Every accommodation business needs an effective revenue management solution (RMS). The key word here is “effective” since traditional hotel revenue management tools developed the reputation of being clunky, difficult to use, and providing dated or incorrect information.
But the truth is that hotel revenue management software has come a long way in recent years. Modern revenue management solutions reflect decades of innovations in how hotels and other hospitality properties can maximize their revenue potential while considering up-to-the-minute changes in weather, economic conditions, and guest behavioral patterns.
But even with the promises of better tools, a report on hotel RMS from 2021 indicated that only 10% of hotels actually purchase hotel revenue management software.
But it would be wrong to hinge on this report and say that hotels don’t find revenue management solutions useful. It’s interesting how things can change drastically in just a few years because a more recent and comprehensive 2023 RMS report shows a huge uptick in SaaS RMS offerings entering the market—especially in North America.
What this all means is that more hotels and accommodation operators are realizing the profit potential of revenue management solutions—so if you haven’t already hopped on board and implemented an RMS solution of your own, you’re missing out on profits that you likely didn’t even realize you could get.
What are Revenue Management Solutions?
Revenue management solutions in the hospitality industry are tools used by revenue managers, accountants, and other stakeholders to:
- Identify trends and patterns in customer behavior that lead to purchase decisions
- Determine what customer purchasing trends and patterns are influenced by, like weather, economic conditions, political climate, and more
- Track payments completed and outstanding
- Utilize dynamic pricing to present the right price to the right customer at the right time
Interestingly, the concept of revenue management originally came from the airline industry. By using technology to harness accommodation guest data to consider major factors influencing customer decision-making and crunching the numbers, the different airline companies found that they could better anticipate customer needs and demands and set prices accordingly.
Of course, the ability to more accurately predict customer behavior based on various data and set prices accordingly is an attractive proposition for every hospitality industry sector.
Specific hospitality businesses that benefit from effective revenue management solutions include:
- RV Parks and Campgrounds—prices for lots, hookups (full or partial), amenities like showers, toilets, sewage dumping, and more can all be factored into the price for each lot with dynamic pricing while also considering competition in the area and the amenities they offer. In addition, location and proximity to attractions like swimmable lakes, hiking trails, fishing spots, and access to grocery stores and local towns can also be considered in pricing.
- Vacation Rentals—maximizing rentals of cabins, villas, or rooms is essential for any vacation rental property. You want to ensure that inventory is depleted as much as possible without compromising on price. Revenue management solutions allow effortless pricing management by considering seasonality, pricing trends and patterns for the area, economic and political climate, views, room amenities (e.g., size of room, number of beds and size of each, television, internet access, etc.) to factor into pricing alongside providing upsell opportunities depending on your property.
- Home and Apartment Rentals—for home rentals, market rates, and key amenities like number of bedrooms and bathrooms, location of the suite (ground level apartments versus apartments on higher levels of the building), access to a private balcony or patio, air conditioning, appliances (e.g., a dishwasher, microwave, and in-suite laundry in addition to the basics like a refrigerator, oven and stove) can all be factored into the price of a single unit with revenue management solutions.
- Hotels and Resorts—hospitality properties like hotels and resorts often have areas for guests for entertainment like swimming pools, water parks, event or concert halls, and specific amenities in the rooms that should be highlighted, like jacuzzi tubs, large windows, luxury beds, and more. Like vacation rentals, proximity to attractions is another big selling point for hotels and resorts that hotel revenue management software considers in price setting.
As you can see, there is overlap but also specifics in how revenue management solutions for different hospitality niches provide educated management of pricing. The key with modern revenue management software is that it can derive insights from large amounts of data that could or could not be related (so it understands the context behind the data) and provide appropriate recommendations.
As we mentioned earlier, like any software, early revenue management solutions for the hospitality industry needed to go through some iterations. But things are much different now. These days, if you’re not using a hotel revenue management system, you’re leaving money on the table.
