The Advancements in Revenue Management set to Transform Hotel Pricing

The post The Advancements in Revenue Management set to Transform Hotel Pricing appeared first on TD (Travel Daily Media) Travel Daily.

Jurgen Ortelee, Managing Director of APAC for IDeaS Revenue Solutions

As the hotel industry evolves in response to changing consumer preferences and global economic shifts, it becomes increasingly crucial for hoteliers to recognize the value of a diverse business mix. Diversification is not just a buzzword; it is a strategic imperative that can make or break a hotel’s long-term success.

Hotels in the APAC region that rely solely on one or a limited number of revenue streams put themselves at risk during economic downturns or unforeseen crises (such as the recent pandemic). For instance, hotels overly dependent on corporate travel may suffer during a recession when businesses tighten their budgets.

A diverse business mix cushions hotels against such economic fluctuations. A well-balanced portfolio that includes corporate clients, leisure travellers, group bookings, events, weddings, and local markets ensures a steadier stream of revenue throughout the year.

Why pricing for different market segments has historically posed challenges

To capture demand and operate successfully in a disrupted business environment, many hoteliers now rely on a variety of product offerings to secure a more diversified market mix such as extended stay business travellers, limited-service packages, city escapes, loyalty discounts and so on.

In the past, pricing for different segments has posed serious challenges for hotel operators as their Revenue Management System (RMS) could only enable dynamic pricing derived from one rate –their daily rate. Legacy pricing systems also limit the ability to price for extended stays and insist on rigid room type or occupancy-based offsets. Extended stay properties that feature serviced apartments must navigate a tangled web of products by length of stay, while selling their daily rates – which also have their own derived rates, offers and discounts. All this, while managing facility operations and guest experiences.

This poses a challenge where hotel operators need to quickly decide how to capture the highest value bookings with the best possible rate while accounting for the ripple effect the change in pricing impacts have on all the linked products – each with their own fences or restrictions to cater to different market segments. For example, short-stay leisure guests who book a hotel’s daily rate (for stays less than a week) behave very differently from business travellers who are looking to book a serviced apartment for a stay of a month or longer. Conversely, longer staying guests (who are typically more profitable) tend to book longer-stays that overlap a few peak nights and may be penalised with higher rates (and could end up booking elsewhere). In practice, this complicated web of considerations to balance often resulted in flawed revenue management decisions.

Capitalise on demand from guests with varied requirements

Hoteliers need new technologies that allow operators to price their base rates independently from one another; and for the linked discounts/add-ons to be optimised according to their unique demand patterns while taking the properties overall demand and revenue opportunities into account. The business challenge is to be able to automatically and simultaneously optimise and price the daily flexible rate (often displayed for the retail market) and other independent products (such as extended stay monthly rates) that are only displayed/sold to a very specific kind of guest.

IDeaS’ G3 RMS new Independent Products feature helps hotel operators capitalise on demand from guests with varied requirements for the different accommodation types offered at their property. Independent Products allows for the separate optimisation and pricing of products, resulting in maximised revenue while maintaining rate hierarchy and product positioning. In an industry first, the system allows hoteliers to price and optimise in real-time while eliminating the complex web of rules, time-consuming manual rate management, and static offline pricing that often leads to an increased risk of mispricing.

With the newly released Independent Products feature working in concert with Linked Products, hoteliers now have new levels of flexibility to enhance rate management and streamline distribution.

Now, G3 RMS is not only capable of leveraging deep learning capabilities to achieve a revenue-optimized rate structure for multiple products across all occupancy dates and accommodation types, but also automatically adjusts pricing for those products’ associated rates (like advanced purchase or loyalty member discount rates.) This helps prevent the unnecessary loss of revenue that comes with using a static discount rate.

Capture the right bookings and drive revenue with an advanced RMS

A combination of changing booking trends and increasing competition is forcing hotel operators across the APAC region to rethink their business mix and approach to pricing. Hoteliers must create a more diverse mix of business today to mitigate the risks associated with economic fluctuations, enhance their competitive edge, foster innovation, attract top talent, and ensure long-term sustainability.

New advancements in RMS technologies are major upgrades on legacy pricing approaches. With solutions like Independent and Linked Products, hoteliers can now easily capitalise on the unique demand patterns of all their key base products to capture the most valuable bookings and drive new levels of revenue for their business.

For more information from IDeaS, please visit: www.ideas.com

The post The Advancements in Revenue Management set to Transform Hotel Pricing appeared first on Travel Daily.

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