Profit Optimization for Hotel Revenue Managers

Previously, the global economic crisis was concentrated on the United States and Europe. The rest of the world remained relatively unscratched during when the turbulence was first starting out. However, it has now reached a major part of the Asia Pacific region. Asian economies including Japan, Thailand, and Taiwan had negative fourth quarter growth in 2008. Meanwhile, even big economies such as India and China experienced very little growth. As a result, the hospitality industry was one of the industries adversely affected. In fact, it took one of the worst hit and the downward trend is expected to continue until 2010.

For a hotel revenue manager, the foremost question that comes to mind is how to boost profitability in this type of environment. It is difficult to increase hotel rates in this kind of condition. With the right tools though, getting the right adjustments with regards to hotel rates, hotel distribution channel, and revenue management is possible. Highly effective tools that should be looked into include inventory software, pricing software, and hotel rate distribution software. With this type of tools, a hotel revenue manager will have an easier time monitoring market trends. In effect, software applications can make an hotelier’s job easier. It has the potential to increase hotel sales and produce profit optimization.

In Asia and the rest of the world, occupancy levels have been declining since 2007. For example, demand, occupancy, RevPAR, and ADR are reaching new levels of lows since September 2008. No one can deny that the market is definitely tough. Even the construction projects in various regions are being halted. There are simply too many rooms with not enough consumer demand because everyone is trying to save money.

To make the best of the situation, hotel revenue managers need to innovate. That is, they should think out-of-the-box for solutions. Traditional thinking will no longer work in today’s digital age. Almost all travelers will use the internet to research, reserve, or book their travels. From airlines, restaurants, to hotels, travelers know where some of the best deals are. It is possible to look at the situation in two ways: threat or opportunity. It is up to an individual hotel manager to decide which way he wants to view it.