Yes, that’s what I am talking about (AGAIN) in this blog. But why am I emphasising (I would rather say re-emphasising) on it? 

It’s because hotels are still not taking this strategy seriously. They are either operating in denial or under the influence of some myths.

That shouldn’t be the case, at all.

Revenue management is a blessing in disguise. And with this blog, I am going to put the accent on the importance of hotel revenue management.

Revenue Management for Hotels is REAL

The best way I can explain the importance of revenue management in the hotel industry is by giving you a scenario.

Imagine a hotel without any sort of revenue management strategy. It has set prices for all its rooms that remains the same throughout the year; even during the times when the demand is high.

Is it likely to make any significant profit? I really don’t think so.

Now many of you (especially the ones who aren’t pro-revenue management) might say that hotels would still make good money and sustain without such strategies in place.

Yes, that’s true (to some extent). 

But when it comes to the broader picture, it is much more than just sustaining.

The hospitality industry is highly competitive and is ever-evolving. And to stay ahead of the curve, accommodation providers need to hit the jackpot. Meaning, they MUST boost their overall revenue so that they can scale.

This is how the scenario looks like with revenue management

For instance, a hotel is well aware of all the nuts and bolts of revenue management.

From customer segmentation, demand forecasting, inventory management, to applying dynamic pricing, the hotel never leaves a stone unturned.

When the demand is high in the region, the hotel owner knows what sort of pricing to keep, how to create packages, what should be the ideal cancellation policy and more.

As a result, the hotel has rarely seen any sort of downfall.

If this doesn’t convince you that revenue management for hotels is real, then I don’t know what would?

Why are Hotels Still Shying Away from it?

Demand-based variable pricing is at the core of hospitality revenue management. And this is where hotels get into the dilemma of whether to implement it.

Also known as dynamic pricing, this strategy is based on not just consumer demands, but also on competitor pricing, seasonality, current occupancy, and other factors.

Many hotel managers believe that this way of pricing hotel rooms is unfair and might even alienate guests by affecting their experience.

THIS IS NOT TRUE.

Hotel revenue management doesn’t decrease guest satisfaction. Rather, it is more about a win-win for both guests and hotels.

That’s not all. Various other myths are swirling around that are making hotels sceptical about it.

In one of our blogs, we have debunked some common myths about revenue management systems and managers. Do give it a read.

Read: Common Myths About Hotel Revenue Management

The Articles You MUST Read About Hotel Revenue Management 

No matter how much I emphasise revenue management, it is never enough. During all these years in the hospitality industry, I have witnessed first-hand how properties reaped the benefits of hotel revenue management.

Not just that. I have also researched and written about a lot of articles on this aspect in-depth.

And here are some of the articles on revenue management I want you to go through.

Do hotels need a revenue management system?

A revenue management system is used to optimize hotel room pricing and inventory. To do that, the software analyses various types of data such as internal data, market supply, and customer demand.

Now, hotels that solely rely on revenue managers think that they don’t need any sort of software.

However, that shouldn’t be the case.

A revenue management system is more like a companion to revenue managers. It simplifies their tasks and enables them to reach their higher potential. Thereby, boosting the hotel’s revenue.

Click the button below to learn about the advantages of having a revenue management system at your property. The points information in this article is legitimate.

The dos and don’ts of revenue management

Revenue management, no doubt, is one of the most prominent aspects of a hotel. However, it’s a tricky task to get it right. 

It is not just about survival; it is much more than that. Hoteliers need to consider going beyond the basics of this phenomenal revenue-boosting strategy.

So, how to do revenue management for hotels?  Is there a way to hit the jackpot? 

That’s exactly what the following blog discusses — all the strategies of revenue management to improve your overall bottom line.

Get it in-house or outsource it?

There’s a huge dilemma among hoteliers; they aren’t sure whether to go with an in-house team of revenue managers and systems or opt for outsourcing.

Both in-house and outsourced revenue management have their own set of pros and cons. Further, it depends on the hotel what suits them best.

However, as a hospitality blogger, I have done my research. I found that the hotel industry is dynamic; technologies, strategies, services, everything keeps evolving. And, revenue management is no exception!

For hotels to keep up with the industry and take advantage, they need to stay abreast with all the latest trends. And in that case, outsourced revenue management wins the race.

To learn why is it so, click the button below.

How to hire the right revenue management service provider?

For instance, you have decided to work with a revenue management service provider. But, how are you going to determine whether it’s worth your money and time?

Knowledge of all the parameters to assess service providers gives you an upper hand. However, it’s understandable that not every hotel owner would have the know-how of revenue management. If you’re also one of them then, we have got something for you.

In our article on picking the best revenue management service provider, we have covered almost every single element of this process. You can even use it as a step-by-step guide.

If you follow all the mentioned steps, and more, then Congratulations!!! You’re this close to hiring the right revenue management service provider for your hotel.

Hotel revenue management strategies for 2022

While I have listed all the prominent articles to show the importance of hotel revenue management, I have kept this for the last.

