Have you ever watched the TV show called The Price is Right?
On the show, there’s a game where you have to guess the price of typical household goods, from packaged food to cleaning products. The game works because the guests that go on the show are just regular people who go grocery shopping for themselves all the time, so they should have a good idea of what prices are for typical goods that would go into their cart.
But there’s a hilarious segment on The Ellen Show where billionaire Bill Gates has to guess grocery store prices for a variety of items. The humor lies in the fact that Bill, being a billionaire who never has to think about his groceries, has no idea what the typical person would pay for, say, a banana.
It’s a lighthearted and fun game, but it really highlights the difference in lifestyle between someone who has a lot of money and the typical person. In a way, Bill is slightly foolish for not even knowing the ballpark price of a package of Rice-a-Roni or Tide Pods.
Now imagine this same scenario but with revenue management for your hotel. A revenue manager who has no idea about what rooms in their area should cost, how much they should charge a popular artist to play at their venue, or what an appropriate discount would be in a given situation would succeed in making themselves look very foolish indeed—and the consequences would be more than just a few chuckles at their mistakes.
Just like Bill couldn’t pull accurate prices for groceries out of thin air when he had no knowledge of these prices beforehand, a revenue manager for a hotel can’t determine pricing without data. That’s where revenue management software for hotels comes in.
With a hotel revenue management solution, revenue managers can take advantage of the vast amounts of data their hotel creates daily, plus external market intelligence to set the right prices for rooms, events, and attractions.
In this article, we explore more about the importance of revenue management software in hotels, including its benefits and how it can improve your hotel’s cash flow.
What Is Revenue Management Software in Hotels?
Hotel revenue management describes the process in which accommodation providers in the industry use data and analytics from price-affecting factors, such as guest behavior and market demand, to forecast and develop opportunities to maximize revenue generation for the business.
Revenue management hotel software is the tool that aggregates all of this important data, analyzes it, and provides valuable insights in the form of data visualizations and reports that hoteliers can use to make strategic pricing decisions.
Types of Hotel Revenue Management Tools
There are a variety of different types of hotel revenue management tools, as outlined in the table below and expanded upon in the following sections:
| Hotel Revenue Management Tools | Function |
|---|---|
| Dynamic pricing | Allows automated price setting based on a wide range of important data points |
| Commission management | Automatically calculates the appropriate commission amounts for OTA bookings and handles payments |
| Upselling | Provides upsell offers to customers including room upgrades, stay extensions, and more |
| Reporting and analytics | Gives revenue managers and hotel owners valuable data on channel performance, commissions reporting, and more that influence revenue generation |
Dynamic Pricing
With dynamic pricing, revenue managers or hotel owners simply need to set their minimum and maximum rates and allow the system to do the rest. The main goal of dynamic pricing is to improve occupancy rates during slow periods by adjusting room prices accordingly. Newbook’s dynamic pricing uses a combination of AI and machine learning to read vast amounts of data, glean insights from it, and use those insights to understand the patterns and trends that affect prices, including guest purchasing behavior. It then uses this information to either automatically change prices or provide suggestions that the revenue manager can choose to act on.
Commission Management
Different OTAs have different rates that they charge hotels for selling their hotel rooms (successful bookings through their websites). This is usually a fixed percentage of the room rate and can vary widely depending on factors like location, property type, cancellation policy, etc. For example, Booking.com’s commission structure can be quite complex, considering the above plus the pricing you set. The average commission amount that the company charges seems to be between 10–25% per booking. What commission management does is allow you to track these commissions to understand how much a certain channel costs you.
Upselling
Being able to offer the right price to the right customer at the right time is highly valuable, but so is presenting them with the right additional offers. Newbook’s hotel revenue management tool makes it easy to offer multiple rates through packaged deals, such as a nightly rate with the addition of a romantic dinner or attraction tickets.
