What Hotel Revenue Management Innovations & Trends Can We Expect in 2022?

“Revenue Management is extremely exciting and a constantly evolving field. There are several innovations and new products/ software currently in development that are designed to make the life of a Revenue Manager easy and also help them take the right decisions.

Covid-19 had a great impact on the travel and hospitality industry. Though we slowly see some markets recovering from the deep red, the impact will be felt all through 2022 and even later. This presents an opportunity as well as a challenge for Revenue Managers to identify prospective areas of revenue generation. Revenue Managers need to be agile in their approach and decision making.

Some interesting trends to expect are:

1. Rates that offer flexibility and/ or free cancellation will continue to be more popular for future dates.
2. A short booking window for hotels located in the city/ metropolitan area.
3. Regional / Domestic travel is still expected to be more prevalent than international travel.
4. Business travel will be the last to pick-up, meaning that all the corporate inventory will be released to transient and leisure travellers.
5. Hotels located in far off places (holiday destinations) will perform better than city hotels and will attract bookers who are willing to pay a higher price.
6. Revenge travel will be common as fully vaccinated people can travel again and will be the first ones to drive the industry forward.

Looking ahead to future innovations:

1. Hotels have already started (and will continue) to give importance to direct bookings via their own website. Google Hotel Ads will play a huge role in channelling direct traffic and will compete head-to-head with OTAs.
2. Instead of price wars, I see many hotels offering extras (via their own website) to stand out from the crowd and differentiate from OTAs.
3. Contactless experiences will be common amongst smaller hotels as they will try and shift to automation in order to save costs.”

“What I hope to see in the future is more recent graduates diving deep into revenue management and technology. People that are interested in what goes on behind the scenes in automation of revenue management processes and especially forecasting and pricing. This new breed of revenue management tech enthusiasts will enable our Revenue Management Systems to have better well-trained machine learning and algorithms.

These professionals do not need to be Data Scientists, but they need to be in the picture, and the collaboration between these two teams is what will drive these RMS to successful forecasts and reliable pricing. COVID-19 came as proof that RMSs need to be flexible, adaptable, and quick to respond to external and internal factors. The more people with revenue management knowledge working together with data scientists to build efficient tools, the merrier!”

“I believe that we will see more and more hotels adapting ways to improve their automation. That does not mean replacing staff or teams, but having automation as a way to increase efficiency and assist with decisions. Data points are now more important than ever, as well as an expectation of a seamless customer journey, so that will cover pre-journey until post-journey of a guest’s stay. There are more and more new products coming up on the market to assist.”

“I see a high level of revenue opportunities centred around sustainability. Companies and clients, as well as hotels, are becoming increasingly focused on safety and sustainability. Therefore, creating an environment and products that will make the guests comfortable while showing social proof of the hotels’ actions will be an important asset in generating revenue and increasing demand.

Even if you’re a business hotel you can contribute to the society/environment and these actions will be more than appreciated by guests. Being part of the community is an urgent need.

Another opportunity is for those hotel that can provide hybrid meeting features to make better events showing real cost savings for clients and helping clients to achieve more business. Hotels will have a great audience from this segment.”

“I guess that technology will play an even bigger role in Revenue Management in 2022: like integrated solutions for all departments in a hotel/resort to be able to easily combine and track all data in an effort towards total revenue management, a shift towards cloud-based systems (cloud-based PMS for those who don’t have it yet, allowing reservations to work remotely), two-way connection for booking engines and channel managers for those who are not using it yet, more emphasis on mobile bookings and brand websites that are easier and smoother to use (more user friendly and fewer steps to confirm a booking).

Analytics and reporting (especially forward-looking data) will be really important and therefore more properties would like to invest in RMS software and/or in rate shopping and business intelligence tools. These would allow them to understand the guest behaviour and upcoming trends in more detail to create proper strategies (e.g., flight search traffic, geographic locations, length of stay, competition, etc).

The strategy will be even more dynamic, with a focus on providing more options and authentic experiences to guests (not only focusing on numbers and forecasts). There might be more packages being offered and collaborations with partners or airlines; with a lot of focus on safety, wellness and exclusivity. But also, totally different offerings have emerged this year and will still be offered in 2022; for example long-stay offers (flat rates for weekly or monthly stays), or day packages.

As the industry tries to get back on its feet after the pandemic, innovation will be key. There will be more awareness about costs (related to a booking whether it is a direct booking or via a third party) and how distribution channels might be better optimized. Hotels that do not have a CRM might invest in one. The market might be more dynamic and volatile and we might see more hotels shifting to automated systems/RMS. Many hotels that do not have proper Revenue Management will rethink their strategy and change their mindset around it. We could see more empowerment for Revenue Managers.

