Four revenue management opportunities for hotel owners

Technology has become an influential player in the development and refinement of hotel business strategies. And while the practice of revenue management may sometimes find itself branded as “micro-level” from an owner’s perspective, it provides many opportunities to increase asset performance and value.

NB: This is a viewpoint by Brian Douty, chief financial officer at IDeaS Revenue Solutions.

Below are four opportunities that revenue management brings to the table for today’s hotel owners:

1) Going beyond the guestroom

Over the past few years, the practice of revenue management has evolved beyond simple and tactical approaches for managing guestrooms and pricing alone.

As revenue management and its technology has continued on this evolutionary blaze, the opportunity for a holistic revenue management approach has emerged from yesterday’s ashes.

The effects of a robust revenue management culture are found permeating into different hotel departments, from marketing to sales to operational teams. Today’s revenue managers are beginning to evaluate total revenue contributions . This includes the management and pricing of meeting and event spaces, group business and ancillary revenues.

Revenue managers are also evaluating costs to help the hotel focus clearly on profits – not just revenue.

While hotel owners don’t need to be heavily involved in these types of day-to-day operations, there is a huge opportunity for them to communicate overall hotel revenue goals to senior management. This kind of open communication can directly influence the strategic role of the revenue manager.

Consider this scenario: The hotel in question is a new asset and the owner is interested in making a quick return on the investment – intent on selling the hotel after a couple of successful years. Communicating this plan allows the hotel team to focus their strategy around achieving that objective.

2) The operational opportunity

Hotel owners have a huge operational opportunity to understand how accurate revenue management forecasts can not only positively influence their property’s profits but also help in the planning of staffing levels and inventory.

Accurately anticipating demand allows the hotel to allocate staff across departments in response to low and high periods of demand. This helps optimize wage costs and also increases guest satisfaction since departments are staffed to handle the flow of guest traffic.

Detailed forecasts also help anticipate expected demand in restaurants and spas – so the levels of perishable inventory (such as fresh food) can be accurately ordered, with waste minimized.

3) It’s all business. It’s just not always good business.

Rather than only focusing on occupancy levels, the hotel’s average daily rate (ADR) and revenue per available room (RevPAR) are good financial indicators of hotel health and have a direct flow through to bottom-line performance.

To help improve a hotel’s RevPAR or ADR, the right customers need to be attracted at the right price. Revenue management technology can provide analysis in identifying the highest valued customers.

Hotels can be tempted to sell out their rooms to lower rated business, but they end up losing out on higher rated business that would have stayed more nights and made them more money.

This is a complexity of revenue management that owners may find difficult to appreciate because it may seem counterproductive to turn down any kind of business. Trusting forecasts and market pricing will demonstrate over time that turning down the wrong business can lead to significant increases in revenue.

4) Does timing really matter?

Investing in revenue management technologies from an early planning stage – even before a property opens its doors for business – is important.  When effective revenue management is established in the early stages of a hotel’s lifecycle, it informs everyone about the hotel’s direction and how it’s going to get there.

The investment stage is the ideal place to introduce revenue management since it can be capitalized to its fullest through feasibility studies, revenue projections and the resulting flow-through. It can further be used to set strategies and establish a long-term action plan. However, any time in the lifecycle is a good time to start taking advantage of revenue management.

There’s a huge opportunity for hotel owners to take an active interest in the principles of revenue management and its effective implementation at their hotels. These four opportunities will help owners begin maximizing their returns and increase the lifetime value of their hotels.

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NB: This is a viewpoint by Brian Douty, chief financial officer at IDeaS Revenue Solutions. It appears here as part of Tnooz’s sponsored content initiative.

NB2: Image by Shutterstock

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About the Writer :: Sponsored Content

This is the byline under which we publish articles that are part of our sponsored content initiative. Our sponsored content is produced in collaboration with industry partners. The views expressed do not necessarily reflect or represent the views of tnooz, its writers, or partners.



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  1. Lukas Kakalejcik


    as I work for the company that tries to maximize hotel revenue, I truly love the post. However, we developed some simple additional tactic that can increase the revenue even if the hotel is small and have nothing to offer. If hotel use mobile application and is a friend with local service providers (ski centres, restaurants, etc.), it can promote their services for commission. Actually I wrote the post about it:

    I am truly interested in your opinion and will be glad for any answer. Thank you in advance.


    Lukas Kakalejcik

  2. Susan Barry

    I’d love to see a case study about revenue management on the events and F&B side. I’ve encountered a lot of revenue managers who are intimidated by this area of our business. We all benefit from focusing on profit; it would be great to see examples of how this is best executed outside the guest room sandbox.

    • Sean O'Neill

      Sean O'Neill

      Great idea, Susan!

    • Anna Marie Miller

      Hi Susan,

      That’s a great point!

      I work at IDeaS Revenue Solutions and one of the things we work with clients on is exactly that – extending revenue management beyond guest rooms into the entire hotel organization. We talk a lot about (and have products designed for) total revenue performance, function space revenue management and group management.

      We do have quite a few blog posts talking about the importance of revenue management in function space. If you’re interested in reading more, feel free to head on over and check it out. Here’s a specific post about revenue management in function space:

      It’s exciting to see the principles of revenue management becoming embedded in the hotel culture!


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