The hotel industry has witnessed all the peaks and valleys in the last two years. It has become certain for them that “the effective strategy of yesterday is no longer relevant today.” Meaning, it is time to hunt for the latest tactics.

Here are all hotel revenue management strategies that are going to benefit your property in 2022. Try them out and witness the impact for yourself.

Revenue Management is the Need of the Hour for Hotels

Last year was pretty good for the hotel industry. Restrictions were lifted, people were travelling, hotels were getting booked and whatnot. It seemed that things are getting back to normal, all over again.

But, we only see one side of the story. While many hotels were reaping the benefits, many were still struggling to revive.

I have been in constant touch with hoteliers from various countries and segments. And one of the common reasons was a broken strategy; a strategy where they failed to price their rooms the right way; a strategy that didn’t focus on guest segments and preferences.

Let me get this straight.

The covid-19 pandemic has changed the way people travel; the needs and wants of guests have transformed drastically in the last two years. Moreover, it is likely to remain the same for the coming years as well.

This is where revenue management comes into the picture.

With the help of data, revenue management practices enable hoteliers to find solutions to what may seem like complicated problems. And this is what differentiate profitable hotels from the ones that don’t leverage revenue management.  

Now, if you say,

“Harsh, I understand that my hotel isn’t making the profit it deserves. But that doesn’t mean I will raise the room prices. It might upset our guests.”

This is what most hoteliers think of when someone tells them about strategies to boost revenue. They feel it actually alienates their guests and drop their sales.

Again, that’s not legit.

The thing is, revenue management is not about raising prices at any time. Rather, it is based on the grounds that say if a hotel is recognised as quality, then it has all the rights to price its room higher.

Talking about the guest satisfaction aspect, people will definitely pay the price you set for your rooms if you deliver value. Period.

The post Hotel Revenue Management: No Luxury. It’s Need of the Hour! appeared first on eZee Absolute.

At present, revenue management systems are gaining a lot of traction. And why not? After all, there are a bunch of hotel revenue management software benefits.   

And in this article, I am going to talk about some of those aspects that make revenue management systems a great deal for hoteliers.

What is a Revenue Management System?

A hotel revenue management system is used to analyse various data such as internal data, market supply, and customer demand to optimize pricing and inventory. Simply put, it helps hoteliers in calculating the ideal rates for rooms and maximising the bottom line.

With time, revenue management systems have evolved tremendously. And amid all of it, artificial intelligence has made a major impact by automating most of the mundane tasks.

AI-powered revenue management systems now enable hoteliers to maximise revenue by selling rooms to the right guest, at the right time, at the right price and through the right distribution channel.

Benefits of Revenue Management Software

The revenue management segment in the hotel industry is quite vast. There are revenue managers, revenue management services, automated systems, and whatnot.

However, there are various misconceptions around. A significant number of hoteliers aren’t aware of the hotel revenue management software benefits.

For example, many hotels stick to revenue managers and never turn to an automated system. Which shouldn’t be the case.

A revenue management system should definitely be there in your hotel’s infrastructure. If you’re unsure, here are some of the top benefits of incorporating a revenue management tool.

1. Easily integrates with a property management system

One of the biggest benefits of using revenue management software is that it integrates with the property management systems (if not all, then at least almost all of them).

Now if you’re wondering how it is beneficial, let me explain.

Revenue management systems work on data. But, where this data is going to come from? You can either feed it manually (which I am sure nobody would like to do) or source it directly from your PMS.

This is when the real job of an RMS starts. And this brings me to the next point.

2. Let’s you analyse better and get an accurate matrix

A revenue management system gathers historical information on hotel rooms, rates, and revenue when integrated with a PMS.

Not just that, an RMS gathers all the required information when you get a new reservation.

Next up, the RMS analyses all the data and returns an accurate matrix of pricing recommendations based on the market and room type.

Furthermore, you also get a crystal clear view of all changes you need to make not only in terms of pricing but also target market and various other aspects.

No doubt, an RMS does all of it automatically; however, you can still choose to intervene and make changes to your hotel pricing. Just make sure, your analysis is apt and is in line with the hotel’s revenue forecasts.

3. Saves a lot of time

Automation is one of the prime hotel revenue management software benefits.

And without an inch of doubt, it saves time. End of story.

The amount of data that a hotel generates and is already there in the industry is immense. And for a human to analyse all of them and to make sense out of it, would take a LOT of time. Which doesn’t make any point.

Not just that, there are various other mundane tasks that actually don’t require any human involvement. But if you’re still engaged with them, then it’s pretty much a waste of time.

However, on the other hand, revenue management systems significantly cut down on the amount of time humans spend gathering data. Because of automation, everything is on hand ALWAYS.

4. Goes lighter on your wallet

Another benefit of adopting hotel revenue management software is that they are much more reasonable compared to hiring extra revenue managers (meaning, more manpower).

There are service providers that offer revenue management systems with amazing packages. And it is certainly worth it.

You can get all the tasks done on time without burning a hole in your pockets.

You can also refer to our hotel revenue management eBook for more clarity.

5. Provides revenue estimation

Automation, time and cost-saving, data gathering, etc. are just a few advantages of having a revenue management system. But did you know that it also provides hotels with revenue estimation?