The availability of more RMS options and business intelligence tools will also increase in the market; maybe making it more accessible to independent hotels and smaller hotels. The trend of more flexible terms and conditions that emerged with the pandemic will definitely continue throughout 2022, encouraging guests to book longer in advance which might also lead to a better long-term strategy. And finally, the focus will shift to short term forecasts vs. long term ones (pre-pandemic) and updating it regularly as the market will be very volatile.”

“I am not so sure about innovation but a trend that we will see in 2022 is the change in how corporate travel will take place. Although there is a need for face-to-face meetings, from a financial aspect corporate travel will be reconsidered now that everyone has grown accustomed to virtual meetings and travel expense savings.

Another trend will be a more fluid approach to pricing and restrictions. We are already observing an increase in requests for dynamic rates as opposed to static prices. This is very beneficial for revenue optimisation, as well as for clients alike.

Additionally, another trend that I believe will stick around longer than we thought is the relaxed terms and conditions, making it easier for clients to do business with us.”

“The appetite for going on holidays and having extraordinary experiences and creating memories will be huge! There will be an increased demand for:

• Exclusive packages
• Fine dining / private dining experiences
• All-inclusive packages

If we look at business travel, I believe that the pandemic has shown us that we CAN do things differently and that travel is not a hard requirement anymore for business meetings. I believe that these topics will be important for 2022:

• Hybrid event organization
• Conscious travels & offerings
• Innovative technology that helps us do business in an efficient & effective way.

The trend will be that Revenue Managers should adapt their strategy and perhaps even redefine core business models. For example, what are you going to do with empty meeting & event spaces? Finding creative ways to optimize selling your square metres will be more important than ever.”

“After many months (up to 18 in some cases) of low or no income due to the pandemic, hotels are in real need of driving up revenue, and that should be the reason why Total Revenue Management should become the main trend in 2022: Untap every revenue stream, and maximize it. Up until recently, technology was the main block to be able to optimize the revenue in any space other than the bedroom.

However, there are many new tech solutions available now – at affordable prices since they tend to be SaaS – that facilitate this task. From upselling quirky pre-arrival packages (e.g., Oaky) that improve the guests’ experience, to controlling each KPI at the SPA (e.g., Spalopia). From having an in-depth control of the F&B bookings and floor management (e.g., Cover Manager) to managing your meeting space efficiently (e.g., Get Into More).

There are no more excuses for most hotels to keep leaving money on the table: resources are plenty and available, it’s about the mindset now.”

“For revenue management operations who have historically focused on room revenue predominantly, there will need to be a change of mindset towards total revenue management and a consideration of distribution and operational cost.

After the first lockdown where there were widespread temporary closures of all kinds of lodging facilities, managers and operators have since become practised in how to monitor profitability and to define the point at which to re-open (and re-close) again. This has increased the consciousness of overall profitability. Surely, we will discuss TRevPAR more frequently in future.

This change of mindset comes with several aspects to consider in revenue management operations. Revenue Managers will need to expand their skill sets to include the impact of channel cost and ancillary revenues for instance. In order to cope with this requirement, technology will need to be re-evaluated. Legacy RMS struggle with the concept of total revenue management and often cannot factor in channel cost into pricing decisions.

Another aspect is also the efficiency of revenue management operations. The fact that the demand forecasts of some RMS are no longer reliable enough adds more manual workload to the Revenue Manager’s task list.

Also here to stay are the opportunities to upsell digitally. Having been discussed for a long time, technology has become ready to facilitate seamless and consumer-friendly upselling techniques, whether it be in the booking funnel (without disrupting conversion rates) or in the pre/during stay experience.”

“One of the new technology innovations, on the distribution side will be an all-in-one booking platform. The online booking journey will become more personalized, with hotels turning to attribute-based inventory instead of just plain room type inventory. With attribute-based inventory, guests will have an opportunity to shape their booking by adding all elements which are of importance to them, and at the same time, this will allow revenue managers to generate some incremental revenue and grow the ADR. Taking it a step further, booking engines should be able to include F&B, SPA and any other services provided by the hotel. This is already happening through third parties like NOR1, but it isn’t yet fully integrated into the booking process.

Because of the pandemic, RM systems are no longer as useful as they used to be. Hotels are facing unparalleled market conditions and historical data has now become obsolete. A number of factors impacting the hotel’s demand have also changed; Revenue Managers have to now consider several competitive sets, international travel restrictions, local restrictions, numbers of flights, reputation scores etc. It all adds a new layer of complexity to the Revenue Management function, therefore the importance of having an adaptable RMS is greater than ever. Revenue Management systems that gather all this data will provide Revenue Managers with a complete picture to make more informed decisions and react to any changes faster.”

