August 29, 2016

Distribution vs profitability – the future of hotel revenue management


With technology and data beginning to play a bigger role in global hospitality, properties may need to rethink their revenue management strategies and take a closer look at the relationship between optimal distribution and higher profits.

Long periods of market uncertainty are becoming increasingly common in today's highly fragmented industry and hospitality professionals are always on the lookout for better ways to maintain consistent profitability. Revenue management strategies have played a critical role in enabling hotels to cover their operating expenses during periods of low demand. By employing dynamic pricing strategies based on market variables and accurate forecasting, properties began to witness significant improvements in the bottom-line.

However, guest trends and spending patterns are subject to a high degree of unpredictability in our current digital landscape. The rapid onset of smartphone technology has seen OTAs capitalize on mobile platforms by offering travelers an unprecedented level of convenience in the form of apps and mobile-optimized websites. Unsurprisingly, the online agencies now dominate a sizeable portion of global distribution. According to data released by the HAMA Study & Kalibri Labs, while industry-wide revenue had witnessed incremental growth over a three-year period, commissions grew twice as fast. In fact, revenue management leaders Duetto recorded customer acquisition costs as high as 40%! In light of these developments, it may be time for revenue managers to modify their approach.

Get the full story at Hospitality.Net