Revenue Management

How to achieve total revenue management

Learn what your hotel needs to do to leverage a total revenue management strategy that increases guest satisfaction and profitability.

Today, every decision a hotelier makes impacts their hotel’s financial performance. To maximise their revenue, these professionals are looking beyond a traditional revenue-per-room model for a more holistic approach also known as total hotel revenue management. 

So what is total revenue management? And how can you gain the data and skillset to achieve this more effective form of hotel revenue management? Learn the answers to these common questions with tried and tested tactics for successfully achieving total revenue management.

How does total revenue management differ from traditional revenue management models?

First comes the question you’re likely wondering the most: how does total revenue management differ from what you’re doing now?

Under a traditional hotel revenue model, your focus may be placed on optimising revenue by room. This entails making sure that all your rooms are priced and filled optimally, so whether you wish to offer competitive pricing that comes in lower than surrounding hotels or a luxury experience that comes with a luxury price tag, you’re attracting the guests you want. 

Total revenue management seeks to track and optimise all your hotel’s revenue streams beyond just rooms. This method looks at your hotel’s operations to determine how different departments may affect one another and create opportunities to improve your guest experience and profit generation at the same time. 

Other hotel operations that are calculated in total revenue management include:

  • Food and beverage
  • Sales and catering
  • Events and conferences
  • Retail
  • Spa facilities
  • Upsells
  • Enhanced pace 
  • And more

More on how you can accurately calculate these operational revenue streams later! 

Total revenue management also shifts your hotel’s revenue model from a tactical, short-term approach to a strategic function. This is because instead of having to practise siloed revenue management across your hotel’s non-room operations, or foregoing it completely for a lack of resources, all revenue streams are centralised for a more comprehensive view into your hotel’s profit potential. 

The benefits of total revenue management

You may also be wondering if it’s worth it to transition your hotel to a total revenue management model based on your team’s current resources. To help you assess its value to your hotel, some of this strategy’s core benefits include:

  • Increased revenue: This one may be a given, but total revenue management achieves more revenue income. While non-room departments have historically only played a supporting role in your guest experience, today they generate significant interest from guests and revenue percentages for your hotel. The total revenue management strategy accounts for these often overlooked, but highly profitable functions in your hotel.
  • Savings: A total revenue management approach shows you which areas of your hotel are most profitable and worth your time. Helping you better coordinate staffing, purchasing and fixed costs to the items that matter most to your guest experience, and your hotel’s bottom line.
  • Resource optimisation: All hotel amenities and resources are limited, and total revenue management can help optimise them. For example, by analysing your food and beverage department’s menu performance, you can buy food products that are popular and ordered frequently by guests, rather than investing in perishable meals that are left to go bad. 

The same goes for your services. Maybe your spa is dead most of the day and then frequently overbooked during peak hours? Use total revenue management to learn that you should offer special treatments and deals during the off-peak times. 

  • Productivity: When your hotel has successfully found a revenue-generation strategy that works, you gain the tools to increase profit margins and lower costs faster, with measurable results through your hotel’s data.
  • Efficient operations: Total revenue management focuses all your hotel’s departments on the goal of increasing revenue and offering better, more tailored services to guests. By breaking these larger goals into smaller, tactical steps for each department, your staff learns what they need to do to improve their department’s performance. 
  • Reporting power: Meanwhile, you gain the data you need to focus on what matters and advertise it to guests to increase not only profitability but brand presence.

The challenges of total revenue management

Sounds great, right? Total revenue management is a superior revenue-generation model to rely on when managing your hotel because it considers distribution, acquisition and operating costs to optimise revenue. However, it can be challenging to achieve for multiple reasons.

When using this model, you must consolidate multiple revenue streams and sometimes hundreds of different data sources, making it difficult to calculate manually. Additionally, some of your hotel’s departments may inherently have high cost ratios, meaning that their revenue doesn’t always indicate success. 

Even so, total revenue management offers the only accurate view of your hotel’s financial performance, and the best method of increasing average spend and revenue per guest. 

The key to achieving total revenue management: technology

Overall, the biggest hindrance to mastering total revenue management is configuring the right system. However, once you know the right formula, it is a highly achievable goal. 

The formula to total revenue management is:

Revenue Management Tools + Business Intelligence Tools + Revenue Management Strategies (through all revenue streams) = Total Revenue Management 

What this formula means: you must use a combination of revenue management and business intelligence solutions to gain the comprehensive decision intelligence you need to optimise all your hotel’s revenue streams. Your hotel likely already has its core revenue management platforms set up, meaning your only missing equation to achieving total revenue management is the business intelligence. 

Fortunately, advanced hotel business intelligence tools have become readily available in today’s market. These solutions offer the most clean, accurate data of your hotel’s revenue streams by flexibly syncing with the software applications you rely on to manage your hotel. 

Applications like your hotel’s:

  • Point-of-sale (POS) system
  • Property management system (PMS)
  • Customer relationship management (CRM) system
  • Booking systems
  • Market reports

If your hotel is like most, you have likely implemented many of these systems at different times, with different vendors. By leveraging the right business intelligence tool to connect and action on all the data of your revenue management platforms, you gain a clean flow of data across all systems while capturing what you need to know about your hotel’s revenue streams.

This is visualised in reports that are applicable to your entire portfolio of properties, giving revenue managers and hotel staff the business and decision intelligence to optimise revenue streams across their operations, sales and marketing. The result is total hotel revenue management, both for their current and future operations.

From there, revenue managers can embed this data-driven strategy into all levels of their hotel’s culture, ensuring that each department is aligned with their short- and long-term goals for the hotel. 

Simplify total revenue management with Intouch BI

Of course, your revenue management strategy is only as good as the data you have, meaning that the data partner you choose is integral to your success. That’s why InTouch BI does the ‘number crunching’ for you with the most high-quality, relevant data reports available. So hoteliers can spend their time analysing data instead of collecting it. 

With over 20 years of experience in hotel software, InTouch BI offers more than business intelligence, it provides a decision intelligence solution designed to help you achieve total revenue management. Whether you have one hotel or thousands, our user-friendly interface captures all your revenue streams in one place, extracting the data you need to make profitable decisions. Our goal — to provide hoteliers with the highest quality of centralised, insightful data to make every decision with confidence.

Request a demo of Intouch BI to learn how the platform works to help hotels like yours optimise their profitability.


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