Based on your pricing strategy, revenue management also helps you calculate the profit your hotel business is likely to make. Which in turn enables you to try out different strategies and estimate your profit margin.

6. Helps in market segmentation

Market segmentation in the hotel industry is grouping different types of guests and narrowing them down to better fulfil the needs and wants.

With a segmented market, hotels can tailor personalised marketing campaigns and thereby, attract more guests.

A hotel revenue management software also helps in this aspect. It collects a lot of guest data which is then used to segment and create guest personas.

7. Provides rate recommendations

Revenue management systems nowadays are equipped with technologies like artificial intelligence. Meaning, they use sophisticated algorithms to perform certain tasks.

Now, when a hotel revenue management software is fed with data such as past performance and current market data, the algorithms running in the background quickly and accurately recommend ideal room rates.

This is indeed one of the major advantages of revenue management systems.

If the same thing was to be done by a human, it would take a lot of time.

8. Does compset analysis

Most of the hoteliers think that every hotel next door is a competitor. However, that’s not the case.

It is important for hotels to know who their competitors are.

A hotel revenue management software helps hoteliers with just that. It not only lets you understand your competitors but also evaluate their services and products to strategize business growth.

Compset analysis is crucial in the hotel industry and with a robust system, the process of keeping an eye on your rivals gets easier.

9. Forecasts demand

Hotel demand forecasting is about predicting future demand over a defined period. It could be in terms of operation, finance or even revenue.  

With a revenue management system, you can manage all the aspects of revenue which is vital for hotels to stay profitable.

RMS already gets access to past and current data, therefore, it gets easier for the system to predict when consumer demand rises and falls. And this forecasting is supremely helpful when you are setting effective room rates to maximise your profit.

FAQs

The post Top 9 Benefits of Using Revenue Management Software at Your Hotel appeared first on eZee Absolute.

Over the years, we have seen the impact of various technologies in hotels; however, there’s one tech that hasn’t been talked about much so far – hotel revenue management system (RMS). 

In this blog, I’ll give you various reasons to invest in a hotel revenue management software and challenges it can help you overcome.

What is a Revenue Management System?

As a hotelier, you might be aware that revenue management is an integral part of hotel operations. However, with time, this task has become complex due to numerous OTAs and the rising competition.

This is where the hotel revenue management software comes into picture. It’s an automated system that can forecast, update, and enhance your overall revenue, by considering various aspects. 

This kind of software is a MUST for every hotel.

Challenges That RMS Can Solve

Handling revenue in business is certainly easier said than done. It comes with its own set of hurdles that can be solved using hotel revenue management software. Here are some of them.

1. Challenge: Data Collection and Storage.

You might have heard that, ‘Data is the new oil’.

Having a huge amount of data that could benefit you in the long run is definitely an intangible asset. As for the hotels, they need to maintain yearly sales reports for demand forecasting and revenue projection. 

Collecting and storing such data is prone to discrepancies. Even if a single report is misplaced, it can create a blunder. 

Solution: Get a cloud-based RMS with unlimited storage

Hotel revenue management software are cloud-based solutions that provide unlimited storage capacity along with data security to prevent any sort of leaks. 

With the unlimited space, saving data becomes easy without worrying about its size. Moreover, cloud-based storage is safe as the data is encrypted, which makes it inaccessible to cybercriminals.

2. Challenge: Managing Multiple Platforms

It’s no secret that every hotel in some way or another is dependent on online platforms for bookings. These platforms include OTAs, hotel websites, and meta search engines.

However, most of the hoteliers struggle with managing rates, inventory, and offers on these platforms. Apart from these, maintaining rate parity is another hectic task.

Moreover, juggling between different dashboards is another challenge. 

Solution: Invest in RMS that supports easy integration

Well, using a revenue management system in hotels is the perfect solution to this problem. RMS these days can be easily integrated with various channel managers. 

Thus by using a hotel revenue management software, you can manage inventory as well as rates across all the online booking platforms.

3. Challenge: Annual Tariff Forecasts

Demand forecasting is crucial for hotels to make informed decisions.

However, it isn’t that easy. Hotels need to deal with piles of data and a lot of analysis. One slight error and it can cause a significant difference in forecasted figures. Doing this manually requires the use of formulas and a lot of calculations.

Moreover, a slight error in calculations can cause a tremendous difference in forecasted figures.

Solution: Opt for AI and ML powered RMS

Hotel revenue management software helps you with running forecasts by using a set of rules which can be changed with time. 

It’s kind of an algorithm which can be programmed while you deploy RMS at your property. Two kind of rules are used to achieve forecasts:

1. Static rule
2. Dynamic rule

While the former one is fixed, the latter one can be changed depending upon the location of the hotel, property size, and other criteria.

Since most of the RMS are powered by Artificial Intelligence (AI) and Machine Learning (ML), there are less chances of having an error.

4. Challenge: Market Analysis

Another major problem for many hoteliers is that a part of their time is consumed in market analysis (compset, market share, and ongoing offers across various online booking channels).

