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The Future of Hotel Revenue Management

Updated: Mar 6

What do you do when you want to increase your business profit? Any solution that one can think of falls into two major categories: 'Decrease the Expenses' and 'Increase the Revenue'.

Although the latter is less focused upon, in comparison to the first solution. Businesses tend to cut back on expenses in order to maintain (or increase) their profits. Now the question arises: 'Which one of the two is better?' Well, we believe a balance of both is vital for a steady and sustainable solution.


When Hotel Owners, Investors or other stakeholders look at a dysfunctional strategy, Revenue management is bound to be brought on the table. Evidently, Revenue Management teams are mostly found to be the center of business, meaning that other departments are affected by them. Despite this,'Total Hotel Revenue Management' is due to claim its fame in the industry albeit being one of the crucial change-makers when it comes to profit-making strategies.


The strategic changes in Revenue Management (RM) have come more slowly than expected over last years, claims a study by Sheryl E. Kimes from Cornell University . The study, based on a survey of 400 Revenue Management professionals, includes but not limits the biggest challenges to RM in Hotels as: Economic Challenges, Online Travel Agents (OTAs), Competition, Owner's Pressure.


The study suggested that, going forward, RM practices will be more fully integrated into all hotel operations, including function space (although these ideas have yet to gain much traction in the industry). It is evident that in order to be future-ready, Hotels need to adopt Revenue Management to fight the probable challenges. Dilution of tariff at unreasonable rates can be seen as a common challenge for Hotels and it heavily affects a micro market. Decreasing Room tariffs below a certain standard might look like a win but it actually is a loss in long-term. Active Revenue Management strategies aim for a long-term and sustainable solution rather than short-term wins, which eventually leave the Hotel property dried up.

To get advised on Hotel Revenue Management or any other concern related to your Hotel property, write to us at info@promiller.in.Explore more blogs at https://www.promiller.in/blog


Study source: By Sheryl E. Kimes from Cornell University

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