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Dynamic Pricing is the practice of adjusting rates based on “dynamics” occurring in the hotel or market. These dynamics include supply and demand fluctuations, days of the week or seasons, and other factors that may have an impact on yours or your competitor’s pricing. Dynamic Pricing can occur in real-time as demand-influencing events occur or can be anticipated or planned for in advance.
Revenue management is the application of disciplined analytics that predict consumer behavior at the micro-market levels and optimize product availability, leveraging price elasticity to maximize revenue growth and thereby, profit. The primary aim of revenue management is selling the right product to the right customer at the right time for the right price. The essence of this discipline is in understanding customers’ perception of product value and accurately aligning product prices, placement, and availability with each customer segment. Source: Wikipedia.
Within the hotel industry, the widely accepted definition is: “Selling the right room, to the right client, at the right moment, for the right price, through the right distribution channel, with the best cost efficiency”.
It involves the use of performance data and analytics, which serve to help hotel owners and operators to more accurately predict demand and other consumer behaviors. This, in turn, allows them to make more sensible decisions regarding pricing and distribution, in order to maximize revenue and, therefore, profit.
As a concept, revenue management actually began in the airline industry, where companies found ways to anticipate consumer demand in order to introduce dynamic pricing. However, it is applicable in any industry where different customers are willing to pay different prices for the same product, where there are only a certain amount of that product to be sold, and where that product must be sold before a certain point in time.
To carry out effective revenue management, a business must also have some way of forecasting demand and consumer spending habits, so that informed adjustments can be made. For instance, hotels can use past data, existing bookings, weather forecasts, and other industry data to inform their revenue management strategy.
Source: Revfine.com
Source: Wikipedia
The primary role of the revenue manager is to maximize the businesses’ opportunity for revenue and profits. In order to do that, the revenue manager is in charge of compiling and analyzing data to make decisions regarding pricing. The revenue manager compiles data on the business as well as the competition. Source: Study.com
Revenue management means predicting consumer behavior to sell the product at an optimal price every day. Therefore, the definition of hotel revenue management is straightforward: selling the right room to the right client at the right moment at the right price on the right distribution channel with the best commission efficiency. Sometimes revenue management is called yield management.
Revenue management is defined by interconnected components, which are
Source: altexsoft.com
Revenue optimization is the management of acquisition, retention, expansion, and pricing strategies in order to improve business health and profits. When you leverage revenue optimization, you’re working to not just impact the earnings from each individual sale, but rather improve the sum of your income. Source: Big Commerce.com
Commercial (strategy) excellence is the design and delivery of commercial best practices that maximize profitable revenue, including programs to consistently improve pricing, salesforce effectiveness, product mix, customer selection and focus, and distributor management. Source: Bain.com
Task Force consulting services for hotels allows a hotel or management company to temporarily fill an open position while recruiting for a permanent candidate. Depending upon the position, the temporary assignment may be on property or remote for services such as Sales and/or Revenue Management.
The hotels that hire TCRM for task force require best-in-class revenue management skills to maintain and protect their market share for an interim period.
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Revenue per available room (RevPAR) is a metric used in the hospitality industry to measure hotel performance. The measurement is calculated by multiplying a hotel’s average daily room rate (ADR) by its occupancy rate. RevPAR is also calculated by dividing a hotel’s total room revenue by the total number of available rooms in the period being measured.
RevPAR is a metric used in the hospitality industry to assess a property’s ability to fill its available rooms at an average rate. An increase in a property’s RevPAR means that its average room rate or its occupancy rate is improving. However, an increase in RevPAR does not necessarily mean better performance.
RevPAR fails to consider the size of a hotel. Therefore, RevPAR alone is not a good measure of overall performance. A hotel may have a lower RevPAR but still have more rooms that earn higher revenues.
