Revenue management can make a huge difference in the revenue of a company in the hospitality industry. Putting effort into this area has the potential to significantly increase revenue. However, revenue management strategies require a lot of data and time, which can be a difficult investment. We’ll walk through the basics of revenue management in the hospitality industry and show you a solution that makes revenue management easier.
What is revenue management?
Revenue management is the strategy that allows companies to predict and anticipate demand in order to optimize pricing, availability, and distribution channels. Successful revenue management is able to predict consumer behavior at the micro-market level. Revenue management optimizes cost efficiency by predicting when, where, and for how much each item or service should be sold. For example, buying a concert ticket today will be a different price than buying the same concert ticket one week from now. That is because the ticket seller has predicted consumer behavior, and how much they can raise the price as availability goes down.
What is revenue management in the hospitality industry?
In the hospitality industry, revenue management can be defined as selling the right rooms to the right customers at the right time for the right price and through the right channel, creating optimal revenue and cost efficiency. Consumers are accustomed to this type of selling strategy in hospitality, such as fluctuating flight and hotel room prices. Although this is a common practice, it takes a lot of data and strategy to get the maximum benefit from revenue management.
Revenue management requires data on past revenue, past consumer purchase behavior, past pricing strategies, market demand, and more in order to predict future revenue based on future pricing strategies. Acquiring and analyzing this data can be difficult and time-consuming. Each dataset comes from a different source, meaning they have to be standardized and integrated together.
Why is revenue management important to the hospitality industry?
Revenue management can be used in many industries, but it is especially important in the hospitality industry. If hospitality companies didn’t take advantage of vacancies, scarcity due to low inventory, and the consumers willingness-to-pay, they would be missing out on a lot of potential revenue. Since hotels, airlines, and online travel agencies booked every room at the same price no matter when or where it was booked, they would not make as much money.
Consumers are willing to pay more as the trip gets closer in time, as the availability becomes scarce, and at peak times of the year. Therefore, a dynamic pricing strategy allows hospitality companies to acquire the maximum revenue with optimal cost efficiency. Dynamic pricing strategies require big data from both internal and external sources, which can be difficult to gather and combine. That’s where Web Data Integration comes in.
How Web Data Integration can help
Web Data Integration (WDI) allows companies to identify, extract, prepare, integrate, and consume web data in minutes rather than months. WDI can make revenue management much easier by giving you the data you need in a consumable format. If you’re using data to dictate your prices, models can be informed so that you can have maximum cost efficiency without manually changing prices. Hotels can use WDI to implement dynamic pricing based on competitors’ prices, availability, peak times, and more. The same is true for online travel agencies, vacation rentals, rental cars, and travel data providers.
Revenue management is much more effective with automated processes to manage data acquisition and dynamic pricing. If you want to learn more about how Web Data Integration can help you with revenue management, contact a data expert today.