Recommendations on How to Improve Hotels Revenue Management

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Recommendations on How to Improve Hotels Revenue Management
Background Information
Revenue management is a very important concept in hospitality and other industries. Revenue management allows hotel managers to forestall demand and maximize the pricing and availability of goods and services to accomplish the best financial results. Revenue management involves the use of data and analytics to predict the demand for goods and services and customer behavior. Revenue management is important in industries where consumers can pay different prices for the same product. The main aim of revenue management is to improve the financial results of any company. In hospitality, revenue management ensures that hotels can cope with the perishable inventories and high fixed costs (Ivanov, &Vladimir Sashov Zhechev 180). For example, hotels have rooms which have fixed costs despite the number of people who will occupy the rooms in a day. Thus revenue management assists hotel managers to predict the prices of the rooms. If hotels and restaurants are not able to manage their revenue well, the organizations might incur losses. In this case, there is a need to have recommendations that will assist restaurants and hotels to increase their profits and revenues at the end of every financial year.
Why revenue management is Important
Revenue management is very important for hotels and restaurants. Revenue management ensures that hotels have been able to make profits from the perishable inventories of the rooms. Further revenue management allows hotels to maximize the amount of money the business can generate daily. This is because decision-makers are always informed of all the operations that are taking place in the hotel instead of relying on the information that is provided by the employees in the organization. Just like all other businesses hotels also have fixed costs (Burgess, Cathy & Keith Bryant 147). The managers need to ensure that these fixed costs are paid regardless of how many rooms have been occupied on a certain day. Regardless of the amount of money that the guest has paid, these fixed costs must be paid. Thus through revenue management, hotel owners will always ensure that these costs have been paid and prices and services have been maximized significantly
Further revenue management of hotels ensures that resources have been managed effectively. Revenue management also safeguards the hotel against the rostering of too many employees during slow times. It also ensures that hotels have the right number of employees who will be available all the time. When revenue management is implemented effectively in hotels, then these hotels can get maximum profits. This because it is associated with improved profits. With revenue management hotels can implement data-driven strategies that will influence the decision of the owners in managing the inventories (Kimes 9). This also ensures that everyone is informed of all the decisions of the company. As a result, the revenue of the restaurants goes upwards.
Revenue management needs technological support like optimization of algorithms. This ensures that all the results have been achieved in the company. Thus hotel managers need to understand all the necessities that are needed to balance the profits and losses of the hotel. As a result, they will be able to determine what the guests are supposed to pay for every room (Burgess, Cathy & Keith Bryant 148). These activities are very important because they will enhance the profitability of the businesses. When they have been able to optimize the income of the entire business, owners will be able to make changes to the current revenue of the hotel. They will be able to understand the needs of the customers. The information of the guests will be used to obtain insights on what they like.
Common mistakes made by hotel managers in Revenue Management
* Ignoring time- When time is ignored, hotels fail to produce the desired revenue results. Hotel managers should focus on the speed of the market. Time is very important. In some hotels, a lot of time is spent on promotions, meetings, and actions that will not generate any revenues.
* Focusing on the wrong metrics- Hotel managers need to understand the demand of the business. They should also track the prices of their competitors.
* Being afraid to make changes
* Poor utili...