What are the main challenges of Revenue Management in 2011?

Over the past years the Revenue Management and revenue managers have been fighting with dropping demand and changing marketplace. Now the demand is finally growing again and the markets are recovering from recession.

What are the main challenges of Revenue Management in 2011?

As the industry is coming out of the recession, the main question is the recovery of RevPAR. How long this will take? Along with this, there are several other issues on the table in need of a solution. Below we talk about 3 of them, which in our mind are the main challenges.

1. Rate recovery

It is clear, that the traveling has increased and the occupancy levels in hotels are growing. What is the main challenge revenue managers are facing is rate recovery.
There has been a rally of rate dropping over the past year – the rates in some markets decreased by 20-30%, sometimes even more. These rates in general, but especially now, that the demand is growing are leaving a lot of money on the table.
It is a separate question, if this drop in rates generated more demand and helped the industry or just created a loss in revenues.

2. The customer is trained to look for a deal and constantly negotiate for lower price

With the emerging strength of online travel agencies and flash sales sites, we’ve gotten so far away from trying to sell our services that we have forgotten what we are selling. The only thing we offer today is lowest price!
It will be difficult to differentiate yourself and concentrate on the value you are offering to the customers and not so much on the price. One is the process of how we sell, but the bigger challenge lies in peoples heads – customers as well as employees of the hotels and how they sell – the change is needed here.

3. Rate parity

The big challenge is the rate parity over the Internet. Even without the flash sales sites and online travel portal offers, the hoteliers are not able to keep the rate parity in Internet. The reason is clearly lack of knowledge in how to control the rate parity over various channels and manage it. The transparency of the Internet and the fact that customers are aware of hotels not keeping rate parity has resulted a deal seeking becoming a norm in travel purchasing.

With these and the other everyday challenges as well as opportunities to maximize the revenues in the hotels, the revenue manager’s roles are becoming more and more important in the organizations. The supply and demand has always been in focus in the industry, but more and more focus is needed on the pricing and revenue management models to cope with the changes on the market and in customer behavior.


Have a look at eDream Hotels Revenue Management training program and contact us, if you need help on some ongoing issues.

See also interview with Randy Smith, the chairman and owner of STR and STR Global on www.hotelnewsnow.com

Revenue Management in hotels is a business process aimed to maximize the revenues of hotels via availability management and pricing

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