revenue management platform

revenue management platform

The Evolution and Impact of Revenue Management Platforms in the Digital Age

1. Introduction to Revenue Management Platforms

Characteristics of service are changing: consumers are no longer siloed across a range of different services. Instead, requirements are changing. Service is now expected to be guaranteed regardless of location and provider, and the ability to send, receive and store data securely at almost any location becomes of utmost importance.

Such a significant change of route does not come without significant shifting of focus. As well as grappling with the fundamentals, our customers’ needs adapted to increase requirements to our extensive range. The rapid spread of globally available ultra-high capacity networks is driving further evolution. The prosperity of Revenue Management Platforms is closely related to the impact of these new consumer requirements. The relocation of data to the cloud, which is no doubt one of the reasons you can read this article in comfort, aligns closely with the increasing vital importance of Revenue Management Platforms.

The arrival of the COVID-19 pandemic highlighted the necessity of maximizing efficiency and influenced a growing push towards the digital age. During lockdown periods, the majority of our workforce was remote because we had broadly turned our operations into a digital way of working prior to this. This shift was made possible by turning away from the more traditional service and enabled through the development of new platforms, policies, and procedures.

Efficient working benefits both customers and employees. Employee retention increases as working conditions improve. In turn, this impacts staff training negatively through reduced turnover rates – a known benefit for any business. For the customer, an expected service that is sensationally delivered is the bottom line of any RMP. Reduced waiting times prove efficiency, and more straightforward communication does wonders for public perception.

The search for efficiency is eternal. Manufacturers being able to produce a higher number of products more rapidly has allowed consumer markets to grow and customers’ lives to improve. As a result, consumers have come to expect improvements in efficiency everywhere they look. These improvements lead to long-term benefits for people, and the more efficiently a company can operate, the more it can benefit the public-at-large.

The digital era has ushered in new forms of working, and squeezing every penny out of your revenues is now more important than ever. In a fast-paced world, ticking every efficiency box is a priority, and the use of technology will be the method that maximizes your potential. This report aims to underline the importance of Revenue Management Platforms (RMPs), how they have evolved, and discuss their impact on modern businesses.

2. Key Features and Functionality of Revenue Management Platforms

For Sample Hotel ABC, the mix of business was generally heavier in market mix than for comparative hotels. In this regard, Sample Hotel ABC performed very well. This type of analysis clearly represents the seat allocation decision for most airlines and the room allocation decision for most hotels. Thing Big Hotel performed better than its Sample competitive set in some months and worse in other months. The independent, relative, and holistic performance analysis provided by the RMP is only one element of the platform story. The revenue and other management recommendations need to be evaluated to determine whether the platform adds value or at least performs better than other high-quality accommodations and similar RMPs that are appropriately run. The RMP vendors describe this pricing service and utilize the term “price recommendation.” Revenue-generating services for accommodations, airlines, car rental firms, the railroad industry, and the everyday hotelier would appear unusual in practice, and so these services are also referred to as revenue management services.

Revenue management platforms (RMPs) are business application software that purports to improve hotel capacity and revenue by optimizing physical inventory, as well as by developing and dynamically updating price recommendations. This software is designed to accept inbound proprietary and structured public data, apply negative and positive rules, create derived information, and make real-time price and allocation recommendations. The RMPs are designed with the premise that hotel room inventory is fixed and perishable and that there is a high fixed cost of sales. They are then developed to accomplish one or more of the following objectives: to enhance the pricing element of goal-set pricing decisions with learned dynamic pricing models using specialized techniques, to implement learned heuristic-based, problem-specific, and near-optimal non-price decision rules, and to provide an independent check as a reporting research tool. The following sections discuss the features and functionality that the existing Revenue Management platforms perform.

