To help hotels deal with the increase transparency of price structures and growing complexity of distribution we have developed a revenue management system which goes beyond the existing technology in the market.
The Xotels Revenue management solution was developed with a vision in mind that managing rates is becoming more and more complex, and that the market insight of customers has increased greatly. Many travelers check different sites on the internet before they book online or call/fax the reservation office.
For offline (phone, e-mail, fax, walk-ins) reservations, a quick overview of availability and related rates with conditions is important. The most important for online bookings is pricing and distribution (of availability and rates). Not only to the own site, but also to the travel portals like Booking.com and Expedia, or the many smaller ones. Preferably, rates should be consistent over off-line and on-line channels.
Revenue management is the art of managing prices through the demand curve (the demand up to the date of arrival), so that people who are willing to pay more, also pay a higher rate, while cheaper rates are available when the hotel is not going to be full.
"Demand/booking curve" showing number of days before stay
Another part of the concept behind revenue management for hospitality and travel is to differentiate prices by bundling them with one or more conditions, like:
Only through a specific channel (or portal)
Up until 5 days before arrival
Minimum number of nights
Only with weekend stay
Only though a corporate contract
Most important in revenue management, but also the hardest, is predicting demand. A common model used is to calculate "unconstrained demand". This is the quantity (of rooms) that could be sold if there were no constraints such as availability.
Most revenue management tools provide a way to give insight in historic bookings to be able to predict this future demand and adjust pricing accordingly. According to Xotels' vision, this is only part of the equation.
The future expected demand is a combination of:
historic demand: how many days before the day of arrival were the rooms sold for which market segments, at which rate(groups), adjusted with unconstrained demand values
demand influences: events in the future which impact demand, like festivals, venues, economic factors, competition
current bookings so far : which rates have been booked until now
Xotels Revenue management uses this expected demand to calculate maximum revenues in an optimal configuration of available rates. This is what we call "logical availability"; the availability of different rates (combined with conditions) with an automatic overbooking level when necessary. It is different from the physical availability (ie. the number of room you have available), since a room may be counted for different rate and conditions. Of course, as the hotel will get nearly full, the Logical Availability approaches the physical availability (including overbooking percentage).
At any given time, the logical availability and rates need to be known to systems and departments that approve/accept bookings. Hence the Xotels RMS is also fully integrated and interfaced with the XBooker hotel reservation software.