WHY DO HOTELS NEED REVENUE MANAGEMENT?
Revenue Management is the application of disciplined analytics that predicts consumer behavior at the micro-market level and optimizes product availability and price to maximize revenue growth.
Other definition would be, selling the right room to the right client at the right moment at the right price from most profitable channel.
Why do Hotels need Revenue Management?
Hotels need revenue management because;
1-)How Hotels Set Prices
1.1 Firstly, Hotels must track critical data and KPI as follows;
1.2 Demand forecast based on granular data as follows;
1.3 Inventory Management
2- ) How Should Hotel Evaluate The Results
Total Revenue / Total Inventory Sold
Total Revenue / Total Inventory Available
Identify correct performance of complete inventory.
2.1 RevPar As a Key Performance Indicator
RevPAR is the total guest room revenue achieved based on total available inventory
Average Daily Rate (ADR) = Hotel’s total room revenue divided by the number of sold rooms,
Occupancy = Number of sold rooms divided by the available hotel rooms
ADR X OCCUPANCY =REVPAR
It is the combination of the ADR and Occupancy,
It allows comparisons with other hotels,
Hoteliers can understand the exact performance of each room.
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