One of the great pains of revenue management is and has been the uncertainty factor. Historically, market trends and factors that affect how hospitality businesses stay competitive was a bit more of a guessing game, with levels of visibility leaving a lot to be desired.
For some, it still is a pretty uncertain area. But these days, thanks to automated revenue management software like Pricepoint users are offered resilience, versatility, and competitive leverage backed by AI-driven pricing recommendations that take the guess work out of your pricing strategy.
The alleged concern with automated revenue management software when discussing whether or not to use it is the paradox of choice. A hotelier may not know what revenue management can truly do for them until they try it, but will not try it to know what it can do for them.
Confusing? Maybe, let’s try this:
If a psychic friend of yours came to you one day and said you will make exactly half the amount of revenue or 50% of what you made last year in 2021 you would be rightfully very upset.
This friend tries to comfort you by telling you not to worry “The whole industry is going to only make 50% of last year’s revenue as well”.
If a week later that friend came back to you and said there is a software that can be used to adjust your room prices 24/7 automatically to boost your occupancy and sales by 25% so you would be making 75% of last year’s revenues instead of 50%. Would you be interested?
The point being that automated revenue management is always a positive, when you are winning, you’re winning bigger and when you are down, you’re not down by as much as you would be without it.
The questions then become how does an RMS like Pricepoint adjust pricing? Where does the new price come from? When is it adjusted? How much should price go up or down?
Let’s take a look at three important areas that help to illustrate how the right revenue management solution can help hoteliers realize significant return.
How can market trends be more easily predicted?
It is almost comical to discuss the ability to predict the future of hospitality during the COVID-19 pandemic in which there is unprecedented variability of demand. There is a whole host of questions hoteliers and revenue managers ask themselves in order to follow a “best-guess” process, the fundamental question at the end of the day is; how can hoteliers gain more precise insights on where the market is going earlier in the process?
The most critical factor in answering this question is: accurate and complete reporting, which starts with direct integration into a hotel’s property management software. Pricepoint is most effective with 2 years of past bookings but it can also work without historical data. It will simply take time to learn your property booking trends. When Pricepoint has a clearer understanding of the properties own data, it becomes far easier to anticipate how to build a strategy against where the market is going.
How much should a room rate be increased or decreased?
Pricing changes so often even within a 24-hour period, the best way to keep pace is to have a solution in place that automates the process against relevant factors like booking trends, historical data, seasonality, geography, competitor set etc. To stay in the game, hoteliers need to increase maneuverability around pricing to stay at the optimal rate, which changes multiple times a day and entering manually not only is significant daily work but can leave you with a feeling of uncertainty. Pricepoint AI helps to remove that uncertainty factor and allow hotel managers to concentrate time and energy on other more directly guest-centric efforts.
How flexible can I make my pricing strategy?
By allowing a revenue management system to change the price according to demand fluctuations – while making sure you set a minimum pricing rate so that you don’t incur losses, you are already a step ahead of thousands of properties on the road to recovery post-COVID.
Regardless of the pandemic travelers will always seek better prices, by automatically adjusting your pricing strategy to best match the demand, you will naturally generate more bookings.
Having a revenue management software that addresses these questions now could be the deciding factor to success or failure as a new paradigm for hospitality comes into being.
Wyatt Niblett-Wilson, Marketing Coordinator