FAQ – Frequently Asked Questions

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All you Need to Know about Hotel Revenue Management

Answers by TCRM

  • Q. What is the definition of revenue management

    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.

  • Q. What is hotel revenue management for the hospitality industry?

    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

  • Q. What does a revenue manager do?

    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

  • Q. What business challenges do hotel revenue managers solve?

    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

    • Customer segmentation,
    • Demand forecasting,
    • Inventory management,
    • Yield management, and
    • Pricing.

    Source: altexsoft.com

  • Q. What is revenue optimization?

    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

  • Q. What is commercial strategy for hotels?

    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

  • Q. What is task force for hotels?

    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.

    Quick Placements

    • TCRM offers fast turn-around times for your staffing requests because we understand that every day without a revenue manager means potential revenue loss for your hotel.
    • TCRM keeps your revenue strategy on track so you can focus on recruiting and hiring while we mind the numbers.
    • We customize contracts to meet your needs for on-site or remote revenue management resources.

    Experienced Managers

    • Our technical savvy, with brand and independent hotel systems, allows for rapid implementation of your revenue tactics from day one.
    • TCRM maintains a low property-to-consultant ratio to maximize workflow and accuracy.
    • We’re working in major and tertiary markets across the United States, so our revenue managers have the relevant experience required to benefit your hotel’s topline revenue stream.

    Recruiting | Training Resources

    • TCRM will help you select the best revenue management candidate for your specific needs. Our technical skills assessment questions have been crafted specifically for executive leadership so you can feel more confident about hiring the right candidate.
    • TCRM offers on-boarding training to guarantee a seamless transition from task force to new hire.
    • TCRM’s revenue management classes offer training from beginner level to advanced strategy.

  • Q. What is hotel RevPAR?

    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

  • Q. What is a good hotel RevPAR Index?

    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

  • Q. Which Hotel Revenue Management Systems (RMS) does TCRM use?

    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

  • Q. What is Business Intelligence (BI) for hotels?

    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

  • Q. What makes TCRM’s Revenue Management services unique?

    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 Customized Contracts

    • Every hotel is unique and deserves customized services optimized around seasonal trends and the teams’ strengths. (Commodity-style, pre-programmed solutions fall short of expectations in crunch times.)
    • With TCRM, you choose the services that are beneficial to you, when you need them the most.
    • Our flexible and tailored support maximizes the return on your revenue management solutions investment.

    TCRM Strategic Toolkit

    • Pace and performance data requires complex analysis. TCRM’s easy to understand revenue snapshot tool takes the headache out of complicated evaluations.
    • Armed with preemptive strategic insight from our BI Tool, your hotel can avoid fire sale discounts and less profitable channels of business.
    • TCRM’s report card auditing tool measures the results of tactical initiatives guiding/creating a culture of pro-active improvement with long-term benefits to your topline revenue stream.
    • Our top performing clients utilize an upgraded service, our (revenue playbook), to gain more market share against competitors.

    TCRM Technical Expertise

    • Your designated revenue manager is on-boarded to become an extension of your property team(s) to maximize his/her effectiveness for your benefit.
    • TCRM’s “nerd-level” technical experts obsess over your data points, system integrations and anything in a spreadsheet, so you don’t have to.
    • No downtime: we plan for turnover, so you don’t have to. Your daily revenue strategy is protected with agency support regardless of personnel changes.
    • Experienced, attentive agency with a 1:1 family feel that cares about your long-term success.
    • Low property-to-consultant ratio to maximize workflow and accuracy.

     

  • Q. How much do revenue management services cost?

    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.

  • Q. What are the benefits of hiring expert revenue management consultants?

    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.

    • Technical Expertise.
    • Your designated revenue manager is on-boarded to become an extension of your property team(s) to maximize his/her effectiveness for your benefit.
    • TCRM’s “nerd-level” technical experts obsess over your data points, system integrations and anything in a spreadsheet, so you don’t have to.
    • No downtime: we plan for turnover, so you don’t have to. Your daily revenue strategy is protected with agency support regardless of personnel changes.
    • Experienced, attentive agency with a 1:1 family feel that cares about your long-term success.
    • Low property-to-consultant ratio to maximize workflow and accuracy.

  • Q. What types of hotel revenue management training does TCRM offer?

    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