What is a hotel RMS (Revenue Management System)?

RMS stands for Revenue Management System, a system that's increasing in popularity within the hotel industry. Whereas previously an RMS was only affordable for hotel chains, there are now many different systems available for every type of hotel. A Revenue Management System uses multiple sets of data to respond intelligently to your hotel room prices (price elasticity). Examples are events that take place in the neighbourhood, weather forecasts and the room occupancy in the past. In addition, in the RMS you can configure under which conditions the price increases or decreases, and by what percentage. This way, you can offer an optimal number of rooms for a longer period, to the right amount of guests and at the best price.


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Is a Revenue Management System (RMS) important?

An RMS is not a requirement for revenue management (or yield management); you can also do this in a Property Management System (PMS) or Channel Manager. However, if you want to start ''yielding'' your prices or already do, an RMS can make things easier for you. An RMS is there to help you optimize your room sales. Do consider whether the extra income, outweighs the price you pay for an RMS. For a smaller hotel far outside the suburbs with little competition, it can be difficult to earn back the RMS costs, while it can be interesting for large hotel chains and hotels with a lot of competition.


Is Revenue Management an ongoing process?

Yes, revenue management never stops. You have to stay updated about changes in the environment and adjust your price accordingly: what are your competitors doing, are there any events, is the weather going to be perfect? All these considerations become easier and less time-consuming with an RMS, as the system already does a lot of thinking for you.


What is a successful Revenue Management strategy?

Let's state in advance that there are complete training courses regarding revenue management, and that the strategy can differ entirely from hotel to hotel. So there is no such thing as one standard strategy. What we do often see is that three rate groups are used (25% occupancy, 50% occupancy and 75% occupancy)—the earlier you book, the lower the occupancy and the lower the price. When booking late, the occupancy is higher, and the asking price can also be higher. Please note: selling the room at the highest possible price does not always give a positive result, but also make sure that the price is not too low. It is essential that the room price increases over time and does not become cheaper.


About SmartHOTEL

For more than 16 years, SmartHOTEL has been helping hoteliers navigate the exciting world of online distribution. From our office based in the Netherlands, our team serves independent hotels, hostels and chains worldwide by providing channel management and tailored online distribution solutions. A lot has changed over the last years, but our goal remains the same: simply connect hotels to the world. For any questions regarding our services, please contact us at sales@smarthotel.nl or call +31 (0)182 75 11 18.

By SmartHOTEL | January 05, 2015

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