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Revenue Management Systems Promise & Delivery:
Part 2: The Hotelier Perspective

A vendor’s perspective can be very different from a customer’s. In a decision as significant and far reaching as whether to implement a Revenue Management System (RMS) in a hotel, hearing both perspectives can lead to a better decision. In the first article of this two-part series I presented comments from six major vendors of RMS technology. They gave their perspective on customer expectations of RMSs, crucial actions to ensure a successful RMS implementation, and the obstacles that can impede such an implementation. Now it’s time to provide the hotelier’s perspective.

Revenue Management staff, holding both on-property and corporate positions, were quick to share this comments. Where they matched those of the vendors, and where they differed, was significant.

Benefit expectations were the first area about which I asked hotel and vendors alike. While revenue improvement was the expectation that vendors most frequently attributed to hotel staff, the hotel industry representatives I spoke with focused much more on expected operational improvements. Improved forecasting, more effective group evaluation, and earlier and clearer trend identification were all expected gains from an RMS implementation. Better analysis tools, leading to more accurate and more revealing reporting, were hoped for as well.

Production of pricing recommendations based on length of stay was described as a unique and substantial anticipated benefit of an RMS – a situation that was not practical to anywhere near the same extent in a manual Revenue Management environment.

Improved operational processes, leading to less time spent performing repetitive activities and opening more time for analysis and more strategic activities, was the hope of several hoteliers as they implemented their RMS. Several looked for not only more granular management of the electronic distribution channels (in part facilitating efforts to maintain rate parity) but equally important, more extensive automation of those processes. One hoped for a broader array of activity reports – and the ability to quickly produce new variations of reports – saving them from long and recurring report development assignments.

On reflection, while the vendors were quick – not surprisingly – to cite higher RevPAR as the primary RMS benefit, hotel staff talked about process strengthening and streamlining. In the end both constituencies were ultimately going to the same place – improved revenue production.

Expectations are one thing – performance is something completely different. Did the Revenue Management Systems deliver on the promises? In general, the answer was a resounding "Yes". While some specific caveats were expressed, overall the hotel staff who I spoke with felt their expectations were met.

In addition to delivering promised functions, implementation of a web-based RMS, for one corporate Revenue executive meant an expanded oversight opportunity. He said, "We gained the opportunity to login to the system and look at each individual property’s data and their data analysis, as it was installed in one property after another." Another pair of experienced eyes, and eyes viewing from a corporate perspective, could be brought to bear.

Two hoteliers cautioned that their RMSs functioned successfully in comparatively straight-forward transient travelers, and often in group opportunity evaluation, but less so in more complex areas or under non-typical circumstances. One person commented that in a 155-room property in a secondary market, with 22 room types and few sell-out dates, their RMS fell short of the expected expert analysis and recommendations. Another hotelier observed that their RMS’s "BAR and group rate recommendations are not usually in line with the hotel’s comp set; (that in some cases) the lowest available rate is usually chosen, which is not realistic".

A focus on the vital role of interfaces in achieving full RMS benefits was cited by another hotelier, who said that their company’s initial expectations concerning the availability of data and of data management improvements, were not fully realized due to an out-of-the-gate lack of in-place interfaces.

In the end, was the RMS implementation effort worth it? The consensus among the hoteliers interviewed was, again, yes. In discussing the implementation process they cited – as had the vendors – the need for extensive planning, total and unqualified support by the property’s Executive Committee, and the importance of willingness to review and revise many of the standard, longstanding processes in order to fully capitalize on the potential of the new system. "Maybe not HR and Engineering, but everyone else (needs to be deeply involved), especially the Controller, Rooms and Sale and Marketing", a VP Revenue Management commented.

Another person praised their RMS supplier’s preparation of the installation, commenting " ... it was essential to listen to the vendor about the complexity of the implementation process. They know exactly what it would take". Another said "implementation is a true team effort and you must have your IT people – especially on the PMS side – involved".

Addition of a RMS to an existing Revenue Management process appears to intensify and upgrade the Revenue Management environment at a property. In the research for this article, hotel staff often described a higher level of concentration needed, and fostered, by these specialized systems. An RMS creates a tension several people suggested – a positive and productive tension – that challenges and over time reshapes key inventory and rate management processes, to generally significant benefit of the property. Processes are honed and attitudes are changed. One hotelier observed, "The RMS – through its recommendations if not its implemented actions – is forcing some of our hotel staff to be more aggressive than they would be on their own, and this is a positive step".

Has the RMS implementation effort been worthwhile? "Yes, in fact more than anticipated. The RMS has given us a place to focus in our program to create a Revenue Management culture at each property".

The purpose of this article is not to praise or criticize specific brands of Revenue Management Systems. Because hotel companies and their selected RMSs are easy to identify, I have opted to not name the hoteliers who generously shared their comments on their RMS experiences. I hope they will understand this decision - I am grateful for their freely shared comments.