Revving Up The Revenue

Revenue is extremely essential for the progress of any industry. Revenue management in the hospitality industry is undergoing a constant change, with the evolution of technology. Besides earnings from room rents, Revenue management is forecast to expand to other avenues like restaurants, room service, laundering, etc. in the hotel industry. Ashok Malkani takes a look at the fast changing scenario and the increasing importance of revenue management, whose role is being perceived more as profit generating rather than revenue managing. The focus on profit is expected to increase as revenue managers use new methods to better understand customers and improve margins. As hotels compete with their rivals the role of revenue management is expected to play a more dominant role in the progress of a property

Revenue management is an essential part of running a successful hotel as it lowers operating cost of the property. One can say that revenue management entails offering the perfect room at perfect cost to the perfect client at the perfect time. But it is not just about rooms. Currently it is extending to conferences, restaurants and other recreational facilities like spas.

With stiff competition between properties, it is believed that revenue management becomes all the more relevant.

But what exactly is revenue management? Sucheta Jadhao, Director of Revenue, Sofitel Mumbai BKC states, “Simply put, revenue management is the skill and strategy of allocating the most optimum room at the best price and at the right time. It involves taking pricing decisions considering the diverse distribution channels according to room demand and supply. Along with room pricing, revenue management also accounts for other factors such as pricing based on the quality of offerings, brand goodwill, discounts, holiday packages, merchandise marketing, revenue from events and similar.

“Revenue management is especially relevant to the hospitality industry, as the movement of demand and supply of rooms and corresponding guests is quite a dynamic trend. With the growing competition of hotels in and around the city, the decision to optimally price rooms based on data-driven forecasts becomes all the more significant in order to maximize revenue growth. Being a guest-oriented industry, it is essential to have a staunch revenue management system based on which one has to make knowledgeable decisions to strike a balance in periods of low demand as well. A stable revenue management aids the hotel team in making the most out of the existing room inventory and in achieving and improving overall resource management.”