It is never easy convincing hotel owners and senior management to invest in new systems and tools at budget season. Faced with challenging operating conditions due to global inflationary pressures, some Australian hoteliers may even look to consolidate costs and pull-back spending in 2024. Nevertheless, it is vital that local property owners and investors alike understand that any hotel without advanced, automated technologies will be operating at a severe disadvantage—and that “technical debt” can compound over time.

In the past when hoteliers have looked at investing in their business, they have focused on remodelling or renovation work. The rationale for this is to make the property more attractive to guests and support an increase in product pricing based on improved market positioning. However, while maintaining the physical appearance of a property is clearly important for guest satisfaction, what should not be overlooked is how a hotel’s digital infrastructure is just as critical in attracting guests and growing revenue.

The case for revenue management this budget season

In a competitive environment, where every pricing decision counts, hotels need a way to ensure they price themselves correctly and minimise operational costs while attracting the right guests at optimal rates. That’s where revenue management technologies can make a significant difference.

Revenue management’s goal is to price a room or service so it produces the most overall revenue and, in turn, profitability. But to operate profitably, hotels need to accurately price a multitude of different rooms through various channels, across different days, and types of guests. Put simply, hotel management teams must process far too many data points to manually analyse and act on these accurately in real time. To effectively manage all these data points and decisions they need the assistance of an automated revenue management system. 

Revenue management technology utilises advanced algorithms and data analytics to forecast demand more accurately, taking into consideration influencing factors like historic seasonal interest, sporting or cultural events, or economic changes. By concurrently analysing historical data, market trends, and current booking patterns, hoteliers can adjust their pricing strategies to optimise occupancy. And with dynamic pricing capabilities, a property’s prices can be automatically updated in real-time, ensuring that the hotel always offers competitive rates relative to its competitive environment, driving demand and revenue.

Hotel owners rely on revenue management

A special report recently commissioned by IDeaS, “Unlocking Hotel Performance: The Power of Revenue Management Technology Today,” offers some highly relevant perspectives this budget season. It includes key insights from leading hotel owners and investors on their perspectives on revenue technologies, the role of artificial intelligence in hospitality, and how technology is reshaping hospitality commercial organisations.

The report outlines how:

• Hotel owners are increasingly relying on revenue management tactics to drive profitability: Inflation and other economic pressures may naturally lead some hoteliers to pursue cost-cutting measures to improve profitability, but many survey respondents viewed revenue management technology as both the best and fastest way to drive improvement in net operating income.
• The importance of revenue technology is growing: The relatively turbulent recent past and the blistering pace of AI advancement are shifting revenue technology from a “nice to have” to an essential tool for success, with 71 percent of surveyed investors saying revenue management technology has become more important over the past three years.
• There is high investor satisfaction with revenue management software: Hoteliers are largely happy with their revenue management software investments, with 83 percent of those surveyed describing the ROI for revenue management technology as “high” or “very high.”

Hotel leaders are focused on profitability in 2024

A fully occupied hotel doesn’t always equal a profitable hotel. Without revenue management technologies, hotels can easily fall into the trap of selling out to lower-rated business, thereby leaving money on the table from higher-rated business opportunities. To identify guests with the highest long-term profit potential for a property, hoteliers need revenue and pricing systems that take a holistic view of their guests’ activities, not just their room spend.

Moving away from occupancy goals to focus on higher profitability is an area of focus for revenue leaders such as Jason Nelson, an experienced revenue leader at luxury resorts in the US, who commented at the 2023 NYU International Hospitality Industry Investment Conference, that, “The profit and loss statement was something that I was always sort of aware of, but it definitely wasn’t something that necessarily drove me. I just wanted to drive occupancy. But recently, I really found myself revenue managing to labour constraints and supply constraints and having to think about the business in a very different way. That meant setting aside wanting to reach maximum capacity and focusing on what is the maximum capacity that my team can handle.”

Peachtree Group CEO, Greg Friedman, also observed that revenue management is central to hoteliers being able to maximise profits: “The most critical side of operations is revenue management and driving top-line revenues. If you don’t do revenue management well, you’ll miss opportunities for higher rates, and higher rates matter because they lead to higher profitability.”

Invest in your business’ future

Investing in revenue management technology is a critical step for any hotelier seeking to maximise profitability and stay competitive in the Australian hospitality industry. Beyond setting accurate rates and enhancing revenue performance, revenue management technology also provides detailed insights and reports that help hotel owners understand their business performance, identify opportunities for growth, and make informed decisions, now and into the future.

For more information on how technology is reshaping the commercial operations of hotels from global hospitality leaders, please visit: https://go.rev.ideas.com/the-bigger-picture

Click Here: A special report recently commissioned by IDeaS, “Unlocking Hotel Performance: The Power of Revenue Management Technology Today,”

Written by: Jurgen Ortelee, Managing Director - APAC, IDeaS Revenue Solutions

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