Revenue Management

Revenue management, especially for hotels, is the science of making sure that rooms revenue is optimised. This is particularly important when it is realised that bedrooms are often the most profitable area of a hotel’s operation.

In the current marketplace, with multiple distribution channels, pressures to maintain “rate parity” and ever strong competition, a hotel needs to be able to flex rate very efficiently. Either flexing upwards during periods of peak demand to achieve a higher average rate, or downwards to attract volume during periods of low demand. Whatever the strategy for a particular day, the objective is to improve rooms yield (REVPAR – revenue per available room) – that is to say the amount of revenue received for every available bedroom. Average rate and occupancy levels are important measurement tools, but more important is an understanding of the relationship between the two.We can support hotels in :

  • Full review of historical data highlighting areas for improvement
  • Rate review, including competitor rate analysis
  • Set up monitoring and reporting tools
  • Ensure understanding of the revenue management principles within the hotel team
  • Develop a selling strategy for the front office team
  • Support regular measuring and monitoring of results

The approach is to take a scientific look at demand on a daily basis, and introduce a selling strategy that delivers a good base of business (eg from local corporate markets, GDS or groups and tours) enabling you to then flex the rate upwards, depending on the expected demand for that particular day. Once the basics are in place, there is then an opportunity to look more in depth at measurements like TREVPAR (Total Revenue per Available Room) or ProfPAR (Profit per Available Room) to gain a deeper understanding of a hotel’s performance, or applying revenue management principles to other revenue streams in a hotel, for example to Food and Beverage or Conference and Events.