Suppliers you should know: revenue management
Hotelier rounds up the companies that help you manage your revenue and compete online
Revenue management systems enable hotels to manage room rates and inventory in order to develop strategies to acquire the highest occupancy and maximum revenue. Demand forecasting, differential pricing tactics, data analysis and distribution channel management are some key factors to consider
Meet the experts
Hisham Diab regional director of sales MEA, Africa and Turkey, eRevMax
Hisham Diab is responsible for the sales of RateTiger and Connect solutions in the Middle East, Africa and Turkey. He has more than 16 years’ experience in the hospitality and travel technology industry, and has worked with groups such as Golden Tulip, Starwood and Preferred Hotels & Resorts. He also previously worked with Emaar Hospitality Group in a revenue role. Prior to joining eRevMax, Hisham represented RateGain and Globres in the MENA region.
Alex Barros VP of sales EMA, Duetto
Alex Barros is a Software as Service (SaaS) business development and loyalty executive.He was the first Duetto executive in the EMEA region and was appointed to open in new markets and establish the brand. He has run more than 300 successful sales and marketing campaigns with organisations that promote disruptive stategies. With a track record of successfully opening new markets, he served as director of sales, Southern Europe and & Latin America for SiteMinder.
Amit Sharda vice president, Prologic First
Prologic First is an employee-owned software development and marketing company based in India. The company was formed in 1997 by a group of hospitality IT professionals, and it has since evolved into a provider of integrated solutions for the hospitality sector and related verticals. Prologic First is able to ‘custom assemble’ its software to the specific needs of hotel chains. The company also recently joined HTNG in support of next generation technologies for the hotel industry.
Q: What are the latest innovations in revenue management systems?
ALEX BARROS: The use of big data, including new consumer-centric insights like air, weather, and web shopping are making it much easier for hotels to predict true demand.
Predictive analytic platforms and a new approach called open pricing are enabling hotels the ability to yield all segments and channels independently. Revenue strategy applications and cloud technology also create collaboration among different departments.
AMIT SHARDA: Big data sets need to be analysed and evaluated to predict consumer demand to optimise inventory and price availability in order to maximise revenue per available room (RevPAR) and gross operating profit per available room (GOPPAR).
The correct combination of pricing and online reputation might be the key to driving customers to your property. Revenue management challenges the resources to gather information about the market so that you can be proactive and not reactive.
A good revenue management system (RMS) guides hotels to form a strategy, managing multiple online travel agencies, intelligent allocation of their rooms, competitive price benchmarking, rate change alerts and scheduling of reports on demand at regular intervals.
HISHAM DIAB: It has become imperative for hoteliers to understand their guests’ buying behaviours, price elasticity and changing market dynamics for yielding the optimum rate from the most desired consumer set. All these factors have been driving innovation in revenue management systems.
The challenge is to take out the complexities and present the data as information in a high quality market insight format so that hotels can respond to opportunities and threats in real time for optimising their business outcome.
Q: What factors should an operator consider when choosing a revenue management system?
ALEX: Hotels need better information and should look for solutions utilising new data sources beyond just historical, pace and competitive pricing. To keep up with the complex distribution landscape, hotels need systems that react in real time, making deep and reliable integrations critical for safe and secure data and instantaneous pricing.
AMIT: Any system should be able to deliver dynamic reporting and business intelligence data in a format which can be analysed so important decisions can be taken immediately. The RMS should have some basic selling strategies such as open/close rates, stay controls, room categories, and overbooking levels — maximising your yield and profit.
In addition, your RMS should be tightly integrated with your central reservation systems and property management system. A good system must offer a certain amount of flexibility or user-friendliness, accurate recommendations based on variables that the RMS is taking into account, and the ability to adapt to the competitive set for room rates, based on accurate predictions for demand.
HISHAM: The aim of revenue management is to sell the right product to the right customer at the right time for the right price and with the right packaging. In this era of information explosion, hoteliers are overloaded with reports from their CRM, PMS, CRS, but they don’t have enough understanding to map them to business needs.
Hotels need insight to be able to gather potential consumer opinions, needs and desires, and deliver results accordingly. This can only be possible when they have proper market intelligence as well as historical data and current data analysis capabilities, which a sophisticated RMS can provide.
Revenue managers today needs to access pricing analytics, channel management, multi-property data, budget forecasting, competitive set analysis and reputation management. A superior system that can integrate information from all channels and create a consolidated report with bite-sized pieces of relevant information and offer them in an easily actionable format, would make it easier for revenue managers.
