The peak and valley nature of the hospitality industry is extremely conducive to revenue management techniques. This applies to both smaller, independent properties and large chains equally. All hotels share the combination of high fixed costs balanced against low marginal costs. The cost of the property itself and all expenses associated with it is high, but the cost of gaining each new hotel guest is relatively low. This gives any hotel a degree of latitude in setting their rate structures.
Revenue management techniques will therefore help even the smallest of hotels capitalize on the flexibility that allows them to sell rooms for the maximum rate possible on any given day. This is why revenue management is so crucial to all segments of the hospitality industry, no matter the size. Most smaller properties cannot afford a dedicated revenue management specialist, however the investment in software designed to assist in that regard could be most beneficial to them.
Effective revenue management can also benefit hotels in ways beyond the implementation of a more profitable rate structure, although that should be reason enough. Revenue management empowers hotel properties to ensure their rates are not only profitable, but competitive within their market as well. The research required for revenue management provides valuable market intelligence in the form of a clearer picture of the hotel’s customer base and their expectations. This offers hotels the opportunity to get to better know their guests. The data extracted can reveal to hoteliers exactly what are their property’s market segments and even point out new segments for future growth. All of this information will additionally lead to enhanced coordination between the efforts of sales and marketing with their service counterparts who interact directly with hotel guests.
The hospitality industry is built around servicing the needs and desires of their guests. Revenue management is a tool which will enable hoteliers to better anticipate and meet the wishes of their customers. In the third part of this series we will explore courses of action to best utilize revenue management in a hospitality setting.
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