Wednesday, May 22, 2024

Six Revenue Management Trends to Watch

2022 was a year when we saw a significant move to cloud-based technology. Staffing pressures and market variability meant that hotels needed to implement systems that could harness and process extraordinary amounts of data without having to hire large teams of specialists.

The interoperability of HTNG-spec, cloud-based technology has meant that tech stacks have evolved rapidly across a range of areas of critical importance to hotels.

Looking at the results of our recent Trends & Predictions survey, it looks like 2023 will be another year of increased tech adoption, as hotels continue to look for ways to drive efficiency, boost profitability and adapt to the challenges of the year ahead.

For more insight on industry trends & predictions for 2023 read our latest eBook: Targeting Greater Profitability In 2023. Download your free copy today:

Here are six revenue management trends to watch for in the year ahead:

1. Variable Demand 

Demand will continue to be variable because we will continue to experience multiple overlapping market crises on a recurring basis – from pandemics to wars to recession – as such we will need to adopt very flexible pricing models, especially in the high-volume hub city destinations.

However, there are opportunities here. This variable demand should drive hotels to focus more on the repeat customer, using personalization and emotional trust appeal to build closer connections and loyalty with the individual guest. The value of this connection between hotel and guest will only grow in importance in the years to come.

2. Short-term booking windows

The short-term booking window remains, and this will continue to challenge hotel teams, both operationally and from a revenue perspective. However, a short-term booking window represents an opportunity to connect with a more mobile, more astute, and engaged traveler, switching seamlessly between business and leisure profiles. Hotels are learning to integrate customer data and loyalty profiles across the entire spend onsite to curate personalized offers for a more discerning guest. This is a guest that is used to shopping in a short-term booking window and making direct decisions with their hotel supplier.

3. Dynamic optimization

Hotels can no longer rely on fixed pricing models to deliver consistent and reliable volumes across their hotel real estate. Dynamic pricing and rate flexibility have become essential, not just for the hotel, but also to attract the new breed of engaged traveler.

Real-time dynamic optimization enables hotels to react instantly to changes in demand, accelerating go-to-market strategies and promotions. In a world where everything is in an instant, a lack of speed can kill profit. Be ready for agile pricing – what we may come to refer to as ‘situational pricing’ – as this assists hotels in driving advantage in short term windows or limited seasonality by using flexible data models based on forward-looking predictive models.

4. Real-time forward-looking data 

Historic data is no longer sufficient to build a hotel revenue strategy. Duetto has been focusing on forward-looking data for years. Our solutions pull in website data that provides insight into future demand dates and consumer price sensitivities.

Moving forward, hotels need to look beyond the booking engine and start considering wider demand intelligence, such as how upcoming events (sports, concerts, conventions etc) may boost demand, and on the flip side, be aware of how other external factors, such as severe weather, may change the demand curve. If you measure it, you can manage it.

A great example is Virgin Hotels Edinburgh, which opened in the middle of the summer season of 2022 and just ahead of the busy festival period. The hotel needed to enter the market competitively on price without underselling. However, as a new property, the hotel had no historical data. Therefore, the revenue team used short lead market demand data and pick up data to be able to price and forecast more accurately. Having access to forward-looking demand data, such as the website data Duetto ingests, was important in enabling the hotel team to identify small market trends, making sure they didn’t miss out on any opportunities.

5. Data transparency and co-operation

Forward-looking data, such as the web traffic data available in Duetto, provides hoteliers with a vital heads-up on what is to come in terms of bookings and consumer demand, and this is even more important while that booking window remains truncated.

Sharing this data with the relevant teams and making sure that all departments have access to the same data, in real-time, means that operations teams can better schedule staff and order perishables, while revenue, sales, and marketing can work together to fill any gaps in demand through tailored packages and personalized pricing. And this data should be available and transparent to all stakeholders. Today’s revenue leaders should be able to adapt their data story or visualization to their audience. They should be working closely with executive teams, asset managers and investors, as well as brand development teams. Pricing parameters play an important part in asserting a brand’s value.

6. Personalized pricing

Our work in the casino and leisure resort space has allowed us to assign personalized pricing and packages based on upsell demand or loyalty profile directly from the inventory through revenue management. As we continue to evolve this capability in our application, we will see hotels working in a more fluid and more targeted way with their individual guests and business partners. The more personalized your offers, the higher your conversion rate. The best way to drive this is to link personalization directly to revenue. We have seen this through our partnership with Oaky. Working together with Duetto, Oaky has reported hotels achieving 45% more guest spend per upgraded night and at the same time providing a customized guest experience. Hotels will see this trend continue through loyalty and profile-based offers targeted directly to individual guests in the shopping and confirmation process.

Why Make Tech Investment A Priority in 2023?

Still unsure about the need for a technology upgrade? Ask yourself, are your customers still carrying around a Nokia 3310 out of loyalty? The phone was great in its day, but the world has moved on. Technology has advanced. The customer has advanced. And hotel businesses that don’t keep up with this change will slip behind at a rapid pace.

When your current technology is limiting your options, the replacement cost must be compared to the revenue lost from not implementing technology in the first place.

In addition, modern solutions attract the brightest talent, who don’t want to have to perform mundane tasks such as data entry. They want a system that offers the efficiencies of controlled automation so that they can work to influence the direction of business and strategy of a hotel business.

A cloud native system like Duetto also allows for a more fluid and hybrid way of working for the revenue manager, which is a tremendous benefit when attracting young talent today. A legacy system often requires an office presence. But by working in the cloud your talent can work in a more flexible way to drive revenue for the hotel from anywhere.

This post originally appeared on the Duetto website and is reproduced with their permission.

Cloud-based hotel revenue management software and revenue strategy solutions that deliver powerful insights on pricing and demand. Discover more today.

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