8/12/2023 0 Comments Sucess iceberg picture![]() The 2010s: Big Data and Personalization – Big data analytics became crucial in revenue management as technology advanced. Online travel agents (OTAs) like Expedia and emerged during this period, providing a new distribution channel and increasing price transparency. ![]() This software helped track booking patterns, customer segmentation, and demand forecasting. Hotels started using software to help with revenue management decisions. The 1990s-2000s: Technology and Data – With the rise of technology and the internet, gathering and analyzing large amounts of data became feasible. Early revenue management focused on managing room rates and occupancy to maximize revenue per available room (RevPAR) The idea was to sell the right room to the right customer at the right time for the right price. American Airlines pioneered yield management to maximize flight revenue, and hoteliers saw a similar opportunity. The 1980s: The Birth of Revenue Management – The concept of revenue management was introduced to the hotel industry in the 1980s, primarily influenced by the airline industry. There was little use of data analysis or customer segmentation. Hotels typically set fixed rates for rooms and adjust them only occasionally, usually based on seasonality and local events. Pre-1980s: Traditional Management – As a formal discipline, revenue management didn’t exist in the hotel industry before the 1980s. The evolution of revenue management in the hotel industry has largely mirrored the broader changes in technology, data analysis, and customer expectations. Is your revenue manager still stuck in the 1980ties, or did you invest in developing the revenue management team, tools, and technology to capture more profit? First, we examine how revenue management has evolved and future trends. It’s the ‘now’ of the hospitality industry and why sticking to the old school of thought could cost you more than you think. Let’s delve into why contribution-focused management is more than just the future. What’s more, the profits you could gain are not just significant but also have the potential to be genuinely transformative. This approach was previously considered unattainable with a top-line-focused strategy. Instead, it’s time to pivot our attention to the often overlooked yet critical factor: Contribution.īy shifting the focus to the contribution, which is the revenue minus the cost of customer acquisition cost (CAC), hotel executives can achieve a higher level of profitability and efficiency. It’s time to dive deeper beyond the allure of high occupancy rates and RevPAR. While comforting in its familiarity, traditional revenue management is akin to focusing on the tip of the iceberg, ignoring the vast potential lurking beneath the surface. This may sound unbelievable, but it’s a harsh reality for numerous executives in the hospitality industry who only focus on top-line revenue and fail to recognize the untapped profits that are slipping away. You may believe your revenue management team has done an excellent job, but it’s possible that you’re unintentionally missing out on a significant amount of money. Imagine a busy hotel lobby with every room occupied and a constant revenue stream.
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