Revenue management is commonly associated with presenting the right room at the right cost to the right client at the right time. At the current state, hotel industry profit centers are extending to newer avenues such as conferences, restaurants and other recreational facilities such as Spas and golf courses. The common traits among each are that every one of these products is perishable. This means if a hotel room is not sold till end of day then it is an utter waste. It can’t be held saved for a later use. This simply means that the hotel manager must insure that the revenue management achieved from each night booking is streamlined to average the non-sale nights. Failing to do so means that hotel loses out on revenue and witness declining profit margins.
It can lead to a 10% minimum price hike for each available room rate which causes a serious improvement in profitability. Naturally, the bigger sized rooms command more profits, but revenue management is vital to be incorporated to even the smallest operation.
To raise the revenue and to rake in big profits, it is essential to understand the significance of Revenue Management in Hotel Industry, so that you can accurately structure it to amass the desired results. Few of Revenue Management advantages are as follows:
- It enables team’s synchronization among varied group or department within a hotel on the singular objective to increase profitability.
- It boosts efficiency by pummeling down the costs.
- It sparks creativity in both the conceptualization and creation of undiscovered products and services·
It aids in presuming and forecasting future demand.
- It strikes equilibrium between general managers, revenue managers and hospitality managers.
- It provides the every hotel staff with an idea of how to manage revenue flow.
- It builds a brand’s competitive intelligence and market
- It acts as a support pillar for any person to solemnly considers a situation and also provides the best solution possible to the hotel management system.
- It slashes time and financial cost associated with traditional pricing tactics.
Revenue management is the core to the hotel business and should be trod with caution and due diligence. It is important for a hospitality professional to know about Revenue management’s role in the hotel industry in order to operate the business successfully.