Solution: Go for a data-driven RMS

RMS is capable of conducting market analysis by leveraging data. Once you update your compset, booking channels, and hotel’s location, the system would automatically generate timely reports as per the defined algorithm.

Moreover, it’ll give you insights on your competitors and property’s performance across all the OTAs. And by using it, you can plan other strategies to improve your hotel’s performance on the online booking platforms.

5. Challenge: Monitoring and Updating Revenue Daily 

‘Daily sales recapitulation’ is one of the important reports in every hotel. It highlights hotels’ daily performances in the form of ADR (Average Daily Rate), RevPAR (Revenue Per Available Room), and ARR (Average Room Rate).

These figures are further used to update tariffs on a daily basis. Doing this manually requires dedicated timing. Moreover, if it’s a large property, this becomes way more difficult. 

Solution: Bring RMS into picture for 24*7 monitoring

At this point, RMS comes to your rescue with its unique feature to monitor your hotel’s revenue 24*7. 

Due to automation, it updates intelligent pricing on channel manager accordingly. Since you’ve already configured the details, you just need to sit back and relax.

6. Challenge: Managing Time and Money

Now that you are well versed with the benefits of the revenue management system and the problems it can solve, you might be wondering that this automation can cost a fortune.

But no, it’s exactly the opposite. Initially, when RMS was launched, it was specifically used by luxury properties having a plethora of services such as spa, gift shops, and multi-speciality restaurants.  

For budget hotels, investing in this kind of automation seemed like a futile step due to less inventory, low guest count, and seasonal operations. 

Solution: Get a customised RMS for your hotel

With time, things have changed. Hotel revenue management software these days are entirely customisable and tailored as per your requirements. 

Moreover, with an easy to use dashboard, it requires a couple of training sessions for the RMS providers to make hoteliers thorough with the working process.

After the setup is done, the hotel managers/owners just need to check the rates and inventory once or twice a day. This can help them in saving both time as well as money.

The post 6 Challenges Hotel Revenue Management Software Can Solve For You appeared first on eZee Absolute.

“It is easy Jacob. I applied different strategies than I taught you”, explained an ever-smiling Patrick.

“So you are saying all strategies you taught me before are wrong?”, asked an exasperated Jacob.

“No my friend, those strategies were very much useful; but in the pre-COVID era. In this difficult time, you need to upgrade your strategies to be able to go beyond survival. Let me share the secrets to successful revenue generation with you.”

When Jacob left the bar that evening, he knew all the hotel revenue management do’s and don’ts he needed to consider to improve his sales.

“How to go beyond survival?”, is the biggest challenge hoteliers are facing in the post-COVID era. As the number of active cases is declining globally, the governments are easing the lockdown restrictions. 

People have started moving out of their homes with masks and sanitisers. While several countries are now welcoming international tourists, inbound tourism is going to be a major revenue booster for the year 2021.

Since the times have changed, you too need to go beyond the basics of hotel revenue management and adapt to new strategies to generate profits.

In this blog, I am going to discuss all the nitty-gritty strategies of revenue management to help you improve your hotel’s bottom line.

Revenue Management Strategies to Follow 

Ever since various nations have started easing the lockdown related restrictions, hoteliers have been offering rooms at dirt-cheap rates to keep sufficient guest influx and survive. So far, it has worked fine as the travellers were essentially moving with no intent of a vacation. Now that vacationers are back, you can apply these tips for successful hotel revenue and marketing management to stay ahead of your competitors.

Cleanliness is Godliness

In 2021, a clean and sanitised environment is a direct contributor to your property’s revenue generation. A lot of hoteliers consider installing sanitisation booths as non-profiting investments. I cannot begin to tell you how wrong they are. The first thing people are looking for in 2021 is a clean and sanitized accommodation that gives a sense of safety to the booker.

Critical dates

Travellers are now planning their vacations as there is always a risk of not getting rooms on long weekends. People are seizing the opportunity and travelling to their favourite and easily accessible locations on long weekends. 

Start planning. Keep the list of your long weekends handy all the time. Monitor the demands on those days and update the rates and restrictions accordingly. 

Data analysis

“Data is the new oil.”

Clive Humby

It is no secret that data analysis is the most important aspect of revenue management in hotel industry. It helps the revenue manager design strategies for the future by observing the booking patterns. In today’s date and time, one of the most important metrics to monitor is the future booking trends. People are planning their holidays to avoid any inconvenience in the COVID era.

Dynamic pricing

Keep applying different prices on different days as per your demand. Do not keep a flat price for all days that your property is available online. When you keep prices in line with demand, there is a win-win situation for both you and the guest. You can make a surplus revenue on the days when the demand is high by upselling the rooms. A guest can be benefitted from the low prices on the days when the prices are less due to low demand.

Compset analysis

Competition analysis is the evaluation of your competitor’s services and products to strategize your business growth. It is important to choose the right competition to analyse and benchmark against. An ideal hotel compset consists of a minimum of 5 and a maximum of 10 properties that you are going to monitor closely. 

