6 Challenges

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Challenges

It is quite clear that while an RM system can guarantee increased revenues, it can be quite complicated to design and requires high levels of expertise for implementation. Some of the challenges facing hotels in the implementation of a robust and accurate RM system include:

  • Measuring performance of an RM system is a major issue. Occupancy rates and yield are measures that are affected by external competition. An ideal measurement can be done using an opportunity model that indicates where the hotel stands in comparison to its maximum and

  • Differential pricing is here to stay – customers seem resigned to the fact that hotels charge different prices for the same room. However, some customers do not like this practice and penalize the hotel by not becoming a patron. Therefore, in a fiercely competitive environment where quality of service is the key to success, RM may not work. In evaluating the efficiency of a RM system, the tradeoff between generating short-term profits and creating long-term customer loyalty and “mindshare” needs to be studied carefully.

  • From an operational point of view, RM can impact the motivational level of the employees. In many cases, RM takes much of the guess work out of employees, thereby reducing their decision-making responsibilities. Sometimes, employees taking reservations are paid a percentage of the sales they make, motivating them to make group bookings, which in turn may be contradictory with the objectives of an RM system.

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