As an example, Newbook offers some integrated revenue management tools like rate management, dynamic pricing and advanced revenue management and forecasting reports.
Ready to take it to the next level? Integrations with full suite revenue management systems to Newbook provide you a seamless, joined up revenue management system.
Key Benefits of Hotel Revenue Management Software
There is a wide range of benefits that hotels and revenue managers can enjoy when they implement revenue management solutions into their business operations. These benefits include:
1. Provides Better Pricing Without Extra Work
Static pricing fails to take advantage of market shifts, especially with regard to turning challenges like low demand and inclement weather into potential sales opportunities. Hotel revenue management software aligns multiple data points to provide the best pricing recommendations without adding to the workload of overloaded revenue managers.
In addition, by being able to consider multiple different factors that affect pricing and provide dynamic rates for each guest using technology, it takes the pressure off of revenue managers to perform manual calculations and rely on their gut feelings to set prices and instead allows more educated and accurate decisions to be made based on real data.
2. Increases Upsell Potential
Sometimes front desk staff can find it difficult to keep all the different promotions, offers, and potential add-ons straight, especially if there are specific conditions and requirements for guests to be eligible to receive these offers. Whether it’s a massage, couples breakfast package, or discounts on theme park tickets for the family, revenue management solutions like Newbook take the hassle and need for memorization out of offering the right upsell at the right time to the right guest. Plus, Newbook makes it easy to offer specific promotions via SMS or email to guests as soon as they are available.
This makes it inherently easier to not only take full advantage of your hotel or resort amenities for each and every guest but also allows you to track and understand the revenue potential that these extras bring to your business.
3. Better Management of Commissions from OTAs and Channel Managers
If you’re paying an online travel agency or other channel manager to bring on the bookings, it’s important that you can easily track which bookings are coming in and from where and how much commission is owed. Revenue management solutions like Newbook offer channel manager functionality, so you can capitalize on the solutions that actually bring your hotel business and offload the ones that don’t.
4. Gives You Extra Revenue—Whether You Have a Revenue Manager on Staff or Not
Let’s say you don’t follow any specific strategy regarding pricing for your hotel and don’t employ a revenue manager. An RMS can create a situation where you earn extra revenue simply from analyzing past and current data and using that information to make predictions that will earn you more profit. Quieter periods, rooms that don’t sell as often as others, and opportunities for upsells are all considered and implemented with revenue management solutions.
If you are a revenue manager or employ one, an RMS is still infinitely helpful for increasing revenue. Instead of spending time crunching numbers, the revenue manager can leverage their experience and expertise alongside the RMS to build forecasts, strategies, and more using the platform’s valuable insights.
5. Helps You Compete
The more competition you have in a specific area, the more you can benefit from an effective revenue management system. Especially if you’re a smaller or mid-size hotel, competing with bigger chains in the area can be daunting since they typically employ top-end revenue management strategies and tactics. If you’re not following a strategic plan and taking advantage of any niche you offer, you’re likely not getting the revenue and bookings you could be.
Revenue management solutions help you find your unique selling point so that you can position yourself alongside your competitors in a way that benefits your business, whether simply offering better rates or highlighting unique amenities and other features that attract an untapped audience.
Considerations When Choosing the Best Hotel Revenue Management Platform
The market share of revenue management solutions has exploded in recent years. On one hand, an increasing number of entrants to the marketplace means that hoteliers have more choice when it comes to software, but on the other hand, more time and research is needed to find the right tool for the job.
