The Top 5 Hotel Revenue Management Trends and Changes in 2018
Hotel revenue management trends move fast. The sector has evolved at a remarkable pace and is set to continue this course. It’s an exciting time to be a part of such a fast-moving industry and hotels can benefit from taking advantage of the new trends that are shaping it.
Let’s take a look at the top 5 trends and changes that are driving hotel revenue management.
1. A shift to profit management
An increasing number of revenue managers believe that hotel revenue management has already moved to a specific emphasis on profit management. This may well be what we come to call our profession before long. A focus on profit has become more prominent as revenue managers move on from a reliance on the traditional key performance indicators (KPIs) of total revenue per available room (TrevPAR) and revenue per available room (RevPAR).
Instead, revenue managers will use gross operating profit per available room (GOPPAR) as the main KPI. This puts profit at the centre of revenue management strategy, and managers will increasingly search for new techniques to increase the profitability of their hotels.
A KPI we have been advocating of as well is NRevPAR or NetRevPAR, it is a step towards GOPPAR from RevPAR, taking into consideration cost of distribution and marketing. It focusses on a net reservation value.
ROI is the objective of any hotel investment, so it is only logical the focus on profitability and ROI will continue to sharpen.
2. An increased focus on direct hotel bookings
Revenue managers know that one key area to drive profitability is to steer guests away from online travel agencies (OTAs) and book directly with the hotel. This increases brand recall and loyalty, and generates repeat business. It also offers a unique platform to market the hotel via direct communication channels with the customer, offer deals and upsell additional services or room upgrades.
OTAs of course have an essential role as a reservations source but they come a distant second to direct bookings for the hotel that takes profit maximisation seriously. To persuade guests to book directly on the hotel website, the benefit must be clearly presented to the would-be guest. Why should they go to your hotel’s website instead of to an OTA? What is the advantage? This is where revenue managers will ramp up focus.
3. Greater efficiency in use of data
Hotels are inundated with all types of data metrics now. There are many KPIs and types of data for hotels to work with. This makes it even more important to understand how to leverage it, to cut through the data thicket and mine it for its true worth. Efficient use of customer data provides key takeaways that in turn drive business decisions.
An RMS that encompasses data reporting and analysis tools is increasingly seen as less of a luxury and more of a necessity. This helps drive profits via the insights that efficient use of data provide.
Revenue managers are increasingly working out new and improved ways to combine KPIs with specific data types. Software including customer relationship management and resource planning tools provide essential data and will continue to proliferate in use.
4. Technology enhancements in revenue management
The technology that powers revenue management systems is constantly changing. One of the most important recent, ongoing changes is the increased presence of automation. RM systems with automation are much more preferable than without. Automation increases RM efficiency and helps managers focus on driving profitability. They can spend more time on strategy, while data entry and logistics are automated.
As a bonus, an automated system helps with aggregating and interpreting data. Other new trends in RM technology are the increasing prominence of machine learning and predictive analytics tools.
Technology that integrates with the revenue manager’s workflow is key. This can include communication channels management systems, guest review systems and benchmark reporting systems.
5. A continuing shift in focus to mobile
The shift to mobile is not entirely new. 2017 in particular saw a significant rise in mobile interaction and bookings. But, it is set to rise further. 2018 will see even greater focus on mobile. Increasing revenue and profits will be increasingly dependent on a mobile website that delivers high performance.
For this reason, revenue managers will be keen to ensure that hotel websites are optimised for customer engagement, performance measurement and business generation. Moreover, websites must be continually updated and maintained for optimum performance. It will be absolutely critical to the success of a hotel in 2018.
The final word on hotel revenue management trends and changes in 2018
2018 will be an action-packed year for revenue management. These are some of the most important trends that we at Xotels see coming. Revenue management has developed quickly and established itself as a dominant force in driving hotel success, but 2018 could be its most evolutionary year yet.