Planning ahead in a recovering travel market is no easy task. Budgeting presents the challenge of making today’s educated decisions about what you need to spend in the future to attract and meet guest demand.

While hotel budget investments have traditionally been focused on maintaining a property’s appearance to enhance guest satisfaction, a hotel’s operational technology stack places the right guest in the right place. Important to attract on price.

Today, automated revenue management systems (RMS) are critical for hoteliers looking to increase revenue and speed recovery. And with the increased productivity and profits that RMS can provide, these systems often offer a quicker return on investment compared to long-term retrofit projects.

The rationale for allocating funds to RMS is clear. According to Hotel Tech Report and Deloitte, hotel organizations that switch to RMS see a 7-20% increase in revenue per available room (RevPAR) and an average 2-7% increase in profit margin. Additionally, RMS helps revenue managers save about 20-40 hours per month (Deloitte).

But while the benefits of RMS are clear, questions remain. How do you convince owners, the board of directors, or executive level management that you need to budget for RMS this season?

Outline what RMS can do for hotels

A fully booked hotel is not necessarily a profitable hotel. Without revenue management technology, hotels are more likely to fall into the trap of selling to lower rated companies, missing money from higher rated business opportunities. To identify guests with the highest potential for long-term revenue for their properties, hoteliers need a revenue and pricing system that takes a holistic view of guest activity, not just room spending. is.

The goal of revenue management is to set prices for rooms and services to maximize overall revenue and profitability. But in order to operate profitably, hotels need to accurately price different rooms for different days and guest types through different channels. Simply put, hotel management teams have to deal with too many data points to analyze in real time.

Too many decisions are made by hospitality staff members without the assistance of an automated revenue management system. These systems use data mining, machine learning, and predictive algorithms to calculate optimal hotel pricing and inventory decisions.

Prove that RMS is a “need” tool, not a “want” tool

If hotel decision makers see RMS as an optional luxury or a “nice to have” tool that they “want” rather than “need”, it will be difficult to allocate budget to revenue management technology this season. is. Budgets can be strained in an environment where hotels must operate lean to recover financially from periods of low occupancy associated with the pandemic. So you can easily say no to anything that seems like an excessive and non-essential cost.

To demonstrate that RMS is a “need” rather than a “want” for hotels, a revenue manager creates a business case showing how a competing hotel is using RMS with great success is needed.

Make it clear that competitors reinvesting in campaigns that drive potential customer demand are achieving higher returns. By doing so, competitors are taking guests away from your property.

Tactics that can help prove the need for RMS include:

• Use surveys to gather feedback from internal team members (sales, marketing, operations, etc.) impacted by revenue management. Ask them about their confidence in their current revenue management practices. Ask them about the impact of the current system on their department. Allows you to rank your satisfaction with your current system or approach to pricing and revenue management.
• Find authoritative industry reports from publications like HotelTechReport and Skift that talk about the value of an automated revenue management system. The statistics from these reports speak loudly when it comes to justifying your case.
• Know your ROI (or even ROU) if you switch to a revenue management system.
• Find real-life examples of how revenue management systems have benefited well-known brands. Here are some examples to get you on the right track.

Describe how the revenue management system fits into your organization’s business strategy

Listing the benefits and statistics of adopting a revenue management system will get you far. It is wise to specify how you want support. This begins by outlining the goals and objectives of an automated revenue management system.

Start by defining what a revenue management system can viably accomplish. What business projects will this tool help me focus on? What types of revenue streams will help with pricing? How detailed should these pricing models be?

For example, do you need an RMS to manage revenue streams from your organization’s meeting spaces and restaurants in addition to standard hotel rooms? Or do you need a system that only manages pricing and forecasting for individual rooms? Do you need a solution that can help with reporting, data warehousing, or automate budgeting and forecasting?

Tie each of these objectives to the capabilities of the system under consideration, regardless of what objectives end up on your list of “needs.”

Claim RMS to be a cost saver, not a cost center

The business case for allocating budget to RMS highlights how RMS can help reduce the overall cost of hotel operations. Hotels can use forecasting capabilities within RMS to inform staffing decisions and take into account periods of high or low demand.

As demand forecast data becomes available, staffing managers can identify areas most impacted by the number of guests staying at the hotel. Hotel occupancy can directly impact staffing needs such as housekeeping, front desk, restaurant waitstaff, and parking attendants.

And, of course, revenue managers need to consider the potential waste resulting from in-hotel food and beverage operations. Knowing when periods of high and low demand will occur and which segments will be the major consumers of fresh produce will help hoteliers order products at the right time and avoid costly spoilage. It is useful for

Hotels without RMS operate unfavorably

Making new investments following a period of difficult economic conditions is always a difficult task. However, with the increased productivity and profits RMS can provide hotels, these systems often offer a quicker return on investment compared to traditional investment areas such as expensive renovation projects.

Persuading hotel owners and senior management to invest in new tools is no easy task, but these stakeholders believe that hoteliers without an automated revenue management system are at a serious disadvantage. You should know that In a highly competitive operating environment where every pricing decision matters, every hotel needs a way to set the right rates and minimize operating costs while attracting the right guests at the best rates. is. That’s where RMS makes all the difference.

To learn more about how hotels attract business from guests in an evolving market, visit www.ideas.com.

Author: Tracy Dong, Principal Industry Consultant, IDeaS

The views expressed in this article are opinions only and readers should rely on independent advice on such matters.