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Revenue Management Solutions
The Xotels Revenue Management Solution (RMS) was developed with a vision in mind that managing rates is becoming more and more complex, and that the market insight of customers has increased greatly. Many travelers check different sites on the internet before they book online or call/fax the reservation office.
For offline (phone, e-mail, fax, walk-ins) reservations, a quick overview of availability and related rates with conditions is important. The most important for online bookings is pricing and distribution (of availability and rates). Not only to your own hotel website, but also to the travel portals like Booking.com, Easytobool and Expedia, as well as the many smaller ones. Preferably, rates should be consistent over off-line and on-line channels.
Revenue Management & Pricing
The pricing of hotel rooms is nowadays very transparent and for best-price-seeking travelers it is not hard to find good deals. The initial reaction of many managers is to lower the rates to meet (or beat) competition. This practice (together with a decrease in demand) has lead to a decrease of hotel rates worldwide.
Revenue management, or yield, is the art of managing prices through the demand curve (the demand up to the date of arrival), so that people who are willing to pay more, also pay a higher rate, while cheaper rates are available when the hotel is not going to be full.
“Demand/booking curve” showing number of days before stay
Another part of the concept behind revenue management for hospitality and travel is to differentiate prices by bundling them with one or more conditions, like:
- Only through a specific channel (or portal)
- Up until 5 days before arrival
- Minimum number of nights
- Only with weekend stay
- Only though a corporate contract
- Most important in revenue management, but also the hardest, is predicting demand. A common model used is to calculate “unconstrained demand”. This is the quantity (of rooms) that could be sold if there were no constraints such as availability.
- Most revenue management tools provide a way to give insight in historic bookings to be able to predict this future demand and adjust pricing accordingly. According to Xotels’ vision, this is only part of the equation.
The future expected demand is a combination of:
- historic demand: how many days before the day of arrival were the rooms sold for which market segments, at which rate(groups), adjusted with unconstrained demand values
- demand influences: events in the future which impact demand, like festivals, venues, economic factors, competition
- current bookings so far : which rates have been booked until now
Xotels Revenue management uses this expected demand to calculate maximum revenues in an optimal configuration of available rates. This is what we call “logical availability”; the availability of different rates (combined with conditions) with an automatic overbooking level when necessary. It is different from the physical availability (ie. the number of room you have available), since a room may be counted for different rate and conditions. Of course, as the hotel will get nearly full, the Logical Availability approaches the physical availability (including overbooking percentage).
At any given time, the logical availability and rates need to be known to systems and departments that approve/accept bookings. This is the distribution part of Xotels Revenue Management system:
Revenue management and distribution
Since the popularity of the Internet reached the masses between 1995 and now, depending on the country, the market has never been more transparent.
Next to the own website, most hotels sell through (online and offline) channel partners, like tour operators, travel portals (booking.com / Expedia), GDS’s and other channels. It has become more and more difficult to manage rates in multiple channels. You may be managing the availability of rooms for multiple online portals as well. And for each channel you need to set the rates.
Xotels RMS technology is taking away the manual labor to manage the different rates: it updates rates and availability in the Property Management System (like Fidelio or Opera), and in online portals. It can handle some portals directly (like booking.com and Expedia), or use an online consolidator like RateTiger.
Internally, Xotels Revenue management works with rate buckets, which contain the logical availability of a specific rate. To work with many online portals and more traditional Property management systems, this rate bucket availability may be converted to Best Available Rate models or even “virtual allotments”.
Unique solution, increasing revenues in an efficient manner
The unique features of the Xotels Revenue Management System are:
- Proactive and automated management of availability of rates (opening and closing rate buckets), using price elasticity, virtual nesting.
- Efficient preset/override mechanisms
- Easy control / override over rates buckets and demand influences
- Real time revenue calculations for scenario planning
- Configurable weight historic data and (new) demand influences
- Management dashboard with easy comparison
- Extensive graphs and reports
- Configurable alerts per email or SMS upon booking curve deviations
- Extensive supervisor / pricing analyst authorizations
- Integration to multiple inventory and property management systems, central reservations systems, and online portals
- Supporting the latest OTA standard messages for integration with other systems
- Online solution, hosted at Xotels (preferred) or at own datacenter
Increase your Bottom Line with Xotels !
