Revenue Breakpoints: Troubleshooting Issues in Revenue, Pricing, and Distribution

John deRoulet
2/20/2024

“Revenue management is complicated.” If you could hear me speaking this statement, you’d know it was delivered wryly and dryly. We all know revenue management is complicated. There are near-infinite factors that go into deciding how to price your rentals and maximize your revenue. What do you do when even after doing all this work to ensure your rental is at the right price at the right time, the reservation comes back and the rate is wrong? Who do you talk to when vendors are pointing their fingers at each other and you aren’t sure where the breakpoint is?

I have been doing revenue management in this space for over 10 years. Early in my career, it was easy to figure out why a rate was wrong. Everything was manual, so it usually meant we “fat-fingered” in the wrong value. The advances in pricing and distribution technology allow us to operate far more efficiently than when inputting rates and building seasons on individual channels was the full-time job of the “revenue manager.” With that efficiency, however, comes some downsides. I often say, “Technology doesn’t actually make things easier; it just allows us to operate at a higher level of complexity.”

So, how do we break this down?

The first step is to understand the tech stack and how your rate gets between the various systems you are using. In many cases, there are two to three systems involved, and there can be four or more involved in pricing and making a reservation. Often these will be:

• Revenue management system (RMS) or pricing system
• Property management software (PMS)
• Channel manager
• Channel

Some of you may not be using an RMS, and some may have their channel manager included in their PMS. You may also see a situation where some channels go through a channel manager and some directly from the PMS. For the sake of the conversation, let’s assume we are using all four components, as many of these tips will be applicable if you are using fewer.

Rates/Restrictions to Channel

Now that we know what systems may be involved, it is important to understand what components these systems are dealing with and where they might originate (i.e., the source of truth for that component). Keep in mind: Where this originates will depend on your own tech stack.

• Originates in RMS/pricing system
  • Rates
  • Minimum length of stay
  • CTA/CTD restrictions
• Originates in PMS
  • Availability
  • CTA/CTD restrictions
  • Fees
  • Taxes
• Originates in the channel
  • Reservations

Each one of these can be a breakpoint, and they can be a breakpoint at any point where they pass from one system to another. If one of these breaks, you may find that a reservation comes in differently than what you thought was going out.

Below is a diagram that shows how rates flow out, starting from the RMS.

This seems very simple. Rates originate in the RMS, flow to the PMS and are posted there, flow from the PMS to the channel manager and are posted there, then are finally posted on the channel. What is important to note here is that this tells you where you can start to look for breakpoints.

An Example

If you are receiving reservations and the rate is wrong, the first place to look is in the RMS because that is where the rates originate from. Did you post the correct rate? If that is correct, you move down the chain. Compare the rate in the RMS and the PMS. Usually just the rack rate in the tape chart. Does this match? If it does, then the breakpoint is probably not between the RMS and the PMS. Next, you check the PMS and the channel manager. If that rate matches, then move on to the channel manager and the channel.

By identifying where the breakpoint is occurring, you significantly reduce the amount of variables of potential issues that may be occurring. You also know exactly what vendors and partners to seek assistance from.

Reservation Back to System

Now, this goes a bit further because sometimes you have checked all the breakpoints feeding data outward and they seem correct but the reservation is still wrong. This may indicate two things:

1. The reservation data is getting split up incorrectly on its way back through the system.
2. A different component is broken.

In some cases, it is both. In our space, fees can be very complex and not always operating the way we think they should. By first checking if the rates/MLOS/restrictions are feeding accurately, we rule out a significant amount of potential breakpoints and can then focus on reservation-specific things.

By using the reservation itself as the point of truth, we can compare each of the connections for differences to find the breakpoint by going down the chain of the reservation passing between the systems.

 

Like in the situation where the RMS was the originator of the rate, the channel itself is the originator of the reservation. Because of this, look at the specific channel-side breakdown of rental revenue, fees, etc., and check that against what you posted into the system. (i.e., Does the reservation breakdown match what rates/restrictions are actually on the channel’s front end or back end?) Next, check the reservation in the channel manager. Do the breakdowns and totals for the reservation match?

This step in the channel manager and again in the PMS is especially important. While rates going outward originate in a single source and should simply be mirrored when they post to other sources, fees sometimes feed from other systems and sometimes are set up independently in each system. This is further complicated by the fact that fees on each channel may be displayed or read out differently. You may not always be able to track each fee as a line item, but this is why you also want to check the rental and grand totals between each source to ensure that the fees and rates you are expecting are being broken out correctly in the reservation.

Again, the goal of this process is to identify where the data is mismatched between two systems in the chain. This tells you where exactly you need to troubleshoot your problem and whom to involve.

Recap of the Steps to Take

1. Identify the component of the reservation you think is incorrect.
2. Trace that component from the point it originates through each system it passes through looking for discrepancies.
3. Trace the reservation backward through the chain using the booked reservation values as the source of truth looking for discrepancies. Pay particular attention to both the gross total and the room rental total because individual fee line items may not align but they all should be accounted for in the gross total.
4. Upon identification of the breakpoint, get the vendors involved in that breakpoint and investigate setup in both software systems to resolve the issue. Be sure to include the following information to expedite help from vendors: 1) screenshot of component in each system; 2) reservation ID and dates; and 3) description of what does not match between the two systems.

With these steps, I hope you can more easily resolve issues with booking discrepancies and quit spinning your wheels wrangling vendors.

---