The Language of Revenue Management

Revenue Management has it’s own language. Part of being able to successfully implement and test different RM strategies is having the confidence to communicate to owners the reasons why a certain approach was taken.

Naturally if results are strong and favourable it is not such a concern however when a property is trying to improve results and trying to adjust strategies then it becomes more in focus.

The main thing to remember with RM is to try and draw the focus on maximising revenue over a longer period like a week as opposed to looking at nights in isolation. If a particular nights rate is in question as it may be lower than the prior year or month, focus the attention to revenue and occupancies achieved over the week versus the year/month prior.

Focus attention to RevPAR (Revenue Per Available Room) which is the measure of return on their investment.

Rates may reduce on some “peak” nights if the RM strategy has utilised the demand for this period to raise occupancies and revenue across the week by allowing long stay bookings where as previously these may have been closed out to achieve rate.

Do your calculations (RevPAR = Occupancy x Average Rate) and measure your results versus last year/month so you have the information on hand ready to support your strategies.

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