It is important to define a compset as dynamic pricing depends highly on the competition. You can use THIS guide to choose your competitors and perform an analysis.

Wide distribution network

It is time to go all out. Reach out to all your existing OTA partners. Check the offers and promotional programs that can benefit you and enrol on them. Look for new OTAs that have joined the bandwagon recently and partner with them. Reach out to the corporates if you can cater to their banqueting requirements. Wedding season is coming back; make the most of it. 

Mistakes to Avoid in Revenue Management

While the above steps will help you improve. I have listed several mistakes in hotel revenue management which you should avoid at any cost if you do not want to lose on revenue opportunities.

Wrong matrices

The analysis is important to create and apply rate strategies. But, if you are analysing wrong/unimportant matrices you will not be able to get accurate results. Focus on key matrices like occupancy, booking pace, ADR, revenue generated, targets etc.

Suboptimal forecasting

This means not forecasting regularly; or forecasting with inaccurate or inadequate data. Forecasting helps you formulate pricing strategies and necessary actions to correct any pricing mistakes. In the absence of a forecast, you won’t be able to determine if the selling price is at par with the market. Similarly, an inaccurate forecast will lead you to sell your inventory at a suboptimal rate.

Yes, in 2021 it can be a challenging task. But there are experts available that can take care of these aspects for you.

Over-analysis

Certain revenue managers forget that generating revenue is their core job. They get busy analysing every possible number that is generated by the system. Also, they want to cover all grounds before setting the pricing rules. However, they forget the most important one; the implementation of tactics.

Paralysis by analysis causes prevention of business optimisation. The system produces 100s of reports. Learn to use reports that are useful and ignore garbage value reports.

Outdated technology

If you still use time-consuming technology with limited functionality in 2021, you need to immediately upgrade. Use a hotel PMS that provides time-saving features like contactless check-in. Check if your booking engine is in line with Google’s free hotel booking link program that helps you generate direct bookings and save on OTA commissions.

Frequently changing technology

Data from the past helps you to understand the patterns of guest bookings. It also goes a long way in maintaining the guest database and thus, your relationship with them. Changing your PMS every season just to get new software at a better cost is one of the serious hotel revenue management mistakes. While you may feel happy about saving some money, in reality, you are at a big loss.

Changing software comes with a cost of customer information which might not get migrated to the new system. This means that if your regular guest turns up at the property and new front office staff is welcoming them, they will not extend the agreed rate to the client making them unhappy. Stick to using a robust technology that keeps your data safe and does not cost a hefty fee.

Misleading content

“I was totally angry at the hotel for providing me with complete information at the time of booking. I could not even pick a fight to get a free upgrade”. 

said no guest ever

I have been an advocate of updating the right information across online platforms ever since the evolution of these platforms. When a person makes bookings via a website or an app, the human to human interaction is zero. It is therefore essential to review and update current and correct information about your property periodically.

In case you have restricted the use of certain facilities like the gym or the spa due to any reason, be sure to mention it on your online profile. That facility might be the sole reason for a guest to book your place.

Updating correct content also helps you showcase value for the guests in terms of the offerings as they would know what they are paying for before making the booking.

Ignoring guest feedback

At times I come across hoteliers who focus more on competitor’s pricing and less on guest feedback. Their focus is getting a better price than compset regardless of the guest review score of their property. My analysis says that just a 2% improvement in reputation contributes to a 14% rise in revenue.

Retaining an existing guest is as important as acquiring new business. Hence, once should never ignore any feedback from the guest. A happy and satisfied guest will not only return, but they will also recommend you to others, working as your brand ambassadors. 

This is without a doubt of the important aspects of effective hotel revenue management strategy. 

Being rigid about rates

“It is raining in December. It must be monsoon because my books said so.”

Customer retention is always more important than pricing rules. Many a time, hoteliers are hell-bent on things like weekday pricing or weekend pricing and won’t budge despite having empty rooms. This leads to an unhappy guest, a loss of opportunity and potential loss of future business.

But when you listen to your guests, things turn out to be better. Concentrate on their complaints and suggestions and make positive changes around them. 

Fearing OTAs

Over the years, there has been a perceived negative image of OTAs. Now, I am not saying, everything said about the OTAs is incorrect. I am saying that you can work with them instead of fighting or fearing them. 

Globally, 70% of bookings come from online sources today. OTAs give you a platform to be visible to a higher number of people for 15% to 18% commission. Instead of blocking inventory online on high peak dates, speak to them and try to work on an alternative commission module.

The post How to Do Hotel Revenue Management the Right Way? appeared first on eZee Absolute.

 

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The hospitality industry keeps on changing its dynamic. And this is both a challenge and a blessing for hotels worldwide.

Now, just like every other aspect of the industry, the revenue management landscape has also gone through a transformation lately. Meaning? The revenue techniques of the past have just flown out of the window.

But has it become difficult to determine the right strategies? Not at all!

So lately, if you have been Googling “how to increase revenue in hotel business”, you’re at the right place.

In this blog, I will cover all the legit revenue management strategies in the hotel industry that you MUST implement in 2024 to succeed.

What is Revenue Management in the Hotel Industry?

