Business Intelligence and Revenue Management Software Help Hoteliers to Compete for Every Dollar
By Nick Fortuna
All hoteliers want to achieve 100% occupancy, so what’s wrong with steeply discounting your last few vacant rooms each night and putting that inventory on high-commission travel websites? Since no one makes money from empty rooms, surely some revenue is better than no revenue, right?
Jason Freed, who has the unusual job title of hospitality data evangelist at Otelier, warns against maximizing topline revenue through a reverse-yield strategy. “Any revenue manager in the industry will tell you that if you do that, you train guests to book at the last minute,” said Freed, whose company, a Bronze Industry Partner, develops software solutions for the hospitality industry.
With business intelligence and revenue management software, hoteliers can take the guesswork out of gauging demand and pricing rooms accordingly. The software solutions typically provide digital dashboards that display data updated in real time, making it easy for hotels to track their occupancy, revenue per available room (RevPAR), average daily rate (ADR), and other key metrics, Freed said.
IntelliSight, a business intelligence platform from Otelier, for example, centralizes data from a hotel’s property management system and point-of-sale system to track revenue throughout the hotel, including from amenities such as restaurants and spas.
Hotels can look at their reservations for any date in the future and compare that data with the same figures from last year at this time. Leading software platforms also display data from STR or other providers so hoteliers can track their property’s performance against its competitive set. Armed with accurate, up-to-date data, hoteliers can “make better revenue decisions,” Freed said.
“Bringing in real-time data from all these different systems and pricing based on supply and demand, that’s what effective revenue management is,” he said. “For hotels, that means selling the right room at the right price at the right time. You do that by tracking your pace and pickup and setting your prices accordingly.”
Focusing Sales Efforts
Business intelligence and revenue management software can help hoteliers redirect their sales efforts to address “revenue gaps,” according to Amanda Harris, senior director of operations for Jacaruso Enterprises, an AAHOA Allied Member.
The Austin-based business helps hoteliers secure group and corporate customers through lead generation, marketing, and sales support. If hoteliers notice that they have very little business on the books for one week next month, for example, sales associates can reach out to established clients with deals for those dates, Harris said.
Similarly, if a hotel routinely lags behind its competitive set on a particular day of the week, the software will surface that data so hoteliers can take action. Maybe lowering prices would spur demand. Conversely, if hotels are running ahead of their competitive set or are performing better than at the same time last year, they likely can increase room rates to maximize revenue, Harris said.
The software allows hoteliers to track data at a granular level that simply wouldn’t be possible without technology. In a simple example, hoteliers can look at a date three months from now and see whether reservations for rooms with king-sized beds or twin beds are lagging behind last year’s pace. The specificity of the data allows hoteliers to tailor promotions toward particular consumer segments.
“Obviously, if you’re lagging, the best time to act was yesterday, and the second-best time is today, with a focused sales push,” Harris said. “Look for low-hanging fruit: Adjust pricing and channels if needed; deploy outbound sales to fill periods of short-term need; and target corporate, crew, extended-stay, and local demand generators. Know your backyard inside and out, and make sure that they know you.”
To address lagging reservations for certain dates, software may suggest that more room inventory be allocated to online travel agencies. Although OTAs’ high commission rates will eat into profits, a timely recommendation will prevent the hotel from missing out on revenue. Meanwhile, those bookings represent an opportunity for the sales team to convert OTA customers into members of the hotel’s loyalty club, Harris said.
“Winning revenue strategies come from the right mix of tech, talent, and execution, so train and empower your team to move fast, with clear goals and actionable sales strategies,” she said. “Use OTAs as a sales funnel to rebook guests into long-term revenue, build locally negotiated rates and corporate accounts, and educate on the benefits of booking on brand.com.”
Set It and Forget It?
Revenue management software can adjust room prices automatically based on demand or simply make recommendations that the hotelier can accept or reject, according to Micha Forbes, sales manager for the software developer Mews, a Bronze Industry Partner. It saves time for hoteliers since they no longer have to manually price rooms and monitor their competitive set.
Forbes said Atomize, a software platform from Mews, allows hoteliers to “put things on autopilot, if they prefer that, but also take control if they need to.” Hoteliers can establish guardrails for the software, such as never offering rooms below or above certain rates regardless of demand. Likewise, hoteliers can establish rates that are available 90 days ahead of a stay, for example, and separate rates that become available as that date draws near.
