5 Errors Revenue Leaders Are Making and How to Avoid Them • WebRezPro

***Guest post from LodgIQ, a WebRezPro partner***

In today’s dynamic and highly competitive hospitality industry, revenue managers face immense pressure. Rising operational costs, growing guest expectations for personalized experiences, and ever-evolving competition are all part of the daily grind. As these pressures mount, the strategies used to maximize revenue need to evolve too. Yet, many hotel revenue managers still fall into common traps that can undermine long-term success.

Here are five key errors that revenue leaders make and, more importantly, how to avoid them to secure long-term gains.

Despite the proliferation of automated revenue management systems (RMS), many hotels continue to rely on manual processes for forecasting, pricing, and decision-making. Whether it’s using outdated spreadsheets or adjusting rates based on intuition, these manual methods can lead to inefficiencies, errors, and missed opportunities.

Why It’s a Problem: Manual processes are slow and prone to human error. In a world where pricing can fluctuate rapidly based on market conditions, relying on manual adjustments can result in missed revenue opportunities. Hotels that fail to adopt technology often can’t react quickly enough to changing demand, leading to suboptimal pricing strategies.

How to Avoid It: Invest in an automated RMS that can process vast amounts of data in real time, allowing for dynamic pricing decisions based on current market trends. This not only saves time but also improves accuracy, leading to better financial performance. Even smaller hotels can benefit from affordable, cloud-based RMS solutions that offer scalable features without breaking the bank.

It’s easy to get caught up in what competitors are doing. Many revenue managers spend too much time analyzing the pricing strategies of nearby hotels or comparing occupancy rates, often at the expense of understanding their own guests’ preferences.

Why It’s a Problem: Focusing too much on competitors can lead to a reactive, rather than proactive, approach. Each hotel has its own unique strengths, target market, and brand identity. By constantly adjusting prices to match or beat competitors, revenue managers risk losing sight of what their own guests truly value.

How to Avoid It: Prioritize guest data and satisfaction. Use guest feedback from outside of your direct compset, looking at actual pick up trends and behavioral data to inform pricing strategies. By understanding what the market values most, you can create a pricing strategy that reflects demand and maximizes revenue without being blinkered by only comparing to competitors.

Many hotels invest in advanced revenue management systems only to find that their teams struggle to fully adopt the technology. Complicated systems with steep learning curves can lead to underutilization, where staff revert to manual processes or fail to leverage the full capabilities of the technology.

Why It’s a Problem: If your team can’t easily use the system, it becomes a waste of both time and money. Poor adoption rates mean that key insights and automation tools aren’t being used effectively, leading to inefficient operations and missed revenue opportunities. Be aware that antiquated and older RMS based systems can also be a deterrent to top performers if you are looking to hire talent. 

How to Avoid It: Choose a system that is user friendly and offers comprehensive training and support. Involve your team in the decision-making process when selecting a revenue management system to ensure it fits their needs and capabilities. Additionally, ongoing training and support are crucial to ensuring that staff are comfortable using the technology to its full potential.

Revenue management systems are powerful tools, but they are no replacement for a collaborative and strategic revenue manager who is able to take ownership directives, business mix, and other factors into account. Some revenue managers make the mistake of relying solely on the insights provided by their RMS without taking other factors into account.

Why It’s a Problem: An RMS bases its recommendations on historical data, current market conditions, and algorithms. However, there are always variables that a system can’t predict. If revenue managers blindly follow RMS recommendations without considering external factors, they may miss opportunities or set prices that don’t align with current market realities.

How to Avoid It: Use the RMS as a foundational tool, but combine it with business intelligence and market insights. Stay informed about broader industry trends, local events, and economic shifts that might impact demand. Revenue management is both an art and a science, and while data is critical, so is contextual awareness.

In many hotels, revenue management is seen as a siloed function, handled solely by the revenue manager. However, this approach limits the potential for optimizing revenue across the organization.

Why It’s a Problem: When revenue management is isolated from other departments like sales, marketing, and operations, there’s a lack of collaboration and shared insights. This siloed approach can lead to disjointed strategies that fail to capitalize on the full spectrum of revenue opportunities, from upselling at check-in to bundling room packages with dining or spa services.

How to Avoid It: Revenue management should be a cross-functional effort that involves input from various teams. Sales and marketing should work closely with revenue management to ensure that pricing strategies align with promotional campaigns and guest segmentation. Operations teams can provide valuable insights into guest behavior that can inform pricing and inventory decisions. By fostering collaboration across departments, hotels can create a more holistic approach to revenue optimization.

In a fast-paced and competitive market, revenue managers need to move beyond traditional methods and embrace a more dynamic and data-driven approach. Avoiding these common mistakes can help hotels boost their bottom line. By prioritizing guest-centric strategies, leveraging technology effectively, and fostering collaboration, revenue leaders can ensure long-term success.

About LodgIQ™

LodgIQ™ is an AI-powered commercial strategy platform for hospitality, born from an RMS and founded in 2016. By breaking down silos and unifying marketing, sales, and revenue data, the solution offers 360° recommendations to improve profitability. Trusted by 550+ teams in 200 markets, LodgIQ supports real-time decision-making with customizable modules and a mobile app.

Find out more here.