Carol Verret Consulting 
and Training
Training Seminars
Revenue Management Systems -- 
Considerations for Evaluation
by Carol Verret, June 2005

A recent Cornell University Study found "hotels that price above their local competitors to be the most aggressive revenue managers. (This study) - also suggests that those hotels which are best able to extract high REVPARs are most likely to engage in revenue management practices." (Cathy Enz, PHD, Linda Canina, PHD, The Center for Hospitality Research, Cornell University, Analysis of Revenue Management, Vol 5, No 6, April 2005.)

Most (not all) hotels want to be able to sell rooms at higher rates resulting in increased REVPAR. If aggressive revenue management is the key, as the article suggests, many will be looking to institute or upgrade their revenue management systems.

As many of you will go to HITEC and look at the latest in revenue management systems, it is good to stop and pause prior to being seduced by the most sophisticated technology. It is prudent to establish exactly what the requirements of the hotel are in terms of functionality and how an RMS system can make the process more effective resulting in increased revenue.

The needs of a 100-room boutique hotel are quite different from those of a 900-room hotel with multiple revenue sources such as F&B outlets, catering revenue, spa, etc, and a large group component. A hotel company with several hotels within a geographic area has different requirements than a national company with hotels spread across the country and no two of them in a close proximity.

In anticipation of implementing a new system or upgrading an existing one, some criteria should be established in order to evaluate the potential ROI of individual Revenue Management Systems and their suitability for the objectives of one hotel or a hotel company.

One company that I know of is doing this by assembling a team of key staff members from the corporate office and managers of different departments from selected properties. Their mission is to develop a framework for identifying the key functionalities expected from a Revenue Management System and a blueprint for implementing it. This gives each property and department a role in defining the objectives and expectations of the system and so should encourage buy-in from all of those that the system will impact.

Some of those evaluation criteria are:

Who needs to know what and why? In other words, what does each department want to see in terms of reports and other pertinent data in order to make decisions? What is the minimum required by each department and what is the optimal requirement?

The Current Revenue Management System. If you currently have a revenue management system, why are you considering replacing it? Is it all of the system that you want replaced or are there certain functionalities that you would like to "add" to it? Is it more cost effective to start from "ground zero" or to purchase "add ons?"

Channel Management. Most systems do this adequately. How sophisticated a system you require is dependent upon the complexity of your business mix. Will the system allow you to evaluate different channels revenue streams or are all of them dropped into the same basket?

Managing Multiple Revenue Sources. How well does the system manage and evaluate revenue from unique revenue sources? For example, a property with a water park in addition to the usual hotel revenue sources needs to be able to manage the park's revenues effectively and evaluate business that maximizes revenue to all departments. A property with a popular spa needs to evaluate how the revenues of both are interrelated and manage both the inventory of rooms and spa services.

Analyzing and Predicting Customer Behavior. How will the system incorporate customer behavior into its forecasts? Can it provide reports of customers' decision making timelines by market segment so that Marketing can use it to target campaigns? Will the data enable Customer Relationship Management to catch the repeat guest at the right time with the right offer at the right price?

What are the Benefits for Smaller Properties? Is the system under consideration "scalable" -- can some parts of the system be implemented without purchasing more functionality than necessary? Will the benefits deliver an appropriate ROI on the investment? Will the modules of a new system interface with those of the system already in place?

Will the Corporate Office Have Access to the Individual Hotels' Systems? In many companies, the situation exists where the skill sets of the property Revenue Managers vary from hotel to hotel. Will a system "level the playing field" allowing the corporate revenue manager to support those properties whose managers are less proficient?

How Will the System Evaluate Group Business? Many sales people complain that they have been relegated to booking groups only on the weekends and the revenue managers conversely complain that sales only wants to sell "cheap" rooms. How will the system enable the sales department to make good group bookings that satisfy the requirements of the hotel's revenue management strategy and the sales persons' desires to meet their goals? How finely can the system "drill down" the data to enable the decision making process in RFPs and contracts?

Can the System Manage Demand within a Geographic "Cluster?" Some hotel companies have multiple properties within close geographic proximity to each other. Can a revenue management system assist in the redistribution of demand so that all of them can maximize their revenue based on geographic demand?

You will notice that the above section has more questions than answers. That is due to the fact that the answers are up to the buyers and those answers will make the difference in purchasing the right system at the right price or being dazzled by technology that may be more than the hotel requires and therefore, provide disappointing results. The process of arriving at the answers is almost as important as the answers themselves given that it is the process that will determine if the new system receives "buy in" from all of the departments that "need to know."

