Hotel market data analysis enables resorts to gain insight into potential guests and competitive landscapes. Here’s how to use market data for your...
The Top 5 Hotel Revenue Management Challenges in 2022
The most common hotel revenue management challenges can also be your greatest strength. Here are the top 5 challenges (and solutions) in 2022.
With the many functions that a hotel revenue manager is responsible for and the field of revenue management rapidly evolving, you are bound to encounter a variety of challenges in your day-to-day. Dodging these obstacles entirely is often impossible; what’s more important is recognizing them and preparing yourself and your organization to take them on.
The preparations you make and the tools you equip to do so, in fact, can allow you to create stronger revenue strategies than you ever could have made without them. Not to mention, having a thorough understanding of your challenges and how to overcome them will place you ahead of your competitors. You'll be in the best position to analyze consumer behavior and determine a price point most ideal for the time (i.e., season, local events, and other demand factors).
Here are the five biggest hotel revenue management challenges in 2022 and how to overcome them.
- A growing number of responsibilities
- Limited access to data and insight
- Time-consuming manual processes
- Optimizing demand across distribution channels
- Communication between departments
1. A growing number of responsibilities
First and foremost, the list of responsibilities of a hotel revenue manager is long. After all, you're in charge of making the business profitable by maximizing its revenue. This responsibility can encompass everything from pricing strategy committees and expense control to analyzing the hotel's financial statements and determining your monthly expenses and payments. It also entails revenue forecasting, analysis, calculations, reporting, review, and more.
In recent years, the concept of total revenue management has taken the industry by storm. Revenue managers are asked to optimize all revenue for F&B, events, and nearly every amenity — it’s a lot to take on.
Not only do you need to centralize, organize, and interpret your data for all these revenue streams, you need to continuously find more data pipelines. The amount of data hotels collect is constantly growing, and it’s your job to decipher and utilize a seemingly endless amount of information.
It's up to you to know every aspect of your hotel’s revenue and make sure management understands the revenue improvements needed to ensure you optimize your hotel to its full potential.
Solution: Become a system expert, boost your data knowledge
Revenue management is a somewhat novel role in the hospitality industry and it takes a lot of data analytics experience to make quick decisions from your data. It’s important that you build your know-how and utilize tools that can boost your skillset.
Modern BI tools can help you keep productivity high, stress low, and efficiency maximized. While making your job easier, they can also help you grow your data analytics knowledge. Look for BI software that offers you both ease of use and flexibility. Software that’s easy to use will allow you to focus on gaining insights and building your knowledge without a clumsy user experience. Flexible software will give you the ability to explore different methods of data visualization without holding you back as you build your skillset.
2. Limited access to data and insight
Another challenge is not having enough access to data to inform decisions on pricing, strategy, revenue opportunities, level of demand at a given time, etc. In some cases, the issue may be that there is a huge collection of available data to manage without the right platform and automation to organize it.
Either end of the spectrum is problematic for revenue managers. If you don't have access to enough data, you risk not having a holistic view of your consumers and, therefore, enough insight to identify revenue improvement opportunities.
On the other hand, too much data can make it difficult to weed through irrelevant data and identify key points that can increase the hotel's bottom line.
Solution: Understand the data you need — use BI software
Whether there's not enough data or too much, the most important thing you can do is gain access to the right data and use the right tools to put it to use. When you have high-quality data at your fingertips, you can take full advantage of what you have and make it actionable.
Here is where Business Intelligence (BI) software can also support revenue managers. Ideally, BI software should be able to gather and process extensive data through queries. This way, you have access to not only more data but to actionable data.
Keep in mind that not all BI software is created equal. It’s important to ensure that the platform you choose provides more than aesthetically pleasing reports. Digging into the quality, quantity, and accuracy of data is crucial. You need a partner that understands the hotel industry just as much, if not more than you do.
3. Time-consuming manual processes
As the saying goes, "Out with the old, in with the new." Manual export, data compilation, and spreadsheet analysis once dominated hotel revenue managers’ time. However, digital advancements have replaced these time-consuming processes and made it much easier for revenue managers to get the data they need without all the manual hassles.
Research has shown many times the extent to which manual processes cost businesses time, money, and efficiency:
- More time spent on manual work is less time spent on more important matters — 60% of respondents to one survey said they could save six or more hours in their workweek without manual work, and 72% said they would use that time to complete more valuable tasks.
- Completing tasks manually allows more room for human error and mistakes — manual data handling has an 18-40% probability of human error. It's inevitable.
- Manual processes cost more money than they're worth — providing more room for mistakes, which costs businesses more than $600 billion each year. Manually managing your processes costs your company money while taking away time you could be spending optimizing revenue.
Solution: Data management automation
A combination of automation technology and BI software answers the challenges manual tasks will present to you. Data extraction software, for example, can automate the process of gathering data from your siloed systems while your BI software organizes the data you need to do your job efficiently. Automating manual processes this way reduces mistakes and speeds up the whole of your operations. In fact, research shows that 42% of business leaders report quicker workflows and completion of tasks with the adoption of workflow automation — not to mention, 78% report that automation increases everyone's productivity.
4. Optimizing demand across distribution channels
Optimizing demand across distribution channels can be highly complex. Between online travel agencies, travel aggregators (i.e., search engines, booking agencies, etc.), and other web analytics opportunities, it can be challenging to filter through a large amount of data and optimize your demand. The responsibility of this role alone can take up a substantial amount of your time if you're not utilizing the available technology and tools created for this challenge.
Solution: Simplify market analysis
Simplify your market analysis with BI software. This way, you can identify gaps and fill in blanks where customers' needs and wants aren't yet being fulfilled in the industry. BI software takes the vast amount of data you have and sifts through the unstructured data to identify key points and insights. That way, you can determine which rates and packages perform best on each channel.
5. Communication between departments
One of the most important — and challenging — factors that goes into increasing hotel revenue is establishing good, consistent communication between departments. Every department has its own goals and processes for meeting them and getting these departments and goals to align can be tough.
Communicating to them the main revenue goals for the organization and how each department can contribute will significantly reduce the misalignment between teams’ priorities and directions.
Solution: Build relationships, create communication channels
Good work relationships create more productive and efficient work environments. Likewise, excellent communication keeps everyone updated and informed on what will increase revenue and how they can contribute to that business goal.
Ask your coworkers how they prefer to communicate whether it be via email, on the phone, or through a business communication platform like Microsoft Teams. Schedule weekly or bi-weekly meetings to stay updated and work through roadblocks together. Be clear about your availability throughout the day and send consistent updates so everyone is in the know.
Creating communication channels that allow round-the-clock access to each other quicker will ensure everyone is not only on the same page but able to share valuable insights, answers, advice, and collaborations.
Facing new challenges with new tech
Continuous changes in the hospitality industry are bringing more challenges to revenue managers than ever before. Luckily, innovative technology and evolving hotel management practices can solve many of the problems revenue managers face. What’s important is that you find practical solutions that work for you and empower yourself with the tools that are out there.
Take the time to research software, communicate with your team to find new ways to collaborate, and automate redundant tasks so you have more bandwidth to maximize your hotel’s revenue and smash quarterly targets.
Overcome your revenue management challenges with InTouch
Are you ready to overcome some of the biggest hotel revenue management challenges of 2022? Start your research with InTouch and request a product tour to see how our powerful suite of decision intelligence tools can help you streamline your revenue.