Some essential considerations that you should keep in mind when narrowing down your choices for revenue management solutions are outlined in the table below:
|Consideration When Choosing RMS Software||Why It’s Important|
|1. Ease of use||Lower learning curve, easier navigation and setup, and less time spent onboarding Employee buy-in is higher with technology that is easier to useGet up and running faster|
|2. Ability to solve specific pain point(s)||Whether you’re dealing with unsold rooms or unused amenities or trying to find ways to optimize your sales in general, it’s important to have a business goal in mind so that you can measure the ROI of the softwareLook for specific features that provide solutions to problems that you’re having with gaining revenue to determine whether the software provides enough value for your business (e.g., hotel OTA management)|
|3. Implementation and onboarding time||An RMS vendor should provide onboarding either included in a subscription or for a one-time costCompatibility with your current tech stack is a consideration; if you use Mailchimp for marketing automation, knowing your RMS integrates with this tool is essentialThe onboarding plan, including the estimated time needed to teach the software, set up integrations, and incorporate it into your workflow, should be considered|
|4. Cost versus features||To set an appropriate budget for RMS, use a website like Software Advice, Capterra, or G2 to compare different offerings with the features you want to get an average price rangeBe sure to check out the website for products that you’ve narrowed down to determine if there are extra costs with add-ons, onboarding, and more that might affect your budget|
|5. Scalability||A good RMS should be scalable as you add more properties, amenities, and overall features to your hotel or resortStaff in multiple locations should be able to provide consistent and tailored upselling opportunities The software should be flexible enough to allow you to add and remove users as needed|
Increase Room Revenue With Newbook
There are three main considerations that Newbook focuses on when it comes to providing a hotel revenue management solution that not only drives revenue for customers but also unlocks the opportunity for customers to build their business through a partnership.
- As one of the only one-stop-shop revenue management solutions on the market, Newbook offers essential functions for hotels and resorts to use to manage their operations. While Newbook is a comprehensive platform, we also understand the importance of integration support. Hundreds of platforms are natively supported, including Quickbooks, Wild Energy, IDeas, and more. An Open AI is available for more specific integrations to facilitate any integration you may need.
- Data security and uptime are of utmost importance to our customers, so we take it extremely seriously. A 99.99% uptime guarantee alongside top-of-the-line cyber security and data protection measures means our customers don’t have to worry about downtime impacting their revenue generation.
- From onboarding to ongoing support, Newbook provides a white-glove approach to customer service to ensure that our customers consider us an important partner rather than just a technology provider.
Let’s look at one of our customers as an example of how you can increase your hotel’s revenue with Newbook. BIG4 Ingenia Holidays Queenscliff Beacon saw a 13.7% increase in revenue in just three short months (February to April) just from implementing Newbook’s software. They were also able to invest their profits to skyrocket their growth by adding new facilities, like a kids’ activity program, a day spa, luxury villas, and more. This resulted in a 46% rise in international travelers and the ability to hire many more employees. The sky’s definitely the limit for BIG4 Beacon Resort!
Another huge way that Newbook helps hotels and resorts generate revenue is through efficiency. On paper, increased efficiency may not seem like that big of a deal—so what if I save 5 seconds on data entry, or if it takes an extra second to click a button? When you add up all those seconds together, they become minutes, then hours.
Let’s take a look at an example where Newbook saves time by integrating with a popular meter-reading software, Wild Energy:
- Without the software, a person needs to physically walk around and check meters on each individual unit, which can be a significant time-sink if you have a resort with, let’s say, 10-20 units.
- With the software, a team member can simply start and stop meter readings from each unit and immediately get a cost that’s saved on file.
- From there, you can have an accurate record of power consumption for each unit to compare with the power company’s findings if required.
So instead of dealing with the potential for human error, manually writing down usage for each unit and the time it takes to walk around and check each meter, the required information is generated automatically and stored in the Newbook system.
As we all know, time equals money, so an uptick in efficiency like this can have numerous cascading revenue-generating benefits to the rest of your business operations simply because time was saved.
When it comes to managing your hotel or resort’s revenue-generating potential, you should be implementing revenue management solutions. By allowing technology to take over the tedious background processes, accommodation operators can streamline their business operations, provide better customer service, and ultimately increase revenue in ways they never thought possible.
To discover more about Newbook and how it can enhance how your accommodations business generates revenue, get in touch with Newbook today!