Revenue
Revenue Management
Hotel revenue management is the discipline of forecasting demand and setting prices, availability and distribution so a hotel earns as much as possible from a fixed, perishable inventory of rooms — selling the right room to the right guest at the right price, at the right time, through the right channel.
It rests on forecasting. A revenue manager projects demand by date and segment from booking pace, pickup, historical patterns and local events, then decides how to respond: which rates to open or close, what restrictions to set on high-demand dates, how much inventory to allot to groups, and which channels to push.
Revenue management is broader than yield management, which refers to the rate-and-availability decisions themselves. The wider discipline also covers channel mix and the cost of acquiring each booking, group and event business, and revenue outside the room — which is why performance is judged on RevPAR, TRevPAR and increasingly GOPPAR rather than on rate alone.
Most hotels now use a revenue management system (RMS) to generate pricing recommendations, with a revenue manager — on property, shared across a cluster of hotels, or working remotely — setting strategy and handling the exceptions the model cannot.
Venli agents take on the monitoring around revenue management — pace, parity and competitor movement — and surface the decisions that need the revenue manager, with rate changes held for approval.
Frequently asked questions
What is revenue management in hotels?
Revenue management in hotels is the practice of forecasting demand and adjusting prices, availability and distribution to earn the most from a fixed number of rooms. It means raising rates when demand is strong, stimulating demand when it is weak, and deciding which segments and channels to accept on each date.
What does a revenue manager do in a hotel?
A hotel revenue manager forecasts demand, sets and adjusts room rates and restrictions, manages inventory across channels, evaluates group business and tracks performance against the comp set. In most hotels they now work alongside a revenue management system, setting strategy and handling the decisions its recommendations cannot.
What is a hotel revenue management system?
A revenue management system (RMS) is software that forecasts demand and recommends — or automatically publishes — room rates and restrictions. It draws on booking pace, historical data, competitor pricing and events, and usually connects to the PMS and channel manager so approved prices reach every channel without manual updates.
Related terms
- Yield Management — Yield management is the practice of continuously adjusting room rates and availability by segment and channel to extract the most revenue from a fixed, perishable inventory of rooms.
- RevPAR — RevPAR (Revenue Per Available Room) measures how much room revenue a hotel earns for every room it has available, whether or not that room was sold. It combines rate and occupancy into a single number, which is why it is the most widely used performance metric in hotel revenue management.
- Comp Set — A comp set is the group of comparable, competing hotels a property benchmarks itself against — chosen to match on location, segment, quality and the demand they draw from.
- RGI — RGI (Revenue Generation Index) compares a hotel’s RevPAR with the average RevPAR of its competitive set. An RGI of 100 means the hotel is earning exactly its fair share of room revenue; above 100 it is outperforming the set, and below 100 it is losing share.
- Rate Parity — Rate parity is the practice of publishing the same room rate for the same room, dates and conditions across every distribution channel — the hotel’s own site, OTAs and other partners.