WHAT IS REVENUE MANAGEMENT?
Revenue management is a business technique that enables the optimization of your inventories and maximizes your profits. Its exact parameters evolve over time due to new artificial intelligence systems, processes, automation, and the general advancement of industry-leading tools, but at its core it remains the same.
INDICATORS AND KEY CONCEPTS
- The Goppar or Gross Operating Profit Per Available Room is the gross profit margin for each available room.
- The Trevpar has to do with RevPar, but adding all the services that are necessary for a room.
- For TrevPec , the focus changes. We no longer measure ‘per room’ but ‘per client’. This concept encompasses all the services that are necessary for a client.
- The Lead Time is the period of time between the reservation and the moment the client arrives.
- The ADR is a very useful indicator to measure profitability. Its formula is ‘Revenue per rooms / Number of occupied rooms’ and can be translated as the Average Daily Rate.
- Finally, Upselling and Cross-Selling are techniques used within the Revenue Management strategy. The first (Upselling) is a sales technique that seeks to sell a service or product of a higher category than the one initially requested. The second (Cross-Selling) is defined as ‘cross-selling’ and also seeks to add complementary products or services to those that the customer wants to buy at first.
Why is revenue management important in the hotel industry?
Revenue management is highly important to hoteliers because it allows them to maximize revenues and yields, using smart tech and big data. The main aim is to foresee market demand and react to changes in the market efficiently.
Without a doubt, these are challenging times for the hospitality industry. In that sense, it is important to invest all our efforts into breakthrough technologies and powerful systems that apply intelligent automation to boost yield, grow revenue flow, and enhance the guest experience.
Therefore, it’s essential for the hotel industry to adopt new strategies and systems such as advanced revenue management in order to stay afloat and reinvent itself, providing hoteliers around the world with major business success.
