Revenue management trends for 2024
and how hoteliers can prepare
By Alexandra Fjällman | Chief Marketing Officer at Atomize
The hotel industry, like many others, has been unpredictable over the past few years, especially in regards to revenue management. However, as we move into 2024 and beyond, the sector is regaining balance and is witnessing significant shifts in revenue management practices. These changes are driven by the need to adapt to evolving market conditions, improve efficiency, and meet the changing preferences of guests.
This article explores key revenue management trends and predictions for 2024 and how lodging operators can prepare.
1. Technology adoption to increase efficiency
While demand has mostly returned to pre-pandemic levels, it doesn’t look the same. Booking behaviors have evolved, with shorter windows and longer stays becoming the norm. Furthermore, the persistent challenge of staffing shortages leaves less time for hoteliers to dedicate to revenue management, even as market factors grow increasingly complex. That’s where technology comes into play, and more specifically, revenue management systems (RMS).
One of the most notable trends in revenue management is the accelerated adoption of technology by lodging businesses of all sizes. Once reserved for big chains, revenue management technology has become more accessible, and lodging operators worldwide have recognized the importance of these solutions to navigate the rapidly changing dynamics of the hospitality industry.
How RMS technology can help you prepare
Revenue management systems will be an important ally for independent lodging operators, empowering them with data-driven insights to make informed decisions regarding pricing, inventory management, and resource allocation.
A modern RMS continuously updates room rates in real time for all room types and days. This dynamic pricing approach ensures that hotels do not miss revenue opportunities. Properties that switch to an RMS supporting real-time price optimization generally experience a significant increase in Revenue Per Available Room (RevPAR).
Streamlined operations and automation like pricing adjustments offered by an RMS free up valuable time for hotel staff. Improved operational efficiency leads to cost savings, particularly in labor costs, and alignment in staffing levels that can help hotels optimize labor expenses. Additionally, automated processes reduce the need for manual data analysis and adjustments, saving time and resources.
2. Omni data channel excellence strategy
Lodging operators are inundated by data. Future demand data, historical data, reservation data, inventory, and competitor data all provide key insights for revenue management and must be collected and analyzed consistently for effective decision-making.
This year, lodging businesses must adopt an omni-data channel strategy, which involves collecting, deciphering, and analyzing data to guide every part of your revenue management process and beyond. This forward-looking data will help you anticipate peak and off-peak periods and enable proactive resource allocation and staffing adjustments.
How RMS technology can help you prepare
To navigate the complexities of this omni-data channel landscape, an RMS emerges as an indispensable tool for independent lodging operators. An RMS operates as a data hub, seamlessly integrating multiple data sources. It draws from a rich repository that includes market demand data, flight search volume, search pressure, source market behavior, reservation data, and competitor insights. This comprehensive approach equips lodging operators with business intelligence to benchmark and make informed, data-driven pricing decisions.
One of the most significant advantages of RMS technology is its ability to simplify complex data sets. Revenue managers no longer need to grapple with intricate manual calculations or Excel spreadsheets. Instead, the system offers a user-friendly interface that visually represents data in an easily digestible format. This visualization not only enhances understanding but also expedites the decision-making process.
3. Total revenue management (TRevPar)
In 2024, hotels are expanding their focus beyond room revenue. The concept of total revenue per available room (TRevPAR) will gain even more traction, encompassing all revenue streams such as food and beverage, parking, spa services, and more. The objective is to optimize overall profitability by taking a holistic approach to revenue management.
TRevPar is a key performance indicator (KPI) that measures how effectively a hotel utilizes its space for revenue-generating purposes. To maximize this metric, lodging operators must identify opportunities to increase profitability across various areas of operation.
How RMS technology can help you prepare
An RMS employs sophisticated algorithms to optimize room rates, ensuring that hotels maximize revenue while avoiding revenue leakage due to underpriced hotel rooms. With a proven track record of boosting revenue and profitability, an RMS offers a clear return on investment (ROI). This is particularly crucial in the context of TRevPAR, where the optimization of all revenue streams becomes paramount.
With TRevPAR as the guiding KPI, an RMS enables independent lodging operators to adopt a more holistic approach to profitability as part of their revenue management strategy. By considering all revenue streams, operators can identify untapped opportunities to increase profitability across various facets of their operations. Using these additional revenue streams, hotels can attract more direct bookings via hotel marketing and improve the overall guest experience with targeted services and upsells.
4. Non-traditional revenue management sectors
The principles of revenue management are no longer limited to traditional sectors like hotels and airlines. In 2024, we can expect to see these principles extend to a wide range of industries, including sports events, theaters, cinemas, museums, restaurants, and more. In turn, hoteliers can take cues from different industries when forecasting demand around events, conferences, and concerts.
The application of revenue management techniques in non-traditional sectors will help organizations optimize pricing and revenue growth and improve overall financial performance.
How RMS technology can help you prepare
Investing in an RMS provides independent lodging operators an immediate competitive edge in their local market. With data-driven insights at their fingertips, operators can make smarter pricing decisions that allow them to capture a larger market share. This agility in pricing strategies enables hotels to stay ahead of the competition, secure their position in the market, and attract a more diverse clientele.
The application of revenue management principles in non-traditional sectors unlocks untapped revenue potential. RMS technology aids in optimizing pricing not just for room inventory but for various upsell offerings, be it tickets for a theater performance, admission fees for museums, or menu items in a restaurant. By harnessing the power of data analytics, operators can set prices that maximize the bottom line while keeping offerings attractive and accessible to a wider audience.
The evolution of hotel revenue management
As we navigate the challenges and opportunities of the hotel industry in 2024, revenue management continues to evolve. The adoption of technology, the pursuit of total revenue optimization, and the expansion into non-traditional sectors are reshaping how hotels approach revenue management.
Thibault Catala, Founder and Managing Director at Catala Consulting, says revenue management tools “help hotels set the right prices and understand what guests want. By using data and technology like artificial intelligence, hotels can make better decisions, stay ahead of competitors, and create experiences that keep guests coming back. Investing in these pieces of software is like putting a strong foundation under a building. It helps hotels grow, keeps them strong in a changing market, and sets them up for a bright future.”
Investing in revenue management software is no longer a choice but a necessity for lodging businesses. The software not only generates revenue, enhances demand forecasting, and provides a competitive advantage but also improves operational efficiency and occupancy while reducing costs.
A post by Atomize
Atomize is innovative and fast-growing revenue management software built to increase revenues and operational efficiency for hoteliers. At Cloudbeds, we’re proud to partner with leading revenue management solutions like Atomize to help lodging operators achieve the most successful pricing and distribution strategy.
If you wish to learn more about revenue management trends and predictions for 2024, check out the Revenue Management Software Guide 2024 by Atomize.
About Alexandra Fjällman
