The Great Equalizer: Why Revenue Management Tech Is Now a Must-Have for Boutique Hotels

revenue management

Fair or not, the idea that advanced revenue management software is best suited for massive high-end resorts or properties that are operating under a big brand umbrella has been stubbornly persistent among hoteliers. While it’s true these types of hotel properties were relatively quick to embrace the value of revenue management technology, it’s well past time to put this lingering perception to rest.

The number of hotels using revenue management software worldwide continues to grow, with Skift’s Hotel Tech Benchmark survey report showing nearly one in three properties across the globe turning to tech to assist with meeting (and hopefully exceeding) their revenue management goals.

The modern landscape of hotel revenue management is shifting fast. But operators at smaller boutique hotels can get ahead of it if they’re willing to adapt.

Let’s explore why advanced revenue management tech is quickly moving from “nice to have” to “necessity” for smaller boutique properties:

  • Doing more with less via automation: Today’s revenue management tech takes care of many of the routine and often tedious components of executing a revenue strategy. This helps staff to react to emerging revenue opportunities more quickly and efficiently—and ultimately capitalize on them.
  • Better forecasting improves RM results: According to AMR Research, a 3 percent improvement in forecast accuracy can bring a 2 percent increase in profit. When developing revenue strategies, a demand forecast based on historical trends and gut feelings only goes so far. Advanced revenue management systems take a scientific approach to forecasting, using a variety of relevant, timely data sources and modeling approaches to account for the uncertainty all forecast projections must contend with. This advanced approach ensures that the forecasts that are used as a basis for a variety of commercial decisions are adaptive and quick to respond to shifting demand factors.
  • Every room matters more: Failing to capitalize on a revenue opportunity hurts at hotels of all sizes, but the sting of a pricing miss is magnified in properties with fewer rooms to work with. Without the luxury of high room volumes to help incrementally claw back from those misses, smaller properties can turn to advanced revenue management tech to ensure those slip-ups are significantly fewer and farther between.
  • Long-term value of improved revenue performance: Like with any type of hotel, small boutique property operators likely have a lengthy “wish list” of improvements to potentially invest in. But very few of these investments provide both the short- and long-term value of an effective RMS. In a survey of hotel investors conducted by IDeaS, 77 percent described the ROI of revenue management technology as “high” or “very high,” and of those surveyed who introduced a new revenue strategy, 27 percent saw a RevPAR increase of 10 percent or more.
    While that substantial RevPAR increase is noteworthy, even smaller incremental improvements to revenue performance can be the spark for a virtuous cycle of additional revenue leading to improved profitability and cashflow—the things that make all other property investments easier to budget for in the future.
  • Key support for group business decisions: While many smaller properties may be hesitant to aggressively pursue group business bookings, revenue management technology can be a key tool for unlocking opportunities within this staple of hotel business. When a prospective group business opportunity can tie up a substantial portion of a smaller property’s room inventory, it’s absolutely critical for revenue leaders to make a well-informed group sales decision. With advanced revenue management systems, displacement analysis tools can quickly project the likely value of displaced business over the same period and provide pricing guidance to ensure room inventory is occupied by the most valuable business possible.

Smaller hotels don’t have to take a reactive stance as they navigate the myriad of challenges that come with operating in an industry seemingly dominated by big brands with immense resources. By adding the right tools and prioritizing revenue optimization, these properties reach new revenue heights—and get on a more level playing field.

For more on how IDeaS can support your boutique property, visit:

Sponsored by IDeaS.

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Geoff Roether is a Senior Solutions Engineer at IDeaS, where he serves as an advisor to new and existing IDeaS clients as they navigate complex solutions around system integrations and optimal business practices.