Additionally, growth in RevPAR does not mean that a hotel’s profits are increasing. This is because RevPAR does not use any profitability measures or information on profits. Focusing solely on RevPAR, therefore, can lead to declines in both revenue and profitability. Many hotel managers prefer to use the average daily rate as a performance measure since it is among the main drivers of hotel occupancy. Therefore, with accurately priced rooms, the occupancy rate should increase, and a property’s RevPAR should also naturally increase.
Source: Investopedia
Measures a hotel’s RevPAR performance relative to an aggregated grouping of hotels (i.e., competitive set, market or submarket, etc.). If all things are equal, a property’s RevPAR Index, or RGI, is 100, compared to the aggregated group of hotels. Historically, this also is described as “fair share.”
A RGI greater than 100 represents more than the expected share of the aggregated group’s RevPAR performance. Conversely, a RGI below 100 reflects less than the expected share of the aggregated group’s RevPAR performance.
To calculate RGI: (Subject hotel RevPAR / Aggregated group of hotels’ RevPAR) x 100 = RevPAR Index
For example, if the subject hotel’s RevPAR is $50, and the RevPAR of its competitive set is $50, the subject hotel’s RGI is a total of 100. If the subject hotel’s RevPAR totals $60, its index is 120, indicating the hotel has captured more than its expected share. If the subject hotel’s RevPAR totals $40, its RGI is 80, indicating the hotel has captured less than its expected share.
Source: STR.com
TCRM’s consultants have expertise in the following Revenue Management Systems.
Marriott: CI/TY, EPIC, FOSSE, Full-Service PMS, Galaxy/Lightspeed, HPP, MarRFP, MARSHA, MRDW, OneYield Version 2
Hilton: Cognos, GRO, OnQ RM, OnQ PM, OnQ FM, OnQ R&I, OnQ SM, The Lobby
Hyatt: PRIO, Reserve, RMT
CRS: iHotelier, InnLink, SynXis, Windsurfer
IHG: Hotel Content Manager, IHG Reporting, I-RFP, Merlin, Concerto
PMS: Atrio, AutoClerk, CloudBeds, Infor HMS, innRoads, Maestro, Opera, Opera Cloud, RoomKey, roomMaster, Sabre PMS, SkyTouch, Skyware, Springer Miller SMS, StayNTouch, Visual Matrix
RMS: Duetto, IDeaS G2, IDeaS G3, Rainmaker
Other: Amadeus, *S&C, *TravelCLICK Product Suite, Cendyn GuestFolio, Opera S&C, OTA Insight, * Rate Insight, *Revenue Insight, *Market Insight, *Parity Insight, SiteMinder
Business intelligence (BI) tools are types of application software that collect and process large amounts of unstructured data from internal and external systems, including books, journals, documents, health records, images, files, email, video, and other business sources.
Throughout the hotel industry, we suffer from a lack of critical, timely information on the most fundamental aspects of our business. We attempt to address this deficiency through manual reporting; printing reports from operational systems, keying numbers into spreadsheets and emailing files daily. This turns some of the industry’s brightest minds into simple report producers. BI automates, accelerates and enhances reporting, turning these report producers into information consumers who can analyze and apply their findings to take advantage of business opportunities while they still exist.
TCRM offers a BI Solution for hotels.
Source: Hotel Tech Report
We create competitive advantages for our partners through passion for winning, pursuit of constant improvement, and power to translate commercial strategy into action across all levels of an organization.
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Revenue Management Services range in price from as low as $2500 for one-time revenue system audits to $100,000+ for full-time revenue management positions.
TCRM offers multiple levels of hotel revenue management services.
TCRM is the hospitality industry’s leading resource for Hotel Revenue Management Services for hire. We create competitive advantages for our partners through passion for winning, pursuit of constant improvement, and power to translate commercial strategy into action across all levels of an organization.
TCRM offers hotel revenue management training on the following topics:
Competitive positioning
Booking engine optimization
Effective strategy meetings
Room type optimization
STR analysis
Strategic pricing
Upselling strategies
PMS utilization
D360 training
Overbooking strategy
PMS configuration
Group block management
Same-day sales strategy
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