Is Revenue Management Only Useful For Luxury Hotels?

By Jean Francois Mourier, CEO of REVPAR GURU

In the past, revenue management was a practice that only high-end, luxury properties implemented for two major reasons: first, it was hugely cost prohibitive, and second, it required the hotel to hire a revenue manager to execute the processes (or oversee the revenue management system - RMS). Only properties with large budgets ­ both for revenue management and personnel ­ could actually afford to use revenue management to price their properties, leaving smaller, boutique properties struggling to keep up.

But that was yesterday and today, lots of things have changed. Today, revenue management is a practice that all properties should be using to improve their occupancy, ADR and RevPAR ­ no matter their budget, number of staff, star rating and property status (branded vs. independent).

There are six major reasons why all hoteliers should be using revenue management to ensure that their property is as profitable as possible:

Increase in Supply

In most popular tourist markets, there is ongoing development of new properties to accommodate the influx of tourists who travel to the destination throughout the year. As more properties are added to your comp set, it becomes much more difficult to manually track the prices of the competition as they continually fluctuate as the market changes. In fact, in many top markets, it¹s downright impossible to manually track rate changes within a comp set. This means that those hotels are often blindly updating their rates without taking the competition¹s pricing into consideration. That strategy will rarely yield the right price to ensure the highest ADR and the highest occupancy at all times.

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