Over 30 years ago, American Airlines CEO Robert Crandall called it "the single most important technical development in transportation management since we entered deregulation."
In 2015, it was highlighted as the means by which hotels can achieve a 25 percent lift in incremental revenue.
What is it?
It is yield management, also known as revenue management software in the vacation rental industry.
Revenue Management Software and Dynamic Pricing
By simple definition, revenue management is the system of understanding and anticipating the actions of customers and competitors to increase revenue and make the most company profits.
VRMIntel's "Revenue Management Essentials for the Vacation Rental Industry" notes that revenue management can include pricing, product selection, expense reduction, marketing, and fees. For vacation rental property management companies, the way to grow revenues is to grow inventory. In turn, the way to grow inventory is through increased bookings of your best properties.
As the article notes, if inventory is the king of revenue management, then dynamic pricing is the queen.
"It's a science used by the hotel industry for decades which leverages technology to adjust nightly rates based on supply and demand: think of it like a hotel's own personal rate wizard hired to get them more money based on logic the owner or manager determines ahead of time."
- The concept of revenue management and dynamic pricing originated with airlines in the 1980s and was shortly thereafter adopted by the hotel industry.
- Via dynamic pricing models, airlines and hotels have for years been reaping the rewards of constantly adjusting their pricing to match the market conditions at any given time.
- Now, via revenue management software specifically designed for the vacation rental industry, vacation rental property management companies can reap the same kind of benefits from dynamic pricing.
Revenue Management Software Helps Avoid Stalled Pricing
Vacation rental property management companies that fail to use revenue management software leave money on the table. Why can that be said?
Simply put, today's travelers are trained to compare rates. If your prices are static, never changing based on market trends and other factors, it is highly unlikely that your prices will be competitive.
When your pricing strategy stalls, your occupancy rates go down and your revenues take a nose dive. Conversely, with a more agile pricing approach, you keep your prices competitive, your occupancy rates high, and your revenues in growth mode.
How does revenue management software work?
Kigo's Revenue Manager analyzes the demand set by your local market forces and alters your prices within parameters that you set. This means that not only do rates increase, occupancy increases too as Kigo Revenue Management automatically adapts to real time changes in market demand. This ensures that you always achieve the highest possible price for your properties. Thus, it takes the guesswork out of your pricing strategies.
Watch This Kigo Revenue Management Video to Learn More
Learn how Kigo Revenue Management software works.
Better yet, the Kigo Revenue Manager adjusts the pricing for your properties across all your listing partner listings, ensuring that all your information is accurate and your pricing is optimized in real-time.
Would You Like to Spend Less Time Getting More Bookings?
If the idea of using revenue management software to save time and increase bookings sounds like a winning strategy to you, learn more about it by downloading the ebook: The Kigo Guide to Revenue Management today!