One of the most difficult tasks for hotels of any kind is maintaining profit margins in light of the industry’s notoriously high client acquisition costs. With rising expenses, workforce shortages, supply chain interruptions, inflation, economic instability, and the increased data-related complexity, hotels are increasingly looking to technology to drive their revenue management strategies. Moreover, as a result of this increased collaboration across departments, sales departments are increasingly contributing to marketing and sales departmental decisions about IT.
For this reason, several hotels are looking into automated technology to supplement the work of traditional revenue managers. There has now begun a period of time in which revenue management is smarter, more profitable, and more efficient. A revenue management platform in the present era should be able to facilitate such teamwork, as it is no longer a luxury but a need. Instead, maintaining and expanding market share requires nimble responses to competition.
“The hospitality business has seen its worst storm in the previous two years. Hotels and tourism companies faced enormous pandemic-related hurdles, forcing the industry to respond quickly. ‘Doing more with less’ seems to be the mantra of revenue professionals.”
Change has brought new opportunities, thankfully. More data and technology have opened the possibility for advanced pricing, product segmentation, and category management solutions to replace legacy frameworks. Automation, AI, machine learning, and predictive analytics are being applied to revenue management. With this move, hotels can sell the right product to the right guest at the right time, using the right distribution channels and technologies at the right price.
AI-based pricing and promotion can contribute $259 to $500 billion to global market value, says McKinsey. With changing company models, market dynamics, and competition, firms must use data to make precise, trustworthy decisions. In recent years, AI has been touted as the future of personal and professional technology. Manual processes and abstract hypotheses are history. AI automates unproductive procedures, which boosts productivity, operational bandwidth, eliminates downtime, and more. Applying this technology to hospitality revenue management enables a data-driven strategy that helps hotels improve their evaluations and optimise revenue and profit prospects.
Next-generation revenue management has been shown to have a significant impact. Recent research has estimated the revenue generated by the Revenue Management Software Market to be US$ 27.2 Bn in 2021, with projections for growth of 12.3% between 2022 and 2032. The market is projected to be worth approximately US$ 103.7 Bn by the end of 2032.
McKinsey estimates that AI-based pricing and promotion may generate $259.1 billion to $500 billion in worldwide market value, while research from BCG shows that integrating AI into the pricing rules of revenue management systems can boost revenue by up to 5 percent in under nine months.
To optimise forecasts and room rates, RM platforms powered by AI automatically examine a wide range of market variables, including as supply and demand at the destination, room rates of direct and indirect competitors, historical room rates, flights, and local events. This speeds up revenue management in areas like portfolio price optimisation and leakage avoidance, while also informing and optimising pricing, inventory, marketing, and channels independently. Not only that, but revenue management operations that were once laborious and costly may be carried out at breakneck speed without compromising efficiency or conformity to the needs of the organisation.