Revenue management is at the core of a profitable hotel business. It is the process of analyzing customer demand and configuring the best rates to maximize hotel revenue.

Simply put, revenue management in the hospitality industry is all about selling,

• the right room;
• to the right guest;
• at the right moment;
• at the right price;
• and on the right platform.

Why is Revenue Management Important for Hotels? 

In our blog section, there are various revenue management articles. However, many still have this question – “what is the purpose of revenue optimization in the hotel business?”

The answer is actually quite simple. Revenue management helps hotels to drive more revenue from their stagnant source of income (i.e. their rooms). By applying the revenue and marketing management strategies, hotels can:

1. Understand the guest’s demands (and booking pattern)
2. Apply the right room rates
3. Expand the hotel business
4. Win against competition

Despite such benefits, most of the hotels ignore managing their revenue. It’s high time that you all should realize that —

A profitable hotel business is not high occupancy, rather it is more REVENUE. 

Now that you know what revenue management is and its importance, you might be worried about how to increase hotel revenue.

So, let’s dig in with a GOOD answer.

Best Hotel Revenue Management Strategies to Apply

Now, let’s address the burning question – how to maximize hotel revenue? 

If you search online, you’ll find a gazillion hotel revenue management tips. However, most of them are superficial and don’t cover the nitty-gritty.

Which is why I am presenting you with the 17 solid hotel revenue management strategies that you can apply right away and milk benefits.

1. Budget and forecast

Budget planning is a critical part of a hotel’s success, any day. Doesn’t matter what’s the size of your hotel, a robust and mindfully created budget can keep your property profitable, attractive, and functioning properly.

Further, you need to top up hotel budgeting with forecasting. If you aren’t forecasting it is a systematic estimation of guests’ demand and future preferences.

Not to mention, budgeting and forecasting are a brilliant combination that will always help you refrain from exhausting your financial reserves.

Also, do read out hotel budgeting article to learn more about it.

2. Do competition analysis 

The concept of revenue management for the hospitality industry cannot be covered without touching base with competitor analysis. After all, competition analysis is one of the fundamentals of creating robust hotel revenue management strategies.

Basically, with competition analysis, you can understand your and your competitors’ strengths and weaknesses. You can know your position in the market and eventually work to stand out. 

But first things first, not every hotel next door is your competitor. You have to define your competition set (AKA compset). There are certain parameters that you should consider before considering any property as your competitor. Some of them are:

1. No.of rooms
2. Room types
3. Accommodation type
4. Size of property
5. No. of OTA connections
6. Number of services
7. Average ratings and  reviews

Once the RIGHT compset is defined, you can analyze their rates via tools like Rate Shopper. You can check and compare their current pricing strategy and update your rates accordingly.

This will not only help you strategize and manage revenue, but it will also provide you with proper forecasting. As a result, you can attract the right kind of guests at the right time and maintain the revenue you earn.

3. Load rates and inventory

Travelling is spiking, and you, as a hotelier, should definitely not miss out on the bookings.

Further, looking at the current scenario, the travel numbers in 2024 are likely to surpass the numbers in 2023. The industry is going to witness a good amount of people travelling to various places.

When we talk about hotel revenue management best practices, loading your room rates and inventory on all the channels is certainly the first and foremost thing to do.

If you haven’t done so yet, this is certainly the right time.

4. Check the calendar

Now, this point is one of the prominent revenue management strategies. Talking about checking the calendar, it is about listing down all the events when people are likely to travel and stay.

What could be those events? Weekends, holidays, concerts, festivals etc.

When you’re done listing, try to come up with strategies to attract your guests to your hotel. Maybe you could try offering a discount.

So, if you’re a pro hotelier, you will never even think of skipping this part.

Pro Tip: When you’re listing holidays and festivals, do include holidays from neighbouring states and provinces. Because it might be a working Tuesday in your town, but a holiday in some other place. So, make the most out of it.

Also, many people are now not travelling faraway distances, rather exploring nearby places. So, catering to your neighbouring guests is certainly a great idea.

5. Perform demand forecasting

Analyzing your past and present data is important to channelize your marketing efforts and is one of the top strategies to increase hotel revenue. 

But extracting the right data and actually going through them in detail is quite hectic. Then how to figure out which strategy is working for you? 

This is where demand forecasting comes into the picture. It is the prediction of future business performance. In which, data is of utmost importance.

This is how you can perform demand forecasting:

1. Data Collection: Gather data such as peak and weak seasons, long weekends, festivals and so on.
2. Analysis: Find out how you’ve performed on these occasions. Then predict how you’ll be able to perform in the coming year.

In that case, a comprehensive hotel management system helps you get detailed reports and business insights that include the revenue you earned, your best-selling factors, your ADR, and more. These reports will help you make precise decisions in your hotel revenue strategy.

In the end, data analysis will help you come up with better revenue management techniques to implement.

6. Think again about OTA connections

When it comes to hotel revenue optimization, you need to have the right DISTRIBUTION of the rooms to sell the right room at the right prices. For that reason, you have to give fresh thought to your OTA connections: 

1. Select the regional as well as international OTAs
2. Consider your property type and your target audience
3. Last but not least, OTAs that fall into your budget. 

