Revenue Management Systems (RMS) are having their day. They have a solid track record of increasing revenue for hotels and provide a means to optimize profitability in both low and high demand cycles. Even in a soft market, or especially in a soft market, RMS use sophisticated algorithms that allow hotels to price their availability to greatest effect. Revenue management systems provide a way to more easily manage an effective pricing strategy, as well as expand your available markets.
While they have a reputation of being one of the more expensive hotel technology systems, many companies now offer more affordable subscription systems, along with documented results to support the cost. Some even offer guaranteed returns. Addressing their advisability, Katie Grice, Revenue Manager for Big Sky Resort commented, “Not every IT system has an ROI. This does.”
The high cost of deploying an RMS has slowed their adoption by independent hotels and resorts. Many properties rely only on the basic yield management tools included with their PMS or their own internal systems to manually analyze and finesse rates and inventory. Compared to the sophisticated analysis provided by leading revenue management systems, the manual tools are basic and offer only rudimentary results to the property.
There is a very real ROI when properties embrace an RMS. The industry reports that utilizing a revenue management system can add 5-7% to top line revenue results. Yet, increasing revenue isn’t the only benefit of utilizing a RMS. Companies also report enhanced organizational efficiency, improved accuracy of forecasting and a better view to upcoming business trends.
When evaluating revenue management systems, Marty Bussey, Director of Sales & Revenue Management for Trump International Beach Resort, recommends that a property “perform a price comparison and benefit analysis.”
“Evaluate all of the systems used and make sure the cost of interfacing and any peripherals is factored in. Spend a lot of time on understanding your forecasting and price recommendations before you go live,“ said Bussey.
To be successful with a RMS, hotels and resorts need to ensure that they have buy-in from top management and that they choose a system that fits their revenue management strategy. Integration with their PMS is also essential. SMS|Host PMS offers an XML interface to the following yield management systems:
Trump International Beach Resort recently chose Rainmaker as their RMS. “We liked the forecasting reliability and the various components of the system, as well as the partnership with Siteminder for distribution,” commented Bussey. “Having all the components enabled us to realize some savings by being able to let go of some other systems and vendors.”
Automating yield management allows a revenue manager to set aside manual data entry and manipulation in order to more actively analyze, strategize and position their property for greater results.
“Overall we have seen a positive ROI,” commented Grice. “We have a stronger grasp on long term revenue and occupancy goals, increased control over rates during special circumstances such as weather patterns and it’s strengthened our relationships with stakeholders and homeowners.”