Revenue management in hotel marketing is key to ensuring sustained and growing success for any style and str rating of accommodation.

Here at Digital Hotelier offer a variety of hotel revenue management services designed to amplify your efforts in this area, but it’s crucial every hotel marketer also has a working knowledge of the basic concepts behind revenue management. Read on for a quick guide to what it means for your hotel.

Put simply, revenue management is a way of predicting consumer demand for what you are selling. It applies to many different industries, but as applied to the hospitality industry, it concerns weighing up the reasons and predictors for why your hotel guests may or may not make a booking. In an analytics sense, it applies a certain discipline to the prediction of consumer behaviour, in an effort to maximise revenue growth.

Revenue management’s origins began in the aviation industry, but the discipline was swiftly adopted by other areas once they realised its key concepts could be applied to a number of different business sectors and activities.


Efficiency of Service

Conducting hotel revenue management effectively enables hoteliers and hotel managers to take control of their own economic destiny to some extent. It seeks to take into account all the possible variables which could either ensure a sale or prevent you from selling a room to the right customer. By ensuring the correct ‘goods’ meet the correct customer at the right time, you maximise the efficiency of your revenue management and meet the potential of your establishment’s resources.

The satisfaction of your customer base is accepted as one of the key ways of defining the success of your revenue management. After all, a happy customer is more likely to participate in revenue-enhancing activities, such as spreading the word about your hotel via online reviews, forums or word of mouth. They will also be more likely to make a repeat booking than a dissatisfied customer. Linking back to revenue management, when your customer is connected with the right room and therefore made to feel their custom is valued, they are more likely to show greater levels of satisfaction with your service.

Hotel revenue management contains many variable factors which require careful analysis, including ‘big’ data such as past occupancy rates, customer segmentation, target audiences, customer satisfaction levels and other factors which could affect your revenue potential. Whilst formerly these factors would have been monitored internally within the company, more and more hoteliers are seeking to outsource with a revenue management system (or RMS). 

Revenue management is not a quick fix solution, but it can provide a long-term way of addressing occupancy and efficiency problems within your hotel. All profitability factors are taken into consideration to ensure that the business is consistently drawing in revenue whilst realistically assessing ways to make the most of peak times, and cope with a low season pricing plan.