Revenue Management, only for large hotel chains?

The concept of revenue management is a business strategy involving techniques and approaches to manage prices based on demand and stock, always aiming to capture the right customer at the right moment through the optimal channel. This strategy is widely used in industries such as aviation, transportation, tourism, entertainment, and hospitality. But is it suitable for all types of hotels?

Why do we associate this concept with large hotel chains?

The main reason we associate the concept of technological advancement with large companies is the initial investment required. Independent hotels or smaller businesses lack extensive resources and can’t afford additional expenses for computer systems. It’s often thought that these processes are dispensable. If the hotel is fully booked and sales are continuing, does not that mean that the business is running smoothly? However, one should consider how to manipulate the number of sales and occupancy levels to achieve greater profit growth.

Furthermore, talent is also necessary to manage revenue and Revenue Management Systems (RMS) programs, as these are complementary tools. Such systems require a significant amount of data and complex analysis to make strategic decisions that benefit the business. As more data is gathered, it’s compiled and processed in a way that the obtained information becomes of higher quality and generates a more accurate model.

Indeed, more specific skills such as data analytics, technology, and revenue strategies are essential to utilize these systems. Large companies choose to invest in personnel possessing these skills by creating specialized departments for this function, while smaller enterprises see potential in holistic and integrated management.

How can an RMS be beneficial for small chains?

The primary objective of a Revenue Management System is to maximize profits. A crucial point for the success of any company, regardless of its size. Through their ability to forecast demand patterns considering seasonality, significant events in each locality, competition, and other relevant data, optimal prices can be set using a data-driven strategy based on historical information.

Moreover, cost reduction is another key factor to consider to achieve the goal of increasing profits, especially in smaller companies with more limited resources. RMS provide suggestions based on market behavior regarding the number of available rooms and the channels through which they should be marketed. This helps avoid excess bookings on certain channels and reduces the percentage of commission costs.

The ability to forecast, adjust prices, and intelligently manage availability generates more appealing booking opportunities for potential guests. This provides a competitive advantage to the business in a highly competitive market as the hospitality industry. In smaller companies, resources are limited. Often, having reduced teams for price and availability management becomes a barrier they encounter throughout the year. This situation can lead to missed business opportunities and may be reflected in the results. However, RMS systems allow the automation of the most tedious processes for the Revenue Manager. They analyze specific demand behaviours based on dates, channels, and historical data, establishing optimal prices to generate more sales. These automations enable owners and managers to focus on other operational areas while the system optimizes Revenue Management.

Efficient management is for everyone

Then… is Revenue Management only for big chains? This analytical process can be adapted both to large companies and smaller ones since the objective and primary function of this technique are the same for all. Nonetheless, we still associate technological advancement and, with it, intelligent revenue management such as the use of RMS, with companies of significant capabilities that achieve high levels of profit.

It’s important to note that a fully booked hotel does not always mean good management. While high occupancy levels equate to increased revenue, they also imply growth in costs. Over time, hotels, particularly smaller ones, have become more aware of the importance of Profit Management and the support tools that provide functionalities tailored to their needs. The significance of efficient Revenue Management and technological advancement has led to the emergence of solutions like RMS, which are becoming more affordable and adaptable to all types of hotels.

Currently, the traditional association of revenue management and the use of RMS (Revenue Management System) with large chains is changing. More and more small businesses have the opportunity to benefit from intelligent management, operational efficiency, and competitive advantage. As a result of this change in mindset, many RMS providers offer specific packages for small hotels. The solutions are tailored sur mesure to democratise access to this management tool.

Our RMS revbell adapts to any type of accommodation, regardless of size or type. The results are visible in independent Hotels, Hotel chains, and even campsites.

Still unsure about the suitability of an RMS for your property? Schedule a free 30-minute consultation with our team of experts.

Is revenue management just for the big hotel chains? This question is often asked and in this article, we will explain to you how, as a small hotel, you could benefit from it.