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Revenue Management: 6 Must-Haves

Revenue management is a critical component to any hotel operation, and to profits. Revenue managers (or yield managers, as they’re sometimes called), are tasked with finding that sweet spot for room rates that is likely to bring in the most guests at the highest possible revenue. It’s both an art and a science, and depending upon the individual hotel, is managed in one of many different ways: in some cases as its own department, in others it’s folded into reservations, and in some hotels it may even fall under the technology department.
Regardless of departmental structure and ownership, however, a well-built revenue management system (RMS) can have a significant impact on a hotel’s ability to predict occupancy, and to determine the best room rates for a given demand period.
To find out what the most important factors are in a successful RMS, Hospitality Technology spoke with executives from Omni Hotels & Resorts (which recently had a 10-year record-high RevPar index), Goodmanagement and Nordic Choice Hotels. Here, they share their top criteria for system features, including the importance that the vendor partnership brings to the dynamic.
1. Flexibility by segment. Last year, Omni Hotels & Resorts ( achieved the highest RevPar index ranking that it has achieved in the past decade. “We attribute our success on the RevPar index on being able to manage the mix index in our hotels; this is an optimal mix so that on a low-demand day we have more discounts in, and on a higher-demand day you may have fewer discounts. It is just about managing that mix,” says Lesli Reynolds, Omni’s VP of distribution and revenue strategy. That flexibility by segment allows them to manage that mix more effectively. For the past five years, Omni has partnered with The Rainmaker Group (, utilizing a variety of its RMS system incarnations; the most recent adoption being used across its portfolio of hotels is the Revolution RMS.
2. Ease-of-use. Whether it is system flexibility or user-friendliness, ease-of-use is repeatedly listed among many operators’ top must-haves. “First and foremost, something that is easy and nimble, and that the end-user and the hotel revenue manager can easily change” is important to Jeremy Grogg, vice president of operations for Goodmanagement (, parent company to Kees Vacation Rentals, the operator of a transient rental program that represents 23 independent timeshare resorts. Goodmanagement is partnered with LeisureLink ( Having that hotel revenue manager being able to “go in, see something in the revenue management software algorithm, and change it immediately. That would be my number one thing,” says Grogg.
For Nordic Choice Hotels (, operator of 175 Choice Hotel properties in Scandinavia, it is about accessibility. For Nordic Choice, “it was important to install a system that could make revenue management accessible for all levels within the company since revenue management within Nordic Choice still was in its early stage,” says Lotta Andersson, who is responsible for revenue and system training for Nordic Choice Scandinavia. Nordic Choice signed a contract with EasyRMS ( in May 2010 and has since rolled out its revenue management system to 34 properties, with another 24 in the pipeline. “We believe that acceptance and understanding of revenue management from the CEO level to the front desk is key.”
3. Accuracy and forecasting. Accurate recommendations for room rates are based on accurate predictions for demand. “This is critical,” says Reynolds. “If it cannot accurately forecast demand, it cannot make appropriate recommendations.”
4. Algorithm facets. Also high on Grogg’s list of important features is the number and the quality of factors/variables that the algorithm or revenue management system is taking into account, including historical data and the ability to adapt to the competitive set. “I’ve seen some [systems] that are extremely limited, where you are only looking at the inventory that you have and you can only go out so far in the future.”
5. Integration. Omni’s RMS is integrated with its central reservation systems, a factor that is absolutely critical, according to Reynolds. “They are symbiotic in a way in the sense that revolution would not be successful without being able to pull in the demand statistics, the rate regret, the denials, the turn downs, and how many times that hotel for that date and room type has been shopped,” says Reynolds. “Then it takes all of those demand metrics and makes recommendations and then Rainmaker puts those recommendations in to our CRS so that the agents are quoting the price at the correct rate and availability for that day.”
6. Good vendor partnerships. While system features hold major pull in any hotelier’s RMS adoption decision, vendor partnerships should be just as important. For Goodmanagement, trust is a top partnership priority. “With the relationship with LeisureLink, we have had the ability over the past few years to form a very strategic partnership. There is a lot of trust involved to the point where I have [said to] their account managers, ‘you know the parameters here. If you see things that need to be changed, do it and send me an e-mail.’ So trust with that vendor on something like this, because it is the lifeblood of what we do, would be the most critical factor,” says Grogg.
In addition, Grogg suggests partnering with vendors that are constantly looking for ways to improve their RMS, including “learning from different markets and from different properties that have had success or failures with [the RMS].”
For Omni, it is the willingness and flexibility to meet their needs. “When you look at Rainmaker, the majority of their customers are casino-driven and I think that we are one of the few customers that don’t obviously operate casinos. Their willingness to meet Omni’s needs has been a true partnership and it continues to be one,” says Brenda Gordon, Onmi’s corporate director of revenue management. “We have a weekly conference call with them where we share what we are seeing, and what we need help with,” adds Reynolds. For instance, if Omni is looking to bring a hotel online, “they can help us to identify what the appropriate demand curve should look like for the hotel, given the historical data.”

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