Reporting and Analytics
It’s important that you understand exactly how your business is or is not generating revenue, so you can capitalize on what works and laser in on areas that need improvement. A built-in reporting and analytics tool for revenue management hotel software is essential because it helps you keep track of various data points and allows you to make strategic business decisions that are data-driven.
Benefits of Using Revenue Management Software for Hotels
There are a variety of benefits that revenue management software in hotels can provide, including enhanced operational efficiency, better inventory management, and ultimately increased revenue potential.
These benefits are summarized in the following table and described in more detail in the sections below:
| Benefit of Revenue Management Systems | Key Points |
|---|---|
| Optimized pricing with less work | – Considers a wide range of data points using an algorithm to set prices dynamically – Reduces manual administrative work – Revenue managers can control the level of automation |
| Improved occupancy management | – Accurately predict future demand using multiple data points – Maximize inventory fulfillment – Discover opportunities for better sales |
| Enhanced efficiency through automation | – Allows revenue managers to focus on more high-level tasks by taking over the repetitive ones – Aggregates data from multiple sources in real-time – Tracks commission from OTAs – Automatically generates invoices |
| Centralizes revenue with hotel management | – Marries your tech stack with your revenue management – All finances are centralized, secure, and accessible |
| Optimizes distribution channels | – Helps you discover which OTAs are worthwhile for your business and which are not – Tracks how much you’re paying in commission to each OTA |
1. Optimized Pricing With Less Work
It’s tough for revenue managers to determine pricing manually. Sifting through spreadsheets and different data sources from various programs that the hotel uses to glean insights from it takes time and energy that could be spent on more high-level tasks. Implementing revenue management software in hotels helps these professionals combine their expertise with technology, as the software employs sophisticated algorithms to analyze market demand, competitor pricing, historical data, and other variables. This enables hotels to set dynamic pricing strategies, adjusting rates in real-time to maximize revenue based on demand fluctuations, seasons, events, and other factors.
With Newbook, you simply set your maximum and minimum pricing within the software and let the algorithm do the rest.
2. Improved Occupancy Management
By analyzing the hotel’s guest-related patterns and trends and combining that with market intelligence, revenue management software in hotels can accurately forecast future demand. This allows the hotel to maximize inventory fulfillment, even during slower periods, and also minimizes the risk of overbooking or underutilizing inventory during peak times, ensuring optimal room occupancy.
3. Enhanced Efficiency Through Automation
With revenue management software in hotels, the whole process of managing revenue generation efforts is streamlined, allowing revenue managers to reduce their focus on tedious administrative tasks like aggregating data and focus more on revenue-generating campaigns and processes.
For example, with Newbook, dynamic pricing automation helps you set better prices for your hotel and has automatic invoicing functionality to serve short- and long-term guests. The software’s commission management feature automatically tracks commissions owed to OTAs and handles payments.
4. Centralizes Revenue with Hotel Management
Most hotel revenue management systems seamlessly integrate with property management systems (PMS), booking engines, and other software in your hotel’s tech stack to provide a centralized view of every aspect of your property and how each piece of the puzzle works to generate revenue.
However, it’s even better when these systems are offered in one comprehensive solution. Newbook offers a full suite of tools, including a PMS, booking engine, central reservation system, and revenue management, giving you a 360-degree view of how your property generates revenue without having to contend with different programs.
Precisely the tools you need, all in one hotel management software
Newbook is your all in one hotel management software. Talk to us today to learn how you can improve operations and increase bookings for your business.
5. Optimizes Distribution Channels
Many accommodation providers use multiple OTAs to promote their business online. However, each of these companies takes a commission for each successful booking, and the amount they take can vary greatly between providers. Revenue management solutions are effective in helping you determine which OTAs you should keep and which you should cut by tracking the booking rates and commissions paid out to each OTA.