Let me give you an example to have a better idea:

If you’re a B&B in Europe, then you should connect to regional OTAs like eDreams Odigeo and global OTAs like Expedia, and Booking.com. Since you are a B&B, you also need to consider OTAs such as Airbnb and bedandbreakfast.com that help you target your potential guests.

However, when you zero in your distribution method, keep in mind that they should be light on your pocket.

Moreover, you should not limit yourself to 2-3 OTAs. The more the OTA connections, the wider the exposure is. In turn, more bookings and revenue.

7. Adopt a uniform distribution method 

Besides selecting the right OTAs, it is equally important to select the right distribution method as well.

Now, many of you still prefer the allocated inventory distribution method in which you allocate a fixed inventory to a particular channel. However, you may lose potential booking opportunities in this scenario. 

Instead, you should apply a uniform inventory distribution method and list all your inventories on all channels. As a result, you get bookings from all the possible channels and your inventory is utilized to the fullest. 

#ProTip: Use technology like channel manager to practice this method effectively.

8. Perform guest segmentation 

Segmentation is a key element of hotel revenue management. Targeting all types of customers for your hotel is a waste of time and money. Therefore, segmenting and pitching the right set of guests is important.

One of the best ways to segment your audience is by their reason for travel. It could be a family holiday, wedding, tourist event, adventure, relaxation, business, etc. 

Not only that, identifying your guests and evaluating their habits; for example, the kind of rooms, hotel facilities and location they’re looking for. Of course, several other factors will help you optimize your room rates and showcase your services accordingly.

Besides, you can analyze and drill down the segment that is giving you more business. In this way, you can strategize to make more revenue from them. 

Hence, knowing your target audience is important to plan and execute your hotel’s revenue management strategies.

Furthermore, you can also tap into guest personas. If you aren’t aware of it, a guest persona is a fictional character that a hotel creates to describe its ideal guests. Meaning, it is the representation of a guest demographic that is likely to stay at the property.
Talking about its prominence, guest personas help hotels in delivering personalised experiences to their guests and gain their trust, loyalty and increase repeat bookings.

9. Make a responsive hotel website

As the facts stand in 2019,

1/3rd of the total bookings are made through mobile. And this percentage is going to increase in the upcoming years. 

Pegasus

Having said that, you have to focus on your hotel’s website. And get one made if you do not own a brand website.

Ensure the following characteristics of your website:

1. Is responsive and easily navigable
2. Has attractive photos and videos
3. Is optimized using different SEO strategies
   (If you’re clueless about hotel SEO, here’s our step-by-step guide to hotel SEO. Optimize your hotel website, rank higher, and get more bookings.)
4. Has an integrated booking engine to gain direct bookings 
5. Provides all the required information about your hotel and your offerings

If your website doesn’t have these parameters, there are chances of losing significant bookings and revenue. So having a full-fledged hotel website will pose as an assured revenue management strategy for hotels every year.

We have a blog where we have mentioned some of the top elements you need to have on your hotel website. Do give it a read to learn more about it.

The Must-Have Hotel Website Features

Also, we hope you don’t have these myths about owning a hotel website in your mind.

10. Emphasize getting more direct bookings

Needless to say, OTAs are a great platform to advertise your hotel and services. However, a significant chunk of your revenue is deducted as a part of their commissions. 

That is why you should get a booking engine that allows your guests to book with you directly from your website. Certainly, that means you get commission-free bookings. 

Here are some of the  actions you can take to increase direct bookings:

1. Get listed on metasearch engines like TripAdvisor and Trivago
2. Give discounts on direct booking
3. Showcase your online reviews
4. Have a chatbot to attend to all your guests’ inquiries
5. Highlight your amenities

…and there are many other ways to increase your direct bookings. You can find out more from here. 

11. Use metasearch to your advantage

When people like a property, they look it up on Google, TripAdvisor, Trivago, etc. to get more information about it. 

This can be an excellent opportunity for you. Therefore, you should add your hotel website to the Google My Business listing so that a customer can go to your website and explore the options of booking directly with you.

Furthermore, Google has also a program called Free Hotel Booking Links that allows you to display your real-time rates for free. Meaning, you can drive more direct bookings without any hassles. You can enrol on this program through an authorised partner. 

TripAdvisor, on the other hand, allows hoteliers to connect the hotel booking engine with their search engines so that a guest can book directly from the hotel website.

You can take advantage of this and provide add-ons, which you generally do not offer via OTAs because of hefty commissions. This way you can save on some commission and guests would get more value for money.

12. Practice yield management

Yield management is an inseparable part of revenue management for hotels.

However, there is a common misconception that revenue management is the same as yield management. 

But, that’s not the case. Yield management for hotels encompasses the revenue generated through room charges or occupancy. Whereas revenue management in the hospitality industry involves a whole lot more than just occupancy.

Basically, it is all about demand and supply.

You have to set different rates for different occupancy levels. 

