What benefits does implementing a Revenue Management strategy bring?
Currently, revenue management is a commercial strategy used mainly in industries where capacity is fixed and perishable, such as tourist accommodations, supermarkets, aviation, and car rentals. But why? Simply because it provides these companies with greater security in their decision-making to achieve revenues that preserve the viability of the business.
Therefore, the following article is aimed at those managers or owners of a tourist accommodation establishment who are currently not implementing a commercial policy based on revenue management or those who intend to start one. As you will see below, it has several key benefits. However, if you first prefer to better understand what revenue management is, we recommend that you read the following article.
Benefits of applying Revenue Management
The endless benefits derived from applying a revenue management strategy would make this list endless. For this reason, we only include those advantages that directly affect business viability.
Maximising revenues: This is the main objective of revenue management. By adjusting prices based on demand and other factors, you can maximise your revenues. This is achieved through the optimal sale of the right product to the right customer, at the right time, and at the right price.
Making sales profitable: It is not more important that you increase sales, but that you make them profitable. That is, whenever a revenue management strategy is applied, you will always seek the goal of achieving the maximum possible net income.
Diversification of income sources: The classic revenue model, centred on selling rooms or spaces, has become obsolete. Currently, the trend is to create and plan a total revenue management strategy, to – besides increasing the overall income – avoid depending exclusively on the sale of rooms, plots, flats, etc. However, often, this type of revenue management becomes a reality because these complementary services will help you better monetise the income from selling a flat, space, or room. In other words, to sell a service through the appropriate channel, you will need other services to enhance it. For example, free breakfast if the customer books the accommodation through the website.
Better market understanding: Revenue management requires a detailed analysis of customer behaviour and market trends. This will allow you to better understand your customers and anticipate their needs and behaviours. At the same time, it will enable you to segment customers according to their needs and budget, thus maximising satisfaction and perceived value for each market segment.
Reducing uncertainty: Using predictive models and historical data analysis, you can reduce uncertainty and more accurately forecast future demand, making planning and inventory management easier. At the same time, it will allow you to identify areas where you can improve your efficiency, as well as resource allocation, which will, in turn, help you reduce operating costs.
Improving competitiveness: Implementing advanced revenue management techniques can provide you with a competitive advantage, allowing you to react more quickly to changes in demand and market conditions.
Don’t know how to implement it? Seek for help
Planning or launching a revenue management policy is not a simple matter, as it may require an initial investment in technology and training. However, the long-term benefits in terms of additional revenue and operational efficiency often justify this investment.
If this is your case, and you want to increase your business's potential, do not hesitate to contact us. At The Revenue Team, we have all the tools and techniques necessary to develop a commercial strategy based on variable income management, under a personalised programme according to the client and type of product.
