February 08, 2018

Why rate management is not revenue strategy


There is a distinct difference between “rate management” and “revenue strategy,” although for some hotel teams, the line between the two may have blurred over the years.

As two very different, yet fundamental tasks of building a revenue strategy, are revenue managers still finding themselves spending too much time on one of these tasks—and not enough time on the other?

Rate management is the act of distributing rates and length-of-stay controls, in addition to ensuring there is appropriate rate parity across all selling and distribution channels. Depending on the tools available, this activity alone can eat up hours every day and due to its arduous nature, it may not even make a dent on changes needed at the far end of a booking window. This can often translate into a missed opportunity and limited efficiency for a hotel.

Revenue strategy, on the other hand, is the act of determining, executing and analyzing the desired rate structure and inventory controls for a hotel property, or portfolio of properties. This umbrella includes different strategic considerations, such as inventory strategy, room upgrade paths, online sentiments like guest reviews and reputation scores, and insightful market intelligence and guest behaviors. Based on the tools a revenue manager is using, they could be making decisions that are informed by all elements - or just a few of them.

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