You can define different occupancy slabs and set different rates for each slab. And as the occupancy increases, there is a percentage or amount increase in the basic room rates. 

On top of this, it is considered the most important tool to balance the revenue that you earn, especially when the demand is less. Hence, yield management proves to be the most practical way to increase your revenue.

Here’s how you can practice yield management strategies to get more revenue. 

13. Try multiple pricing strategies

Pricing strategies play an important role in hotel revenue management. There are different pricing strategies, some of them are as mentioned:

Segmented rates

In this strategy, segment your customers and offer different rates to each customer segment.

For example:

• Following the rate parity strategy, the rates for the open market should be the same.
• On the other hand, offer negotiated rates to the corporate segment and in return ask them to commit a certain number of rooms for the negotiated rates.
• Connect with a tour operator and sell them some rooms at special rates.

Rates as per the length of stay (LOS)

Adjust your prices based on your guests’ length of stay.

For example

Mandate the length of your guest’s stay by offering them good prices. Get a 3N/2D stay at Avalanche Resort and at 200 USD only.

Offer packages

A package is a room rate clustered together with other products and services.

For example

Offer a free meal package. If your guests have selected a European plan, then offer a free meal for the first day as a package.

Here are top-performing pricing strategies for hotels explained in detail.

14. Partner with local businesses

You may have not considered it important enough, but partnering with local businesses can actually be a great catalyst for your revenue management strategy for hotels.

Following rooms and amenities, activities make up the next largest revenue source for hotels.

Local partnerships can expand your revenue streams and provide authentic experiences to your guests.

If you are located in a place with scenic destinations, offer your guests a city tour. If you are nearby an amusement park then you can tie up with them, and offer tickets at some discounted rates to your guests.  

Likewise, you can explore many such additional avenues of extra revenue.

Further, not to forget, chances are that those businesses around your property are also open for such partnerships. So, ensure that you do reach out to them.

15. Adopt the latest technology solutions 

Now if you look around, technology is everywhere. It’s in the payments you make (digital you know), the shopping you do, the services you consume, etc. 

Further, the current and future generations are tilting toward innovative technology.

Do you know why? Simple – the ease of use.

Hence, providing quick service through the latest technology is key to increasing bookings and hotel revenue. However, the question is: which technology solution you will use to streamline your operations and increase productivity?

I’d say a complete suite of seamlessly integrated solutions can be a shot to your arm. With automated solutions, you can provide quick and better services.

Besides, these days technology such as a hotel chatbot is being used to assist with basic operations and information and improve guests’ experience. 

Hotels can also perform the quick operation at their voice command with a digital assistant, thus reducing their time and effort in getting a task done. 

Moreover, these days, a few hotels have started practising the Internet of Things (IoT). For example, there are IoT solutions that adjust room temperature depending on room occupancy, energy management systems, in-room concierge and whatnot. 

Here’s how the next-gen technology like IoT can increase your hotel revenue and expand your business.

16. Manage your reviews

The first thing guests check before visiting a hotel is its reviews. With the increasing number of online platforms, guests often communicate and interact online to share the experiences they had.

That’s why hotels these days need to focus on their hotel reviews and reputation. This also forms an essential part of your hotel revenue management strategies.

You see,

Customer ratings affect hotel revenue.

How? Well, today people can search and find all the travel and hotel information provided by different sites. Let’s take TripAdvisor for example. TripAdvisor provides information and reviews written by the guests about the particular hotel and its services.

And this ultimately influences the guest’s final decision to book a hotel. This way, hotel reviews have a greater impact on the current and future guests that you may welcome at your hotel.

Therefore, to ensure that none of the reviews are left unresponded, hotels use review management software like Critique. Here’s how it works:

Thus, you must respond to all the reviews (especially, the negative ones). You can utilize our free and ready-to-use review response templates to regulate your review management. 

17. Redesign your loyalty programs 

Guests often need to travel to the same location again. Mostly these kinds of guests are business travellers who prefer to utilize services from trusted hotel brands. Hotels need to face this fact as soon as possible and make good use of it by running some good loyalty programs.

Now, don’t you think guests will prefer hotels that offer discounts or rewards to value their frequent guests? Well, hotel loyalty programs are the best way to do that and increase repeat guests as well as direct guests. This makes them an undeniable aspect of your hotel revenue management strategies.

The sad thing is – only a few hotels consider loyalty programs as an important part of their marketing strategy. But the truth is loyalty programs can be a key factor in the guests’ decision-making process. Especially, those who frequently visit your hotel. Employing a stable hotel loyalty program software can strengthen a hotel’s reward programs.

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Bonus: Expense management

We’ve discussed several strategies to drive more revenue. But if you look carefully, one important aspect of effective revenue management is EXPENSE CONTROL.

Because, if you don’t control your expenses, you’ll be stuck with the same or limited profit margin. 

While you are handling numerous activities, you may not realize when the routine expenses become UNCONTROLLABLE.

For that reason, you have to scrutinize your expenses and try to optimize them. Here are the 9 best cost-saving ideas for hotels. Explore them, reduce your expenses and consequently increase your profit margin.

FAQs

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