Using a combination of human and machine (both!)
But which option is best for your hotel? Here are 4 things to consider.
Hiring a revenue manager as a full time employee is an expensive endeavour. If your business deals with large revenue and profit margins, hiring a revenue manager could ensure your continued success. By using a more analysis of your hotels data, a full time employee is able to play with pricing in a way a machine alone may not. They can make changes and alterations as and when they see fit, based not only on the data in front of them, but their own personal experience too.
This is a great option if you have the money to spare. If, however, your business is on the smaller side, more often than not, the extra money pulled from using a revenue manager simply goes to covering their costs. The hotel as a whole will not reap the rewards of their work and you may well find yourself paying somebody just to find yourself exactly where you started. In this scenario, revenue-management software is a more profitable option. With lower overheads, your hotel is able to implement all the strategies of a revenue manager without the high cost. You’ll be able to compete with the best, without paying the worst.
Put simply, the larger your hotel, the more complex your needs. A property with a large amount of rooms, dealing with high turnover rates and a wider audience, generally requires more in depth and flexible pricing.
In a smaller hotel, the focus of your revenue-management strategy primarily lies with your clientele, the prices of your competition and events in the local area. These factors are simple to track, with the results being relatively straightforward to act upon.
Larger hotels, on the other hand have more complex needs. They may need to think about internal events such as functions or conventions as well as a wide variety of room types and an even more varied guest portfolio, as well as all the factors considered by small hotels. In having to consider a greater, more diverse list of factors, comes the need for their revenue-management to be flexible and dynamic.
In this sense, a larger hotel with a larger number of complex factors to consider would benefit from an in house revenue manager. Someone who can make decisions quickly in an ever-changing environment to benefit the hotel as a whole. At the other end of the spectrum, smaller hotels with less complex factors, do not need highly paid professionals to get the absolute most out of their business.
3. Market Segments
Very similarly, the more market segments you deal with in your hotel the more you have to consider your pricing. In appealing to such wide audiences, a hotel must be able to price for each and every single one of them. The price that is right for one market segment may not be right for another and therefore it would take a full time revenue manager to be able to make pricing decisions that would please the vast majority (if not all) of your customer basis.
Say, for example, your hotel deals with a mixture of group bookings, last minute business bookings and there is also a music festival happening locally. Your pricing must account for the varied needs of all of these market segments whilst maintaining regular custom.
Alternatively, if your business is directed at one market segment (or, at a push, multiple market segments with similar interests and needs), your revenue can easily be managed by software.
Time is always of the essence in the hotel industry and whilst you may want to ensure you’re charging the right price at the right time for your rooms, you may not have the spare time to dedicate to the process.
Revenue-management can be time consuming and if you’re working with a small team, stretched all over the property, it’s hard to imagine finding space to sit down and evaluate your pricing. Fortunately, revenue-management software can do the hard work for you. From evaluating the best possible prices, to automatically updating your PMS, website and OTA’s, you can assure your precious time is spent back on the floor helping your business flourish.
If you are a revenue manager yourself, there is always a lot of work to be done, and software, if used well, can both save you time and more consistently execute your plans.
Putting it all together ...
There’s no one fit for every hotel. Generally, if you’re a large hotel with complex and varied needs you may want to look at hiring a revenue manager. Alternatively, smaller hotels with a keen desire to compete at the top of their game would benefit from revenue-management software that can help them on their way to greater revenue and, in turn, higher profit margins. Typically, for hotels without revenue managers, using software like RoomPriceGenie can increase revenue by 15-20%.
But the best option is: BOTH software and revenue manager...
If you do have a revenue manager, one way to make the most of their skills is to have software to help them. Here you can get relatively inexpensive software like RoomPriceGenie to help the revenue manager implement their strategy.
It is impossible for a human to do as many calculations as a computer. The software can help by doing thousands of calculations a day. But at the same time, the expertise of a revenue manager is very valuable. RoomPriceGenie software is the perfect accompaniment to a revenue manager. Our software is transparent about why it gives a price and adjustable to most strategies. It enables the revenue manager to add their expertise, creating a dream team that can increase revenue even more than a machine alone. In cases with a good revenue manager, RoomPriceGenie typically helps revenue by around 5-7%.
Revenue-management software like ours, not only offers full integration into your current PMS but also provide a personal, on hand service to help you through all the ins and outs. You don’t have to worry if you’re new to the game, RoomPriceGenie will guide you through the process as well as offer tips and tricks along the way to further help your business receive the revenue it deserves.
We had a chat with revenue management expert and Les Roches Global Hospitality master’s director, Scott Dahl about exactly what role your revenue management system should play when in use alongside a revenue manager. Check out our video to see how these tools should interact.
If you would like to find out more about what we do here at RoomPriceGenie and how our software could be the perfect companion to your in-house revenue manager, get in touch to find out more, or set up a demo call with one of our team of experts.