Q: How can operators ensure the data is secure?
ALEX: By making sure vendors are properly integrating with other systems so data can be trusted, tested, verified and kept secure. Duetto for instance, does not store any personal identifiable information (PII), which is a great advantage for hotels and guests.
AMIT: The biggest vulnerability is accepting and storing credit card holder information and volumes of personal information collected through participation in loyalty and rewards programmes. Generally, systems that store this information lack security layers or SSL and data encryption. One way to secure data is to comply with PCI and PA-DSS as this helps protect credit card data.
Another important security feature is ‘tokenisation’. This is a relatively new but good data security model that not only protects credit card numbers but can also protect any type of personally identifiable information collected from guests for loyalty and rewards programmes.
HISHAM: Use of data in hospitality has increased immensely in recent years. As hoteliers leverage data from a broad array of sources, both structured and unstructured, a general question arises as to how to secure these vast amounts of data. A technology solutions provider, eRevMax takes PCI DSS, data protection and consumer protection compliance seriously and invests time, effort and money on compliance.
Q: What is the biggest mistake hoteliers make when investing in revenue management systems?
ALEX: The biggest mistake hotels make is not doing their homework and looking for shortcuts. A sophisticated revenue strategy system is possibly the most important piece of technology and the biggest opportunity for a property to enhance occupancy, rate, and ultimately profitability, which is more critical than ever with the rising costs and complexities of distribution.
AMIT: A lot of hotels also implement revenue management in standalone mode by entering data manually, which basically beats the purpose of automation, real-time forecasts and rate predictions with dynamic rate management. A hotel must ensure the programme they select connects with every possible revenue tracking channel or programme that hotel uses and there should be no manual data input.
HISHAM: The most common error made by hotels is compromising quality for cost benefit. A solution with better technical features and stability might cost a bit more in the beginning, but in turn can produce higher revenues.
The trick is to balance the cost with potential ROI. Also, hotels need to evaluate which features they need for their daily operations, and whether the system they have chosen provides robust real-time rates, updated availability, and business intelligence.
Hotels should not ignore the power of real-time connectivity. An XML technology-based solution delivers real-time connectivity between CRS/PMS, electronic sales channels, wholesalers, tour operators and other travel sales companies processing online hotel bookings.
Hotels can take advantage of these pre-connected solutions, reducing time to market, and thereby maximising revenue opportunities and reducing distribution costs by economically increasing reach and visibility.
Q: How can hotels generate more direct bookings by investing in the right system?
ALEX: By utilising a more advanced RMS, hotels can understand and more effectively price all segments and channels independently to attract the most business and the most profitable business. By merging loyalty and pricing systems and strategies, hotels can also offer better rates privately to customers that break parity and drive both guest loyalty and profitability.
AMIT: It is vital that a hotel is able to drive more direct business with lower cost of distribution by optimising the mix of online bookings. Hoteliers should first evaluate their property’s online reputation or reviews because this can have a big impact on guests choosing their property over others.
HISHAM: As online travel agencies (OTAs) are taking a larger share of a hotel’s direct business, hoteliers need a multi-channel digital marketing strategy to reduce a heavy reliance on the OTAs. In today’s competitive scenario, hotels — especially small and independent hotels — are losing ground in the war with OTAs.
To take control over its booking funnel, they must develop their brand website, integrate a booking engine, and utilise metasearch platforms effectively. Metasearch channels enforce strict rate parity rules, thereby making OTAs indistinguishable from their competitors from a pricing point of view and this prevents price-centric competitive actions to gain market share.
Ironically, this also gives hotels a fair chance of competing and attracting qualified leads to their brand site through emotional appeal, which is vital for influencing a rational decision-making process.
Q: How often should revenue management systems be updated?
ALEX: The beauty of true cloud-based software as a service, is that engineers and developers are always working on the same product that all customers are using. Updates and innovations should be continual, free and frequent.
AMIT: A revenue management system needs to adapt to changing market dynamics. Factors like advances in forecasting, access to more data, increases in processing power, new research into revenue management, will result in changes in algorithms and forecasting methods.
HISHAM: Pricing data is essential to view the marketplace, monitor competitors, benchmark products and be positioned accurately to make most of yield and revenue. Pricing will become more dynamic and creative as hotels try to differentiate products.
An automated revenue management system allows hoteliers to collect and access the multitude of data in their systems to analyse rate, market, competitor activities, historical and trend information and achieve the best possible room rates from the most desired guests.