Carol Verret is offering a revenue management seminar, the Revenue Management Accelerator, sponsored by Optims, in New York City on June 28, to be repeated June 29th at the Sofitel Hotel. Click on this link for more information and to RSVP. It is free program due to the generous sponsorship of Optims America.

Carol Verret and Associates Consulting and Training offers training services and consulting in the areas of sales, revenue management and customer service primarily but not exclusively to the hospitality industry. To find out more abut the company click on To contact carol send her an email at or cell phone (303) 618-4065.

copyright © Carol Verret, 2002-2003 -2004 -2005

Carol Verret, Consulting and Training
Carol Verret
5910 S. University #C-18, PMB 374
Greenwood Village, CO 80121
Telephone: (303) 618-4065
Web Site:
Also See: Disconnect -- Aligning the Revenue Management and Sales Strategies / Carol Verret / May 2005
Independent Hotels & Resorts; Ride the Wave or Float with the Tide? / Carol Verret / March 2005
Hospitality Sales Training Companies Reach Across the Competitive Playing Field to Combine Live Seminar Expertise with  the Convenience of the Internet / Carol Verret / January 2005
Revenue Management - The Challenge for Hotel Sales / Carol Verret / January 2005
Hotel Sales Departments -- Issues in Processes and Functionality / Carol Verret / November 2004
The GM'S Role in Revenue Management / Carol Verret / October 2004
Transforming the Hotel Sales Organization; Alignment with the New Realities of Sales / Carol Verret / August 2004
The Revenue Management Strategy - The Pre-Plan Marketing Plan / Carol Verret / July 2004
Hotel Revenue Management this Summer - a Game of Skill, Art and Most of All Nerves / Carol Verett / May 2004
What Do Meeting Planners Want? Hotel Sales Managers Want to Know! / Carol Verret / May 2004
Revenue Management -- The Integration of Revenue Drivers / Carol Verret / March 2004
CYBER SALES -- Hotel Sales in an Internet World is the New Reality / Carol Verret / February 2004
The New Realities of Hotel Sales - Focus on Revenue Generation / Carol Verret / January 2004
Hotel Sales -- Innovation in the Face of Limitations / Carol Verret / November 2003
The Good News & the Bad News; Improving Economy = New Hotel Development / Carol Verret / October 2003
Leadership - General Managers Managing the Sales Process / Carol Verret  / October 2003
When the Crystal Ball is Cloudy; Marketing Plans for 2004 / Carol Verret / July 2003
Partnership of Sales and Technology; Using Tech Tools to "Sell" the Hotels / Carol Verret  / July 2003
Back to the Basics? The Basics of Hotel Sales Have Changed! / May 2003
Creating Sales "HUNTERS": The Skill Sets Required in the New Hotel Sales Environment / April 2003
Heightened Security Requires New Strategies in Hotels Sales / Carol Verret Consulting and Training / Mar 2003
Revenue Recovery - Building The ‘A’ Team in Sales / Carol Verret / January 2003
Contingency Marketing Plan – War In Iraq! / Carol Verret / November 2002
Playing the Rate Game - Positioning -- Positioning -- Positioning! / Carol Verret / October 2002
The Rate Game - Playing to Win / Carol Verret / October 2002
The Challenge of Marketing Independent Boutique Hotels / Carol Verett / August 2002
Hotel Sales in a Limited Service Environment - The Rules Have Changed / Carol Verett / August 2002
The General Manager’s Role in Sales -Chief Marketing Officer of the Hotel / Carol Verret / April 2002
100% Market Share Penetration is Not Good Enough / Carol Verett / January 2002
The Key to REVPAR Recovery –  New Business Development / Carol Verett / December  2001
Trash the 2002 Marketing Plan - And Just Start Over / Carol Verett / September 2001
How to Use Consultants Effectively –  A View From the Other Side  / Carol Verret / August 2001
How Soft Is Your Hotel's Economic Landing?  / Carol Verret / Aprl 2001
The ‘Value Proposition’: Marketing Yourself to Prospective Employees / Carol Verret / January 2001
Generation Y:  Motivating and Training a New Generation of Employees / Carol Verret / November  2000
Why Customer Service Seminars Don't Work / Carol Verret / October 2000
Creating a Culture of Customer Service / Carol Verret Consulting and Training / Sept 2000 
FAT, DUMB AND HAPPY – The Seasonal Boom and  Bust Cycle / Carol Verret / August 2000
Surf's Up - Ride the Wave or Miss the Boat -The Effective Use of Technology in Hotel Sales / Carol Verret / July 2000 
Measuring Effectiveness of  Hotel Sales Departments / Carol Verret / June 2000
Hotel Sales Training - The Need for Immediate Results / Carol Verret/ May 2000

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