Factors to Consider When Choosing a Hotel Revenue Management System
There are a ton of revenue management software for hotels available on the market, making choosing the right system for your business a difficult task. But with some important considerations in mind, the process of selecting the right piece of software can be made easier. These considerations include:
1. Pricing Strategy Support
Whatever your hotel’s pricing strategy, the revenue management system that you choose should offer flexibility and comprehensiveness to support that strategy. Dynamic pricing functionality is a must, alongside other features like length-of-stay pricing. Dynamic pricing should consider essential factors such as market demand, seasonality, and competitor rates and be able to gather other important insights that inform pricing decisions from internal hotel data.
2. Ease of Use
Incorporating a revenue management system into your hotel that’s easy to use is essential. Not only does ease of use increase employee buy-in, but it also ensures that training and onboarding are seamless. The system should have a straightforward user interface and logical navigation, and it should clearly explain how to facilitate the integrations and connections that the system requires to gather the data it needs.
3. Automation and Efficiency
A good revenue management system automates routine tasks such as rate updates, inventory allocation, and real-time distribution across booking channels. With this functionality, you don’t have to worry about one channel having incorrect pricing or reservation dates, eliminating the risk of double bookings and having to perform cancellations.
4. Scalability and Adaptability
Choose a system that can scale with your business and adapt to different property sizes, types, and market conditions. The revenue management system should accommodate the evolving needs of your hotel and support future expansion.
5. Vendor Reputation and Reviews
Research the reputation and track record of the software vendor. Read reviews, seek recommendations from industry peers, and assess the vendor’s reliability, responsiveness, and commitment to customer satisfaction.
Why Newbook Is the Right Hotel Revenue Management Solution
Newbook stands as the comprehensive revenue management solution for accommodation businesses, consolidating crucial software components like property and channel management, online booking, payment systems, and a robust reservations platform into one cohesive software suite. This integrated solution serves as the backbone of your revenue management efforts, simplifying your backend processes.
What sets Newbook apart from other solutions?
- Emphasis on collaboration: Newbook treats its customers as collaborative partners, delivering unwavering support from onboarding and beyond. The focus remains on ensuring that customers derive maximum value from the software.
- 99.99% uptime assurance: While many software providers offer a 99% uptime guarantee, the difference of .99% is substantial. A 99% uptime means potential downtime of 3 days, 15 hours, and 39 minutes, whereas a 99.99% uptime reduces that potential downtime to a mere 52 minutes and 35 seconds. This stark contrast highlights the reliability Newbook ensures for its users, making the impact of any downtime significantly minimal.
- Continuous customer support: The relationship with Newbook extends far beyond the purchase. Customers receive ongoing support, recommendations for improvements, and prompt responses to inquiries, ensuring a seamless experience throughout their usage.
Expanding Your Hotel Revenue Management Platform with Integrations
Newbook also offers the flexibility to enhance its capabilities through additional functionalities available in our integrations store, allowing customization tailored to your business needs.
Online Payments and POS
Enabling online payments and Point of Sale (POS) features within Newbook is a seamless and efficient process. You have multiple out-of-the-box integration choices, such as:
- Newbook Payments: Incorporates EFTPOS terminals, gateways, BPAY, and a range of other payment methods.
- Clover: Provides intelligent, tailored POS devices enabling payment tracking and facilitating guest charge processing.
- Bepoz: Delivers a diverse array of comprehensive retail POS solutions.
Business Intelligence
Business intelligence tools are imperative for deriving data-driven insights that drive informed decisions across operations, policies, and procedures that directly affect revenue. Out-of-the-box business intelligence integrations with Newbook include:
- Calumo: Provides intelligent dashboards, reporting features, and forecasting tools to empower decision-making.
- Qlik: Utilizes in-memory processing and on-demand aggregations, enabling the discovery of profound insights from data.
- Tiger TMS: Offers specialized middleware tailored for smart devices, facilitating the extraction of intelligence from usage patterns.
Accounting
Accounting tools are essential for managing all of your business’s financial data. Integrating accounting software with your revenue management system is a no-brainer to ensure that financial information is secure and accessible. Out-of-the-box accounting software integrations with Newbook include:
- Attache: A flexible accounting system designed for medium businesses.
