With only a few days to welcome the year of modern business, 2020, it’s high time that we shed light upon the basic opportunities and key challenges that revolve around the revenue management system.
It is no news that no business or industry can flourish without an infallible management system, making it vital to possess a good knowledge about the subject if you are a tycoon.
If we talk about the hotel industry in particular where the revenue management system plays an utmost significant role due to its ever-growing standards and never-ending consumer base, it allows the owners to anticipate the actual demand and optimize price and availability accordingly to maximize financial profits.
To carry out revenue management perfectly and in an effective manner, a business must also discover a way of forecasting consumer spending habits and demands for informed adjustments. For example, as in the case of the hotel industry, existing bookings, past data, dark data, and even weather forecasts can be utilized to form a de regle management strategy.
Why is Revenue Management System Important?
Continuing with our example of the hotel industry, keeping up with a proper revenue management system allows the owner to pave a way for the best use of perishable inventory items, and maximizing the revenue generation in turn.
Also, it allows the decision-makers to make data-driven and informed choices rather than relying on guesswork or instincts.
Hotels, like a lot of other businesses, have predetermined costs, that need to be covered regardless of the number of rooms rented or money generated by guests. Therefore, by utilizing a proper revenue management strategy, hoteliers can ensure that their services and prices are dynamically optimized and also the costs are met correspondingly.
Yield Management VS Revenue Management
Although both these concepts are closely linked to each other, both of them play equal individual importance in allowing the managing committee of a particular industry to maximize the profits through clients.
Yield management is basically a pricing strategy that is commonly utilized by businesses lie air travel, hospitality, tourism, etc. to generate maximum revenue out of perishable inventory.
The Median Clause:
Given that the recent reports suggest a turn of events in the hotel industry. Here, the visible drop in the rate of flight searches can be noticed in various parts of Egypt, Spain, and the UK. The revenue management process can work out as a savior and benefit the struck hoteliers to a good degree.
But since the concept of revenue management is considerably newfangled, it would be unwise to predict its future over the upcoming ten years.
The best approach is to look out for the way that discipline stays ahead in the steps of successful ones.
The Marriott Case Study
Marriott International, with almost 7K properties worldwide, is one of the largest hotel chains in the world. Further, it the largest in revenue terms to date. With active operations in almost 130 countries, Marriott has been on a spree for acquiring valuable brands like Starwood Hotels and Resorts and Delta Hotels.
In 2018, the company signed franchise agreements for more than 800 properties and inaugurated about 500 properties for functional purposes.
Through analytical reports, we can witness the strengthened position of the chain as it ascends to a leading position in the luxury hotel market.
What’s the Secret to Marriott’s Success?
While Marriot is constantly attracting new customers, maintain its legacy and open new markets out front. In addition, it also has sustained the right corporate standards and culture.
The success of the hotel chain depends on the fact that it realizes the importance of data strategy and governance. And, it implements that analysis into its framework to guide its decisions.
A timely and smooth access to quality integrated data drives its decision-makers into providing innovative and effective solutions. And, this makes the experience as smooth and flawless as possible to its clientele.
How Marriott Utilizes Big Data Analytics for Incessant Growth?
Marriot continually records data and tracks the progress of other competitor hotel brands. It does this to identify their streams of revenue beyond the scope of room rentals. And, the scope includes the latest services and facilities that can help them satisfy guests in the local community.
Revenue management still tops off the list of the company’s main areas of focus.
Marriott’s approach to revenue management is Dynamic Pricing Automation. It allows the company to predict and evaluate the patterns of customer demands and behavior.
Even Starwood hotels started implementing this approach back in 2014, just before merging with Marriott in 2015.
Starwood achieved a whopping 5% increase in its per room revenue within a year which is now benefitting Marriott.
What You Can Pick Up from Marriott’s Big Data Approach?
Big data analytics help marketers generate more personalized campaigns and communicate better. This way management authorities can have huge access to unstructured, semi-structured and structured data sources. And, this brings astonishing changes to a company as per its collection, analysis and application.
Marriott has a better understanding of big data analytics than its competitors. They develop their strategies based on transactional activities, third-party demographic data, customer feedback and the usage of loyalty programs. This includes the collection of customer’s profiles, number of kids, type of jobs, etc.
The Final Clause:
Mobile connectivity has become the lifeline of all types of business industries. According to analysis, more than 70% of the semantic search will be based on priorities and individual interests in 2020. This particularly is a piece of good news for consumers. The reason is things, like choosing the right destination and creating a better experience, will become much easier.
With the introduction of management systems like RMS and PMS, pricing and conversions will become more automated and apt.
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For companies and hoteliers who think automated systems like revenue management tools and chatbots are only what luxurious hotels with good spending power can afford. We at Ads and Url undertake to change that thought process.
Studies have shown that the companies that integrate advanced technologies into their systems like revenue management, data analytics, chatbots, etc. They achieve an increased revenue rate of about 6-10 percent easily within a year.
So without any restraint, hoteliers, travel organizations and more must align with this change. And, they should flaunt the opportunities that arrive with this new year.