Our latest guest post comes courtesy of Booking Suite's Idan Velleman, who digs deep into the many benefits technology can offer the modern hotelier when it comes to setting and managing competitive room rates.
For any property owner, managing prices is a time-consuming business. You need a lot of data to help you do it, but at the end of the day, the final decision on pricing is up to you. There’s an art and a science to setting rates, and chances are, you rely on a little of each.
To start, there are so many factors to consider. You have to take into account your competitors’ rates, your historic and near-term occupancy, your reservation history, local events, and your unique business strategy. Where does all that data come from? For many properties, it arrives on paper or via a downloaded Excel spreadsheet. You take all of the contributing factors mentioned above, stack them up against each other, and plan your rates. There’s the science.
For most properties, however, managing rates isn’t all science. After considering the data, you also weigh-in with your personal experience and history. After all, you know your property better than anyone. The data informs decisions, but it doesn’t make decisions for you.
And that’s how it should be. You need to retain control. Given this, the idea of using technology to aid your revenue management strategy might be unsettling. It might also seem like the safer bet to continue to manually implement your revenue strategy all by yourself.
However, we at Booking.com are firm believers in the potential of technology to help properties better run their businesses. In this article, we’ll take a look at how technology can help you improve and run your revenue management strategy. Most importantly, we’ll also examine how technology gives you more control and flexibility when it comes to setting the right prices for your property.
The case for technology
Revenue management systems save you time. If you don’t have software to help, setting rates can take up a good portion of your day. You might be a small business owner doing it on your own, or lucky enough to have a member of staff dedicated to rate management; however you do it, the effort is worth it, because setting the correct price is vital to your business.
Just imagine, though, if you had the ability to automate the tedious elements of the data collection process that are part and parcel of setting rates. Revenue management systems do just that, by collecting and analysing diverse data sets relevant to your property’s rates. The majority of properties do not have the time or knowledge to consider vast amounts of data as a whole, but a revenue management system can use such information to recommend optimal rates, which the hotelier can then push out through their channel manager with ease.
How it works
But how exactly do revenue management systems work? Which factors does this technology take into account when making rate recommendations? Most revenue management systems (including the BookingSuite RateManager) operate using advanced algorithms to analyse factors such as your unique PMS data, occupancy rates, market demand, competitors’ rates, events, and more, to give you relevant rate recommendations.
Revenue management technology streamlines work which usually takes hours into a matter of minutes. Ultimately, these rates are optimised for your unique property and market, and may help improve your bottom line.
Stay in control
Above all, revenue management software still gives you control when you need it most.
Let’s consider an everyday example not related to revenue management. Nowadays, many people rely on their smartphone’s map for directions while walking around a city or driving to a new destination. Complicated software works behind the scenes of your phone’s map to give you suggestions about which route to take. But other factors may come up on your journey. Let’s say the GPS tells you to go a certain way, but you happen to know that making a left turn at that intersection is difficult at rush hour. You therefore adjust your route, so that you can turn left when you have a traffic light to help.
Sometimes, it makes sense to follow your GPS' instructions at every single turn. Other times, however, you need to adjust your decisions based on your own knowledge and expertise. In such moments, we're able to pause the directions, change them, stop and review the map. We can take time to consider the best route.
Using technology to optimise your rates is similar to the example above. You still have the final say over your prices, because you know your property, your guests, your competitors, and your strategy best. That art will never leave your side, but it's a science that you can automate, and that will make your job easier and your hotel more profitable.
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