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Don’t Buy a Revenue Management Solution Before Asking These Two Questions | By Jeff Zabin

According to The 2018 Smart Decision Guide to Hospitality Revenue Management (click here to access), more than one-quarter (28%) of hoteliers who have not upgraded their revenue management within the past 3 years plan to do so in the next 12 months.

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According to (click to access), more than one-quarter (28%) of hoteliers who have not upgraded their revenue management within the past 3 years plan to do so in the next 12 months.

By asking the right questions, decision makers can determine which hotel revenue management solution on the market best fits their needs and is most likely to deliver the benefits they seek, with minimal risk and expense. Needless to say, the hotel's revenue manager(s) — people who know the nuts and bolts of inventory management and length of stay control and who understand, for example, how to calculate group rates and apply rate fences — should be included in the evaluation process.

According to , most revenue managers want solutions that provide visibility. They want to be able to look under the hood and dive into price sensitivity data and observe at a detailed level what inputs are behind the system outputs that are being made and how adjustments to the decision model would change revenue outcomes. They do not want to wait for actual booking numbers to come in to understand the impact of their strategies and determine whether they made the right decisions. In short, revenue managers need to be comfortable that the new solution will enable them to do their jobs with maximum effectiveness.

The following are two must-ask questions that decision makers and influencers may wish to explore with solution providers to ensure that, once implemented, the revenue management solution will enable them to achieve their desired business outcomes.

How much should we charge walk-in guests? What should be the floor and ceiling for our rate range? Are the changes in demand and bookings likely to represent a short-term or long-term pattern – and, if the latter, what actions should we take in response? To what extent should we discount negotiated rates? What should our best available rates be for the coming year? What discounts and promotions, and to what target customer segments, are likely to perform well right now and in the near-future? What discounts would likely dilute profits and should we therefore avoid?

To what extent should we mark up our premium rooms, based on the current and near-term demand patterns? What competitors' price moves would likely affect these demand patterns and how should we respond if those moves become reality? How can we counteract cancellations and no-shows, group wash, extensions and early departures to capture optimal profitability?

A solution should provide for flexibility, which is important when it comes to setting pricing, noting special events, adjusting segmentation schemes, etc. A solution should also make it easy to accommodate virtually any need, including the need to monitor and measure individual property, portfolio, and departmental performance, the need to create customizable hierarchies for different geo-markets, channels, room types, time periods and loyalty programs.

Important questions might include: Once problem areas are identified, can the solution guide users on how to take appropriate action? Can tactical decisions, including the overall impact, be tested live? Can the dashboards provide exception reporting, identifying areas needing the most attention?