The hospitality sector is seeking to maximise profits by setting the right prices to ensure success in very difficult economic climate.
According to IBISWorld, the global hotels and resorts industry is expected to grow to $580-billion in 2012 – and it is vital organisations take a flexible approach to pricing to ensure long-term success.
In a new e-book titled “The Truth About Pricing and Revenue Management” released by JDA Software, it is estimated that organisations could see a 1% to 3% increase in revenue if such an approach is taken – ignoring it could see the industry lose up to $17-billion a year in potential revenue.
In the e-book, JDA reveals that one third of hotel properties do not have automated revenue management systems in place. An automated approach means businesses can adjust pricing as customer demand, competitor pricing and other external influences fluctuate and ensure that pricing remains at a profitable but competitive level.
“Many organisations take a time consuming, manual approach, or worse – do no revenue management at all – because they mistakenly assume revenue management systems are tough to implement and run,” says Andy Archer, regional vice-president: pricing and revenue management at JDA Software. “Additionally, our research has shown that over half of revenue managers believe customers think revenue management is a business trick that drives customer ill will if prices are complex and change too frequently.
“The truth is that customers are more open to a company’s revenue management efforts if that organisation communicates the benefits of the dynamic pricing it brings. Simply put, a more flexible approach to pricing offers the means to truly move with the industry.
“If demand is expected to dip, or boom, pricing is instantly repositioned to reflect that shift. It is this ability to better understand customers and be proactive in pricing, rather than simply reacting to the competition that will help ensure sustained success for the hospitality sector.”
The Truth About Pricing and Revenue Management looks at five biggest myths and aims to set the record straight, separating fact from fiction and debunking the myths that have slowed industry adoption.