Hotel Revenue Management

What are the next trends in hotel revenue management?

The Cornell University School of Hotel Administration has released a comprehensive new study which details its predictions for the future of hotel revenue management.

The 14-page report is the result of a survey of some 400 revenue management professionals. While it acknowledges that hotel revenue management has become more strategic, it also notes that changes and trends have happened gradually over the course of the last six years. As a result, the application of considered revenue management to all hotel revenue streams is still a work in progress rather than a fait accompli – much like the use of social media and mobile technology as distribution channels.

In this post, we’ve rounded up the key trends to emerge from the report.

Trend one: Revenue management will become more strategic and more regionalised

Over 45% of respondents to the survey predicted that revenue management would be managed on a more regional basis in the future, with 31.8% expecting hotel revenue management to be handled centrally. 65% of respondents also felt that revenue management would become more strategic with 77% citing more interaction between those responsive for revenue management and the marketing team as being important.

Trend two: More analytical

Future revenue managers will be more analytical, display strong leadership skills, distribution skills (this could include familiarity with the online hotel reservation system and channels such as social media for example) and communication skills. Having a rooms background will be insignificant.

hotel revenue management

Trend three: mobile technology will play more of a distribution role

The use of mobile technology as a distribution tool has been a subject of much discussion for several years now. When Cornell conducted this same study in 2010 predicted that distribution would occur via mobile devices and social media. Currently, the report suggests that despite this forecast, distribution via social media channels is limited, although networks such as Facebook are being used for promotional purposes to drive traffic to the hotel’s own site and by extension, the online hotel reservation system.

Although the 2010 expectation was that distribution would take place on mobile devices, this is not wholly true today. At present, the customer behaviour pattern suggests that research for travel takes place on a mobile device, but the majority of the actual booking still takes place on a traditional desktop PC. That said, mobiles do facilitate an increase in the volume of bookings, especially last-minute reservations. Moving into 2018 and beyond, 4.64% of the hotel revenue experts surveyed predict that a greater emphasis will be placed on mobile technology. An additional 4.56% expect to see greater integration of revenue management systems with new technologies. There’ll be less emphasis on telephone-based centres and the hotel’s own reservation offices.

Trend four: rethinking performance management

RevPar will no longer be the best way to measure performance moving forwards according to the revenue management experts surveyed by The Cornell University School of Hotel Administration. Instead, what we are more likely to see is that measurement shifts towards gross operating profit per available room (GOPPAR). 33.7% of respondents expect this to become the primary measurement tool for revenue management performance within the next five years.