3. Benefits and Challenges of Implementing Revenue Management Platforms

Revenue management is often structured around a pricing function, although it can also be leveraged in sales planning and promotion planning. Effective revenue management dictates a highly intense quantitative resource commitment, where statistical or operations research-based forecasting models and optimization models are used to assist decision-making. Revenue management approaches can be classified into two major categories: focus on price discrimination (known as classic revenue management) and dynamic pricing. Classic revenue management coordinates the execution of predefined pricing and consumer segmentation strategies by employing advanced forecasting models and multistep optimization. Meanwhile, dynamic pricing approaches enable a firm to adjust prices more relative to real-time market information. Both are typically applied using rules set by the firm, guided by advanced analytical models and algorithms.

The development of an effective pricing and revenue management system comes with many different levels of complexity and trade-offs. As we saw in previous sections, although a well-structured process is critical to achieving success, it can still be challenging to implement and maintain over time. Accordingly, an increasing number of companies have been looking to implement technology-based solutions, known as revenue management platforms, to support their efforts. Adopting one of these platforms is an expensive and complicated process that can last over multiple years. If their development and implementation processes are arduous, these platforms can still reap considerable benefits for firms that are using them, such as a faster time to market, better execution, better and more reliable results, and greater analytical capabilities. In the following section, we explore these challenging platforms in more detail, reviewing some of the benefits that companies can expect by successfully implementing a revenue management platform alongside the challenges that come with it.

4. Case Studies and Success Stories in Revenue Management Platform Implementation

The current chapter builds upon an adapted dynamic framework for revenue management platform evolution and formulates initial hypotheses for platform development, functionality, and complexity in the digital age. The building blocks of revenue management platforms are scrutinized through an extended literature review. While platforms are often modeled as value nets facilitating transactions between different user roles, the perspective and focus are shifted toward a pricing net, acknowledging the revenue and contribution control role of the platform owner. Hypotheses are formulated and derived from the specificity dimensions of relationships established in the revenue management context and information that is available to manage them. A large case company is portrayed, and a software provider delivers insights into actual platform designs. Findings endorse the significance of pricing-related choices, and developed hypotheses enhance understanding of revenue management platform design.

As digital technology becomes increasingly more complex, revenue management platforms also evolve in order to provide the most effective digital strategies for companies to employ. Many of today’s most successful companies are implementing various techniques of current revenue management platforms to maximize revenue generation through price optimization and sales channel management. Presented here are examples of companies experiencing significant success after implementing revenue management software designed to manage revenue maximizing digital strategies. No specific names are used to protect the confidentiality agreements that currently exist between the stated companies and their respective revenue management platform vendors.

5. Future Trends and Innovations in Revenue Management Platforms

Platforms must provide tools to create quantitative markers of low engagement, churn behaviors, and revenue erosion while supporting A/B testing to measure the effectiveness of the sales, ad and upsell offers, and personalized recommendations that enhance the conversion and transaction. Theories abound about the platform data whose models adapt to changes in a data’s generating distribution may be emulating at tech speed – or that untold auto-tunable SKF models using vast arrays of distributed parallel resources machine learning (ML) software may ooze, or at least coast downhill, over years of trial, error, and caching. Machine learning technology advances have facilitated data scientist access to complex models, whose performance can stabilize their hypotheses once proper training data, bias reductions, and validation and optimizations are discovered. Adding nuanced features to bland baseline models, tailwinds reinforce the concept that more models work best for more problems – thousands, millions, or billions of factors – including both online feature updates to enhance model insights combined with heavy customer interaction from human domain experts.

Revenue management capabilities drive top concern for all platforms with customers across all industry verticals. In the increasingly competitive and digital world, platforms are typically challenged in devising pricing strategies that help monetization. Platforms state the imperative to enhance customer site, mobile, and app engagement and derive stickiness as customers expedite digital transformation given the ubiquitous high-speed, broadband fades, spare hours, enterprise adoption, and line-of-business enjoyment of over-the-top interactive traffic. The use is to support the most deeper and longer engagements when those engagements are revenue-generating tolls and services: streamed video, social media splash posts and howls, e-commerce, subscription apps, and the real-time experiences and results of transactions, analytics, and services as consumers and businesses converse to modern tech-chat.