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3 Misconceptions About Hotel Revenue Management Systems


The direct and indirect benefits of a Revenue Management System are plenty, as are the myths surrounding this concept. Unless these myths are dispelled, they pose a severe threat to the long-term success of hotels. The capabilities of such a tool cannot be replicated by any other system nor will manual intervention help since the algorithms are highly advanced. There can be hundreds of factors that influence hotel room prices and the fluctuations. So, with this blog, we hope to dispel three most common misconceptions about hotel revenue management. Let’s get straight into it.

MISCONCEPTION # 1. Mine is a family run hotel. I don’t need a Revenue Management System.

This is one of the biggest and most common misconceptions surrounding RMSs. Whether you are a 1000-room property in the heart of Las Vegas or a three-room family-run vacation home in a remote location, some problems are common to all property types. Occupancy is one of them. Pricing, competition and seasons are a few others. Given that a room unsold for a day can never be sold again, time is of the essence when it comes to selling every single room you have on the inventory.

You may have only seen or known big hotel chains depending on Hotel Revenue Management Softwares to forecast demand or for pricing strategies, etc. And you aren’t wrong. There are players in the market who cater to the big, multi-chain properties but there are also those players who cater to small-scale accommodations. There are platforms that offer an entry-level version of the technology to smaller hotels and a much more advanced version to the larger ones. There is a solution out there for every hotel type, regardless of size. The point is that the tool is capable of doing so much more than we can manually gather or put together. This is why it is necessary for small hotels to invest in one too!

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MISCONCEPTION # 2. My property is barely a month old. I don’t need a revenue management system.

This is one of the most common mistakes in hotel revenue management. When do you think your job as a hotelier begins? The day you open your doors to your first guest? The day you register your hotel? When you first break-even? No. Your responsibilities, as a hotelier, start the day you decide to run a hotel. Every single decision you take from day 1 will play a role in your long-term success. The site you choose for the property, the layout of the hotel, your target segment, your competition, your strategy to tackle competition, the kind of services you offer, your sales strategies – all of this will have to be sorted out beforehand. And whether you threw open your doors to guests a day ago or two months ago, the laws of revenue management will apply to you just by virtue of you being a hotel owner!

A good Hotel Revenue Management tool will give you precise demand forecasts, provide detailed competitor analysis, project the best price no matter what the situation is, increase revenue by room type, help you understand the role of online reputation in price determination and so much more! The sooner you adopt a revenue management tool, the more structured and efficient your business will be.

The other important factor for relatively new hotels is occupancy. Offering the best price to your potential guests will entice them to make a reservation with you, which is one of the biggest challenges for new hotels. A Hotel Revenue Management software will prove beneficial this scenario as well.

MISCONCEPTION #3. I have a revenue management system. I don’t need any other systems.

Yet another classic Hotel Revenue Misconception. The working of the hospitality industry is a perfect example of how multiple systems come together as one, to ensure that the hotel functions seamlessly. Each system works like a cog in a machine, where even if one cog fails, the machine might come to a halt.

In the same fashion, for a hotel to run smoothly and successfully, there are several systems not only working individually but also collectively. The PMS is connected to Reputation Management tools, business intelligence tools, booking engines, payment gateways, POS management tools, accounting tools, an email marketing tools (perhaps to announce your prices to your potential guests!) and so many other integrations, which makes your job as a hotelier easier. The Hotel Revenue Management software is no exception.

In isolation, it can only do so much as it cannot interact with the other systems to source information. You will also have to do a lot of work manually if you rely solely on a revenue management tool. What you need is the complete package, which begins with a Property Management System.

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