“With the integration of more and more data points, I think we will see further development in some of the current themes such as Total Revenue Management and Attribute-Based Pricing which can also be closely linked to ancillary sales.

Total revenue management has been discussed for over 20 years now but the pandemic has brought it to the forefront due to the shift in business segmentation mix and the need to commercialise all available space at the property. Taking in data points from F&B, Spa, Meeting & Events as well as other activities will be more important than ever to drive total revenue performance.

Some of the biggest growth opportunities are in attribute-based pricing and ancillary sales. This means offering price add-ons by room attributes such as view, room size, bed type, room location or service type add-ons like housekeeping, early check-in, late check-out and room amenities. Ancillary revenues do offer a large untapped potential to sell non-hotel based experiences & services such as transport, travel insurance, theatre & event tickets.
Here, we need only look at the airline industry who has doubled its ancillary sales in the five years pre-pandemic.”

“Revenue Management is more and more developing a retail approach to hospitality and we will keep on seeing the alternative selling of hotel spaces, staycations and rooms sold by time slots. Alternative payment methods will probably increase with insurances and deferred payments becoming more popular.

Subscription models might evolve and all of this will require an adaptation in the way Revenue Management yields on rates and factors the cancellation % in its predictions and inventory management.”

“Technology will remain a key component in 2022, with systems looking at continuous analysis and short-term forecasting, the ability to react to an ever-changing situation, incorporate new data sources and ensure that data collection remains up-to-date. Forward-thinking analytics without having to look year-on-year will be crucial.

I also believe there will be more emphasis on creating and selling experiences as a total revenue management approach becomes the key focus across the industry, looking at all products, services and resources and how to optimise. The ability to quickly regain profitability will also be key, as such, generating demand through emphasising the benefits to the guests.

Ensuring that the distribution channels are optimised and maximised to ensure the right offering at the right time through the right channel to secure the best profit will be crucial as we ensure that there is no reliance on any one individual market or source.”

“Rather than innovations, I think that we will be seeing the confirmation and consolidation of trends that were already underway prior to the pandemic. Surely, we will be moving towards total revenue management and profit management, and we have already started seeing the first software capable of tracking parameters such as GOPPAR, EBITDA, TRevPAR, etc.

I also think that open revenue management will become increasingly prevalent. In other words, revenue management will extend to commercial sectors other than the traditional ones (airlines, hotels, transport) which nevertheless have similar or identical characteristics: high fixed costs, low variable costs, predictable demand, perishable product, limited inventory.

These include cinemas, museums, theatres, stadiums, concerts, bathing establishments, ski resorts, restaurants, gyms, hairdressers, etc. There are already some realities where the principles of revenue management are being experienced in embryonic form within these sectors, each with their own peculiarities, and I think that technologies will continue to develop that will make this discipline a critical standard in these sectors as well.”

“The most important trend is the increased understanding that data is key and therefore more and more hotels are open to implementing the right systems to support their day-to-day revenue decisions.

That being said, many hotels still continue to work with excel spreadsheets only based on PMS data and ‘forecast’ manually, or even use PMS reports as ‘forecasting’. In addition to that, we are looking for more ways to align systems and implement systems that can be joined in data in order to help us be on top of the decision-making process.

Finally, what should be trending is the changed revenue management landscape and the importance of online marketing, as this is key to aim for the best results.”

“Revenue management innovations will continue to evolve in 2022. Most major chains have an automated revenue management system in place that utilizes sophisticated revenue management science to produce forward-looking pricing decisions. We will continue to see more cloud-based technology for the faster retrieval of data.

Post-pandemic, the cost of distribution is more relevant than before and all major hotel brands are trying to shift bookings from OTAs to direct bookings. Another trend I have seen is that we cannot compare 2021 to 2020 for any timeframe. The historical data might mean comparing week over week performance. Booking windows are very short now and sometimes it’s the same day which may lead to staffing issues.”

“Attribute-based pricing is sure to become more prevalent in the coming years. For example, some resort hotels currently charge higher rates for particular views. However, there are many other attributes on which properties can potentially yield in the future. Rooms that have walk-in showers for example, or separate seating areas.

Several PMS companies and Channel Managers are working on making it possible to sell based on attributes through the respective web booking portals.”

Ask a Question & Join Our Expert Panel

Would you like a question to be answered by our Industry Expert Panel? Or would you like to join our community of experts and share your experience, insights, and knowledge with fellow industry professionals? Via the buttons below you can submit a question or submit a request to become part of our expert panel.