- Infobiz: An online trust accounting system that seamlessly integrates with Newbook, and offers features like regulatory compliance, owner logins, and local support.
- MYOB: Offers quick payment reconciliation, payroll and accounting management, and more
- Ozbiz solutions: Connect other software like AttacheMYOB, or Reckon to Newbook for the ability to manage financial data in real time.
- Quickbooks: When integrated with Newbook, you can send transactions to Quickbooks automatically each day, making reconciliation of your accounts faster and easier.
- Reckon: Robust software that helps you manage finances, payroll, and inventory.
View all of our integration partners and discover how you can enhance your Newbook experience.
Facilitate your own connections with the software in your hotel’s tech stack by referring to our comprehensive developer resources.
How to Increase Room Revenue With Newbook’s Hotel Revenue Management Platform
There are two main ways that you can use Newbook’s hotel revenue management platform to increase your hotel’s profitability:
- Utilizing the channel manager functionality to connect with multiple OTAs and make management of these OTAs quicker and easier
- Setting up dynamic pricing
With more and more people booking online, and a majority of those individuals preferring to book through OTAs (at least the first time they book with you), ensuring that you’re listing with multiple OTAs to expand your reach to your target market is essential. Newbook allows you to list multiple properties with multiple OTAs without charging you extra, whereas some channel managers charge you for each listing or for multiple listings with one OTA provider. In addition, you can view analytics data for each OTA, helping you to determine which ones are worth the investment.
These days, revenue managers have too many factors to consider when manually setting prices for an accommodation business. Economic factors, events, market demand, rapidly changing weather patterns, seasonality, and more are important factors affecting hotel prices. Through dynamic pricing functionality, revenue managers can rely on an algorithm to consider different data points and draw patterns and trends from them that can be used to influence pricing decisions. Revenue managers simply have to set minimum and maximum prices for the system to work with so that it can determine the best price for each room within those limits.
How to Streamline Hotel Revenue Automation With Newbook
It’s important to streamline hotel revenue management so that you can keep a pulse on your hotel’s financial performance. A wide variety of factors go into revenue management, and having the information gathered from them go into one centralized platform is essential.
Newbook’s revenue management functionality, in combination with its other features such as property management, online booking, channel management, and centralized reservations, ensures that all of your finances are accounted for, regardless of which system they are coming from. Automation takes care of this task seamlessly by consistently gathering data in real-time so that the revenue management system can analyze it.
It’s also important to utilize external integrations so that every system in your hotel’s tech stack is connected to Newbook’s revenue management system.
Conclusion
In exploring the world of hotel revenue management software, an analogy from “The Price is Right” showcases the importance of data in setting accurate prices. Just as Bill Gates found himself baffled by grocery prices due to his unfamiliarity, revenue managers without data-driven insights risk making costly errors. Revenue management software, like Newbook, bridges this gap by utilizing vast hotel data and external market intelligence to set optimal prices for rooms and events. The article underscores the significance of such tools, highlighting their benefits, key features, and factors to consider when choosing one.
Through its comprehensive suite, Newbook not only optimizes pricing with minimal manual effort but also enhances occupancy management by accurately forecasting demand. Its emphasis on collaboration and customer support, backed by a 99.99% uptime guarantee, sets it apart. Additionally, Newbook’s integrations extend its capabilities, facilitating online payments, POS functionality, business intelligence tools, and accounting systems to streamline revenue generation.
With a focus on dynamic pricing and effective channel management, Newbook empowers revenue managers to expand their market reach and automate pricing decisions. The platform’s seamless integration across the hotel’s tech stack centralizes financial data, offering a streamlined approach to revenue management.
Reach out to Newbook today, and we’ll show you how Newbook will improve your hotel’s bottom line.
Precisely the tools you need, all in one hotel management software
Newbook is your all in one hotel management software. Talk to us today to learn how you can improve operations and increase bookings for your business.
