The definition of Revenue Management can be described as – selling the right room, to the right client, at the right moment for the right price on the right channel with the best commission efficiency – a confusing and complex concept to grasp especially when looking at what it takes to implement a successful revenue management strategy.
The Revenue Journey is a simple step by step guide to make this process a little easier, if you were not convinced, you will most certainly be.
The very first step in our Revenue Journey clearly shows a very good overview of the types of business in which revenue management can be implemented successfully, the first step is very simple, if you answer yes to any of these questions, you know you are ready to implement a revenue management culture into your business;
– Does demand for your product fluctuate?
– Can customers book your product ahead of consumption?
– Do you have a limited capacity perishable product for sale?
If you still need convincing that you need revenue management into your company read the very first step in this journey – The Revenue Journey Part #1 – Taking The Plunge.
Now that you have identified that you require revenue management in your business the question is always the same – how do I even get started? This is a very simple answer, the entire Revenue Journey needs to be carefully mapped out with three very simple questions in mind – where am I today? Where do I want to go? And finally how will I get there? For this step to be successful one needs to be brutality honest with oneself, taking the first step will always be the most difficult.
Do you need some help in making this decision, read the second step in this journey – The Revenue Journey Part #2 – Navigating The Journey
Now that the business is mentality prepared to adopt a revenue culture it is time to get the correct driver, the human element in the revenue management process is a vital part of a successful strategy. It is suggested that one identifies an experienced revenue manager to assist you streamline the different elements of setting up a team as many different factors needs to be considered.
The very basic questions that this driver would need to consider is:
– Who are the decision makers and who are the influencers?
– What is the size of the team required?
– How much experience is required in the team?
As you can only imagine the human element can be rather complicated so read the third part of this journey for complete clarity – The Revenue Journey Part #3 – Fundamentals
The team is now in place and it is now time to decide on a distribution infrastructure for your business. Selling a product requires an infrastructure and can be made up of systems, manual processes or a combination of the two. Deciding on the correct infrastructure could involve certain costs so it needs to be evaluated correctly but it is key to remember going cheap could be a costly choice in the long run. Make this process a little easier by reading The Revenue Journey Part #4 – Choosing Infrastructure.
Now you are well underway with the Revenue Journey, you have your journey mapped, you have identified a driver and you have given him his vehicle in the form of a solid infrastructure – but now what? Now it is time to instil the revenue management culture into your business, successful revenue management is all about consistency and requires a set list of processes to instill that revenue culture. The list of processes that needs to be instilled can be rather extensive and each revenue manager also has a unique style it is suggested that you this is carefully considered and it needs to be a win – win situation for the business. For more information on the list of processes read The Revenue Journey Part #5 – Processes.
A good forecast is the most important part of the revenue management decision process, without an accurate forecast it is not possible to make any accurate revenue driving decisions. It is vital to understand the different types of forecasts and the importance of each. As the revenue director spends more time analysing the different data elements of the hotel the more accurate the forecast will become and with this come better business results. In order to forecast more accurately read The Revenue Journey Part #6 – Forecasts.
The next steps are understanding the importance of pricing, in any business pricing can be seen as a complicated process and in the hospitality industry even more so. The end goal of strategic pricing however remains the same, maximizing rate and rooms sold for a particular time.
The different elements of pricing are rather simple when it is broken down individually, if a proper understanding of the below elements can be established one will be off to a great start;
– Forecast – how much do I need to set my prices at in order to achieve my forecast
– How elastic is my product – am I charging enough or am I charging too much, how can I maximize?
– What are my competitors pricing at? Are we inline or are we completely out?
– Do I know my own value based on what my customers are saying on review channels?
Pricing has various aspects which is directly determined by the segmentation that one has in place in the hotel, read part 7 of the Revenue Journey to get the bigger picture on pricing – The Revenue Journey Part # – Pricing.
Complete Revenue Management combines the set pricing strategy with the different inventory aspects of your hotel, complete revenue management is more critical than just normal revenue management and often requires different inventory management controls to maximise RevPAR. It touches all rates and room types and fully optimizes all aspects of the properties inventory.
Complete Revenue Management takes time to achieve but when it is achieved it will allow a savvy director of revenue to gain substantial in revenues.
Read The Revenue Journey Part #8 – Complete Revenue Management for a greater understanding of this great concept.
The last critical aspect of implementing a successful revenue management strategy into your business is looking for tools that assist your revenue manager steer the process. Consider a revenue management system the same as a GPS, it helps the director of revenue, often rerouting to find the most profitable path, a revenue management system is not a tool to replace your driver but a tool to give him a boost to reach his goals. The Revenue Journey Part #9 – Revenue Management Systems will most certainly guide you in making the correct choice.
If you are still not convinced, why not just give it a try, you now know what it takes to start navigating this journey, take the first step and start navigating this journey to see an increase in your revenues and profits.