Revenue Management

Revenue Management
IDeaS | The Critical Importance of Revenue Management Systems
Hoteliers Increasingly Rely on Revenue Management Tactics to Drive Profitability
IHF Associate Member

The importance of having the right tools cannot be understated, whether it's the first caveman crafting a spear or today's sophisticated world of hospitality business. In the realm of financial leadership within the hospitality industry, cold calls and presentations touting various tools are a common occurrence. Among these tools, the implementation of a revenue management system (RMS) stands out as a game-changer, and this sentiment is not unique to us.

IDeaS recently conducted a survey among hotel real estate investment executives to gain insights into the role of revenue management in hotel investment. The results unequivocally emphasize the critical nature of revenue management systems in successful hotel investing.

Key Takeaways from the Hotel Investor Survey:

1. Technology's Impact on Hotel Asset Value:

All respondents in the survey, without exception, acknowledged the importance of technology in maximizing hotel revenue. Specifically, 20 percent considered it "somewhat important," while a significant 80 percent deemed it "very important." Notably, 45 percent of the investors saw revenue management technology as "somewhat important," while 55 percent regarded it as "very important" for enhancing the value of their hotel properties. This underscores that revenue management technology is not just a luxury but an indispensable resource for optimizing asset value.

2. Increasing Importance of Revenue Technology:

The survey revealed that 71 percent of respondents believe that revenue management has gained greater significance over the past three years. This heightened importance can be attributed to the disruptions caused by the global pandemic and the subsequent economic uncertainties. Moreover, the data-driven capabilities of revenue management systems are leveraged in a data-driven age characterized by machine learning and AI advancements, allowing hotels to adapt swiftly to changing market dynamics and seize revenue opportunities even during "normal" times.

3. Upgrading Revenue Management Systems:

Investors recognize that revenue management technologies are pivotal for maximizing returns in a competitive environment. As a result, nearly 59 percent of respondents are either currently upgrading their RMS or planning to do so within the next 12 to 36 months. This trend is consistent with the growing role of RMS in optimizing revenue across various hotel revenue streams, including meetings and events spaces, food and beverage services, and ancillary spending.

Mike Chuma, Vice President of Global Marketing at IDeaS, points out, "Because of the positive performance at scale, we see the use of revenue management systems expanding beyond daily room pricing to other areas of strategic growth."

4. High Returns on Investment:

Investing in revenue management software is a substantial financial decision, but the returns are equally substantial. Among those using revenue management technology, a resounding 83 percent describe the return on investment (ROI) as "high" (62 percent) or "very high" (21 percent). This underscores that investors consider this technology to be a financially prudent choice, capable of bolstering cash flow from hotel investments. In fact, two-thirds of surveyed investors view revenue management technology as "very important" for maximizing cash flow.

In conclusion, revenue management technology is a crucial tool for enhancing the value of hotel investments. The survey results indicate a growing understanding among investors of its value, leading to increased investment in these systems. While implementing a revenue management system can provide quick and sustainable improvements, it's important to note that optimizing its potential, especially in properties with diverse offerings, may require organizational changes and widespread support.

Download the full Survey Infographic here.

Contact details

Gregory Gallagher
Sales Executive EMEA

+34 910 76 51 81

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