The complex simplicity of revenue management systems

15 July 2019 by
The complex simplicity of revenue management systems

This article was written by Damiano Zennaro, head of advisory services, EMEA, IDeaS Revenue Solutions

It's amazing to think how far revenue management systems (RMS) have come and the depth of the critical information they deliver. However, to make the grade in today's highly dynamic market, a modern RMS must be capable of performing two key tasks:

1. To autonomously make the best possible pricing decisions using the most relevant data available.

2. To provide a simple answer to the question of why the system is setting this price. Ultimately, we must be able to trust the system's decisions.

In everyday life, we often second-guess our own decisions, but questioned about the validity or accuracy of a price, you must be able to confidently explain where the rate came from and why it's the best approach. A sophisticated RMS must not only answer the ‘what' question, but also the ‘why.'

Trust your RMS as you do your satnav

A great way to appreciate the impact an RMS can have is to compare it to how we use our satnav.

After turning on your satnav and waiting for directions, there's a good chance you'll decide to ignore it and instead take a route you think will be faster…only to arrive five minutes later than the satnav-recommended path. A satnav pulls data from more sources than you have available and provides optimal suggestions while validating its decision by showing real-time traffic levels, accident alerts, road work and more.

Trusting data-driven decisions

We all strive for more simplicity - in an ideal world, we want things that work without fail or question. However to confidently answer the 'why' question, our decisions must be based on concrete reasoning - and that means data.

As most revenue managers are analytically focused, they look to data for answers. Whether they're using Excel or a sophisticated RMS, they like to dig, drill, chart and graph to justify their pricing decisions.

While a revenue software system must simplify procedures and increase efficiency, users must have confidence in the decisions it makes. The key to solving everyday problems such as "what price do I charge on Tuesday for a two-night stay?" is for it to have access to the right amount of information at the right time, whenever and wherever it is needed.

Just as an iPhone works behind the scenes, analysing data to provide services like voice-to-text, weather forecasts and video messaging, an RMS converts complex data and displays it in a format that instills trust and confidence in the end user.

Myth busting

Despite working in an increasingly data-focused industry, misconceptions linger about the importance of revenue management technology within the hospitality sector.

Myth #1: We don't have any issues manually setting our rates, so we don't need a RMS.

Manually collecting, evaluating and calculating data is time-consuming and highly susceptible to human errors…and hence lost revenue. By contrast, a modern RMS allows for an in-depth analysis to be made of a hotel's performance.

It will also bring increased accuracy and consistency to forecasting and reporting, making it easier to determine the best price to optimise demand and boost revenue.

Myth #2: I need a dedicated onsite revenue manager to use a revenue management system.

With hotel staff increasingly becoming more mobile, revenue managers are often responsible for multiple properties across multiple time zones - and they need constant and instant access their RMS.

Cloud-based technology and mobile apps allow them to make informed pricing decisions by providing critical demand forecasts and rate analysis including historical behaviours, seasonal patterns and recent trends at any time, from anywhere.

Myth #3: An RMS is too expensive and only used by large global hotel chains.

As revenue management solutions have been successfully adopted by larger hotel chains and properties, it has led to a misconception about the cost and ROI smaller operators can expect.

However, many leading revenue management providers work with budget and midscale hotels in both city and resort locations. There are also entry-level platforms for hotels starting their revenue management journey, such as pricing system technology that focuses on setting and distributing the right rates to the right guest at the right time.

Myth #4: My hotel is still under construction; I can't consider revenue management until I have been operating for at least one year.

There are many areas of revenue management that must be considered throughout the pre-opening phase of a hotel - ranging from establishing market segment revenue and sales strategies, undertaking comprehensive competitor evaluation, pricing research, pricing processing and forward planning of market demand cycles.

An integral component to pre-opening should be considering the optimisation of room-type configuration, as well as the implementation and integration of revenue management technologies with the hotel's IT infrastructure and platforms from the very start.

Myth #5: Automated RMS proliferation will put revenue managers out of work.

These days, AI's domination of our workforce is a common fear, but human interaction, input and problem-solving are still vital to the revenue management process. With an automated RMS performing the more mundane, time-consuming tasks, revenue managers are enabled to focus more on forward-looking strategy and find new ways to enhance profitability. An RMS solution won't replace the hotel revenue manager, it will empower them.

This article was written by Damiano Zennaro, head of advisory services, EMEA, IDeaS Revenue Solutions

About IDeaS

IDeaS, a SAS company, is the world's leading provider of revenue management software and services. With over 30 years of expertise, IDeaS delivers revenue science to more than 11,000 clients in 129 countries. Combining industry knowledge with innovative, data-analytics technology, IDeaS creates sophisticated yet simple ways to empower revenue leaders with precise, automated decisions they can trust.

Results delivered. Revenue transformed. Discover greater profitability at

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