I still get plenty of questions about exactly what open pricing is and how it works. And more pointedly, how the hell is it even possible. Earlier this month I spent hours in panels and at parties at HITEC and ROC answering those questions.
We often talk about a more comprehensive revenue strategy, but before you can get there, you need to understand effective revenue management, which encompasses segmenting, forecasting and pricing. Here is a glossary of terms to get you started, and if you’re looking for even more, register and download this white paper, “A Beginner’s Guide to Revenue Management.”
Good revenue strategy goes beyond competitive pricing
by Michael McCartan, Managing Director, EMEA | During a panel discussion at a recent conference, I heard the corporate revenue manager for a hotel company lament that even with a revenue management system, the biggest challenge for any hotel is dealing with a foolish revenue manager in the comp set. We’ve all heard similar refrains from hoteliers about only being as good as their dumbest competitor on the street corner.
It’s taken a long time to get revenue management into the lexicon of the hotel industry, but now that we’re finally there, let’s talk about redefining it. Revenue management—yield management, price optimization or however it’s described from company to company—will always be a critical function at every hotel, and it’s great the majority of the industry recognizes this. But revenue management has come to be defined by managing rates, which isn’t exactly what Robert Cross first imagined in 1997 when he called for a marketing renaissance in his book, “Revenue Management: Hard-Core Tactics for Market Domination.”
by Marco Benvenuti, Chief Marketing and Strategy Officer and Co-Founder | Too many people in the hotel industry who purport to be revenue management experts don’t understand what forecasting error is or how to accurately calculate it. Or if they do, they’re ignoring it. That’s the only conclusion I can come to when I read about people expecting or getting an unconstrained demand forecast on average 98% right six months out. That’s practically impossible.