Latest Trends in Revenue Management

By Lin Grensing-Pophal, Contributing Editor | May 10, 2012

Over the past several years revenue management has become increasingly multifaceted. Hotel operators must juggle promoting properties, driving traffic to websites for online registrations from multiple sources, and predicting future demand, all while strategically managing capacity and pricing. That complexity has been much simplified by an array of revenue management systems that hotel operators in large and small environments are leveraging to their benefit.

Heiko Dobrikow, general manager of The Riverside Hotel (www.riversidehotel.com) in Ft. Lauderdale, started in revenue management with Marriott and first became aware of REVPAR (www.revparguru.com) in 2007. He was “very intrigued by it,” however, he was concerned about relinquishing control. “I was very worried as a GM that we were giving away our decision-making power.” So, in 2007, he made the decision not to go with the system. He was, he says, in his “old, traditional way, thinking that I’m going to know more than a system does.”

In 2010 Dobrikow once again was reviewing systems and met with REVPAR. “They had refined the algorithms and had a much better track record,” he says. “I was receiving very favorable reviews on their system.” What impressed Dobrikow this time around, was the fact that the system provided him with the ability to set the boundaries in terms of what he wanted to sell.  

In addition to the forecasting capabilities and the ability to analyze booking patterns, Dobrikow has found big returns in being connected to “potentially more than 500 online travel agencies.” The previous system had required Dobrikow’s revenue manager to manage the extranet from each different online travel agency through its own portal. “This technology has given us a one-stop shop system, where I don’t have to go through all of these different portals,” Dobrikow reports. “I’m actually controlling my rate just through one system.”

John Martin, director of revenue/reservations with Hotel ZaZa (www.hotelzaza.com) in Dallas, voiced similar concerns about the balance between technology and human beings where revenue management — and hospitality management in general — is concerned.

While technology tools have streamlined operations and provided intelligence that can be used to make critical strategic decisions, Martin fears the loss of an important personal touch in the industry. “If you are a business that relies on algorithms and systems to automatically manage your revenue, you’re leaving money on the table,” Martin warns. “In my own experience doing this for 27 years now, it is impossible to not have human elements in fifty percent of revenue management — for us it’s more like 70-80 percent.” Martin believes that there are simply too many variables for revenue management to be a perfect science and, he adds, given that this is the hospitality industry, you will never be able to remove humans from the equation.

Despite his trepidations, like Dobrikow, he has found many benefits through the use of a revenue management system — in his case OPERA from MICROS (www.micros.com). The system is the basis for two regular weekly meetings that provide Martin and his colleagues with an opportunity to view real-time activity, make projections and compare activity against historical data.     

Weekly reviews also involve a careful review and analysis of the information to check for any errors that may have occurred through inaccurate entry or unauthorized comps or discounts, for instance. The system also allows comparisons against competitors. Martin is proud to report that despite being a two-property, boutique, independent, Hotel ZaZa outperforms its competition 90 percent of the time on the STAR report from STR Global (www.strglobal.com). “We’re very revenue-oriented here at the hotels,” Martin reveals. The ability to rely on a revenue management system like OPERA is critical to the hotel’s successful operation, he says.  

Smaller facilities may feel the direct impact of revenue management even more than larger counterparts. Rich Newman is the general manager of Gainey Suites Hotel (www.gaineysuiteshotel.com) in Scottsdale, Ariz., an all-suites property that blends business and leisure segments. Newman has been using Maestro (www.maestropms.com) for revenue management since 2004 and he has found the two-way interface and tie-ins to social media particularly useful. Since implementing Maestro, Newman is proud to report that Gainey Suites has achieved a number one rating in TripAdvisor.com. “The integration of the property management system with social media platforms as well as our website has given us the opportunity to tell our story which is truly unique,” he says.     

“[Maestro is a system] that enables us to be more competitive and nimble and gives us the ability to leverage the unique aspects of our property,” Newman notes. “We’ve been able to use the yield management system, we know our strategy patterns, and the yield management system enables us to look ahead and set parameters for each room type, segment, and rate type. It’s very easy to use. Everything is right there at our fingertips and everybody is on the same page.”

Ease of use was a top concern for Newman when selecting a system. He admits that it’s easy to get distracted by “all the bells and whistles,” but the bottom line is that simplicity matters. “I think you have to find that perfect balance between the human factor, the technological factor, and the usability for your staff,” Newman asserts.

With so many options available, finding the perfect combination for a particular property might seem like a daunting prospect. Dobrikow, who went to the extent of actually driving to other properties to see what systems were in place and how they functioned, stresses that due diligence is important. Though the process was arduous, Dobrikow admits that he picked up tips and best practices that he might not otherwise have gleaned.  As technology continues to evolve, what the future holds is anybody’s guess, but as Dobrikow says, “I’m looking forward to it.”


comments powered by Disqus

ht events

2014 Restaurant Executive Summit