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The data points every revenue manager needs to know

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It’s often said that revenue management is an art, rather than a science. And while creativity is key to every revenue management strategy, data is still integral to maximising growth. Here, experts share their tips for the top data points every revenue manager needs to know

We live in an age of data. Financial data, real-time data, structured data, machine data… And not forgetting the hot topic of the moment: big data. But all these numbers, facts and statistics are useless unless we know what to do with them – especially in hotel revenue management.

Data-driven strategies are the key to successful hotel revenue management, and there are thousands of data points out there to consider when pricing your rooms. There are, however, a few key data points no revenue manager should dismiss, says Stan van Roij, Vice President of Hospitality Solutions & Program Management at Infor.

Start by looking around you

“A revenue manager needs to stay on top of what is happening in the marketplace,” explains van Roij. “This is both from a supply perspective – such as more hotels or alternative lodgings coming online or closing down – and that of demand, such as new companies moving in or leaving the area, or the impact of new airlines.”

This is important, he says, because the most successful selling strategies are defined by the balance between remaining supply and remaining demand, and so this also means keeping an eye on your competitive set.

“I think sometimes we oversimplify our competitive sets,” says Susan Guimbellot, Vice President of Revenue & Channel Strategy at HVMG. Formerly an airline revenue manager for the likes of Delta and American Airlines, then at various roles in revenue analysis, channel strategies and reporting at Starwood hotels, Susan brings an interesting perspective to hotel revenue management.

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Data-driven strategies are the key to successful hotel revenue management. Photo: credit to Jason Briscoe, Unsplash


“We need to try to rank our competitive sets,” she explains. “When I worked at Starwood, we spent more time than many other companies trying to understand who is ranked number one for occupancy, or who is ranked number one in rate – and why? We’d ask things like: ‘does the consumer like that location better?’ or ‘is their product better?’ or ‘are they pricing more intelligently?’ I don’t think anyone spends enough time truly trying to understand their value and their rank in the consumer’s eye.”

Breaking out your competitive set by weekend versus weekday will also help, as well as by segments. In fact, all data should be broken down by segment, source, channel, day of week, month, season, room category, function room type, function types and other filters, says van Roij.

Don’t dismiss price elasticity

Guimbellot also says there’s one thing revenue managers don’t talk about enough: price elasticity of demand. For airlines, she said, this was always a big consideration and a much-talked about data point. But it’s less common in the hospitality industry.

For hotels, price elasticity is about how the demand for rooms changes based on the price. In a report titled Distribution Channel Analysis: A Guide for Hotels, Cindy Estis Green established that hotel room demand was found to be relatively inelastic for broad periods of time.

The report states that “a reduction in room rate will yield growth in demand, but not enough to offset the lower price charged for the room resulting in a net negative result in room revenue.” Revenue managers, therefore, need to ask whether lowering prices – perhaps as a result of a competitor doing so – will really yield better revenue, says Guimbellot.

“For some places, it’s more obvious,” she explains. “Take a resort town at the weekend, for example, or Florida in the summertime. That’s very elastic pricing because the lower you go, you’ll typically get more customers to come. But a one-night stay on a Tuesday in New York in January is very inelastic.”

External factors

Alongside knowing your own marketplace and the wider travel industry outlook, there are external factors revenue managers should think about. “The whole macro-economic outlook is important,” says Guimbellot, so revenue managers should be looking at world economic forecasts for 2020 and 2021 ahead of time.

Other things like visa rules being relaxed or made stricter can make a huge difference, as well as factors like weather, the oil industry for places like Houston or Pittsburgh, and airline capacity for destinations like Hawaii and the Caribbean. Some of these can be planned for, but others are less predictable, so revenue managers ultimately need to keep abreast of world news as well as their own local markets.


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Hero image: credit to Christin Hume, Unsplash
  • Revenue managers need to know what’s happening around their hotel – your local marketplace should be the first port of call for contextual data
  • Know what’s happening inside your own hotel, too – look within your own walls at guest satisfaction ratings and operations, and set rates accordingly
  • Break it down – all data needs to be broken down by a set of parameters in order to be most relevant
  • Price elasticity is an underrated data point revenue managers often ignore, but its one that can be heavily exploited
  • Understanding the consumer – why they travel and what their priorities are – is your key