The forecast and budget season is approaching again. This means that revenue and finance teams are currently evaluating revenue, profit and loss, costs, and investments. For some, investment in new technology might not seem a priority. But not investing in tech also comes at a cost.
For decision-makers, you need to weigh up the revenue opportunity and the potential savings through increased efficiencies, against the cost of implementation.
Typically, hotels run on Duetto will see a RevPAR uplift of 6% in the first year of operations, and a further 10% gain following that. In terms of market standing, Duetto clients see an average RGI of +12% vs their comp set. Achieving number one in your market means that you are setting the bar, rather than chasing the competition.
For every day, week, and month that your property is not using a revenue management system (RMS) to optimize room rates, revenue is being left on the table. The key reason to invest in an RMS is an uptick in revenue.
Our recent ‘Revenue Management Outlook & Trends Survey 2022’ revealed that 78% of hoteliers planned to increase their investment in hotel tech in the next three years. If you are in the remaining 22% you are going to be left behind.
The question should not be ‘can I afford to invest?’ but rather ‘can I afford not to?’
Why Hotels Took The Leap
Forecasting, pricing automation, Open Pricing that fluctuates according to demand and not in lockstep with a Best Available Rate (BAR) strategy, and having easy-to-use technology to support revenue teams, are just some of the deciding factors for hoteliers who have taken the step to implement new technology in recent times.
“Design Hotels was looking for a partner with competencies in forecasting and pricing automation, specifically for small to medium-sized boutique hotels. We wanted to enable smaller-scale properties with a fluid pricing strategy and the technology to support this endeavor, and Duetto does exactly that. It’s a great fit because hoteliers can easily understand why the system increases or decreases prices based on Duetto’s ideal booking curve, and therefore optimizes prices by room type.” – Simon Schwitallik, Head of Channel Analytics at Design Hotels.
“Even in such stressful times, our hotels have seen improvements by taking the right approach for the relevant market. GameChanger is our ‘game changer’ in terms of choosing the right strategy for the individual market, even if this market changes spontaneously. Even small, traditional hotels can improve easily with GameChanger. We could see RevPAR increasing within two weeks of Duetto being implemented and it’s still going upwards!” – Fabian Trapp, Revenue & Distribution Coordinator at Gorgeous Smiling Hotels.
3 Additional Factors To Consider For Technology Investments
Here are three additional factors to weigh up as you consider investing in an RMS:
Forecasting, budgeting & managing cash flow
Revenue management technology enables hotel leadership teams to generate forecasts and budgets more quickly, more accurately, and at a more granular level, which ultimately enables them to be smarter about managing cash flow. If you can see when the money is coming in you can better schedule when payments can go out.
For most hotels, there is an outright owner, investor, or group of investors that the property, group, or chain must report into. And this is where forecasting comes to its fore. As a lot of hotels look for additional investment or refinance, an accurate forecast is vital in securing the best terms.
Less CapEx, More OpEx
Operating your tech stack through a software as a service (SaaS) model such as Duetto means that hotels can spread the cost. It’s not a big, one-off CapEx spend – you are not buying hardware that sits under the desk and becomes outdated, requiring further big spend in the future. Rather a cloud-based RMS is an OpEx spend, based on a subscription model. This makes ROI quick and realistic to achieve.
Operations & scheduling labor
An RMS that provides forward-looking data can more accurately track demand. Using a cloud-based system that can provide varying levels of access to team members, means that hotel operations leaders, such as housekeeping, engineering, and front of house, can get access to the data most relevant to them. This enables them to schedule staff rotas, order more accurately for perishable supplies for F&B, manage operational loads such as linen counts, and schedule essential maintenance works.
In summary, your rooms are perishable inventory. You can never get back the lost revenue from yesterday. But by investing in an RMS you can optimize room rates for the future and ensure that you are yielding according to market demand for each segment, day, channel, room type, and other variables.
What’s more, implementing an RMS means the revenue team can provide an accurate forecast to leadership, owners/investors or finance providers. Operations can run more efficiently. And with a subscription model offering payment terms conducive to profit optimization, as soon as the system is implemented the incremental gain in revenue will cover the subscription cost plus extra.
Can you really afford not to invest in technology?
This post originally appeared on the Duetto website and is reproduced with their permission.