“A lot of revenue managers get nervous about automation because they’ve been doing their job for years, and they know their hotel and the ebbs and flows of the business,” Forbes said. “But I would argue that sometimes your gut feeling isn’t going to result in the best RevPAR decision. It’s nice to take that out of the equation and let pure data give you a recommendation.”
Some software can even send hoteliers personalized alerts and updates about revenue opportunities in their market, such as announcements of major events and weather developments, according to Brian Reising, market vice president for the software developer SiteMinder, an AAHOA Allied Member. The company’s Dynamic Revenue Plus application allows hoteliers to adjust their rates and channels as quickly as those opportunities arise, he said.
“What really matters is being able to set clear revenue goals based on real-time market conditions and adjusting quickly when things change,” Reising said. “This means revenue management is no longer a ‘wait and see’ game. It’s about defining the outcomes you want, tracking your progress in real time, and being agile enough to pivot your strategy quickly.
“The most successful hotels understand that occupancy remains important, but they’re equally focused on maximizing overall revenue – finding the sweet spot where occupancy and pricing work together to drive profitability,” he added.
Revenue management software can help hoteliers predict whether they’ll sell out on key dates and whether they should accept group business at a discounted rate. As an example, Forbes, of Mews, pointed to a hotel near Times Square that fields an inquiry for New Year’s Eve.
The group is seeking a rate that’s slightly below the hotel’s ADR for the same holiday last year, and the hotelier is unsure whether to lock down that business. By factoring in the hotel’s historical data, current reservations, and competitive set, the software can predict whether that group is likely to displace guests who are willing to pay a higher rate, Forbes said.
If the hotel is lagging behind last year’s bookings and the competitive set shows weakness, it may make sense to accept the offer and ensure a full house. But if current reservations are outpacing last year’s numbers, the hotelier can keep prices elevated and trust in market demand. To estimate that demand, software applications take a wide range of factors into account, including guest-satisfaction scores, which can indicate whether business is likely to trend upward or downward.
“With this technology, you can avoid the mistake of taking business that’s not worth the revenue it would bring in,” Forbes said.
Consider the Whole Property
With business intelligence software, hoteliers can maximize revenue throughout their property, said Freed, of Otelier. Based on historical demand and current pickup, hotels can adjust their prices for parking, food, beverages, spa services, and other amenities. If a particular dish is selling well at the restaurant, for example, managers can see that information on a digital dashboard and raise prices immediately.
Taking it one step further, the software can determine whether guest demand for alcoholic beverages is especially strong today, suggesting that the hotel could increase prices just for one day, Freed said. Since the software is linked to the POS system, it can even distinguish between demand for beverages at the pool versus at the bar. Based on that data, hotels theoretically could charge more for poolside service than at the bar, or vice versa, he said.
“The software allows you to slice and dice your data in a million different ways,” Freed said. “That’s the evolution of revenue management – taking the practices we’ve learned from room-revenue management and applying them to other departments in the hotel.”
With many customers tightening their belts, however, hotels do face the risk of alienating guests by getting carried away with dynamic pricing. Frequent guests may chafe at paying significantly more for a massage or a round of golf than they did at the same hotel last month, for example. Dynamic pricing isn’t always customer-friendly, but for hotels operating in competitive markets, it’s key to maximizing profitability, Freed said.
“The idea is to make as much money as you can based on supply and demand,” he said. “There are risks to dynamic pricing, but I just think it’s becoming more and more acceptable, and the next areas where you’re really going to see it are parking and food and beverage.”
Reising, of SiteMinder, said it’s important that hoteliers not overreact to periods of soft demand. Discounting may feel like the easiest approach, he said, but it often sets off a “vicious cycle,” with one property cutting rates, competitors following suit, and profitability cratering for hotels throughout the market. That “downward spiral of price cuts” may be hard for properties to recover from, Reising said.
“Instead, hold your rate when possible, and add value,” he said. “Be it a breakfast offer, early check-in, or a welcome drink, these extras cost little but go a long way in maintaining the integrity of your room rates while giving guests a reason to book.”
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