Revenue management within the hospitality industry involves predicting consumer demand, in order to optimise the sales process, allowing businesses to sell at the right price, to the right customer, at the right time. In a hotel, this may mean turning away business now, in order to do more profitable business tomorrow. When carried out correctly, revenue management can be extremely effective, helping companies to significantly boost their profit margins. Here, we provide 10 revenue management tips for hotels.
1. Create a revenue management culture
The first of our revenue management tips involves creating a revenue management culture within your organization. By creating an awareness of what revenue management is and why it is important to your hotel, you can encourage positive behaviours from all staff members. If they realise why it is necessary, they are more likely to take care when recording data and more likely to utilise that data in order to make good, knowledge-based decisions.
2. Keep consistent, relevant records
Data collection is at the very heart of the revenue management process and the data your hotel gathers will form the basis for almost all of your decision-making. Yet, some hotels collect too much data, which serves only to confuse matters. It is, therefore, vital that records are relevant and consistent. You need to identify exactly what information needs to be gathered, and how that data should be recorded. Then, in order to make life easier for the people who have to use it, a set of standard practices should be introduced, ensuring that everyone involved in the collection of that data uses consistent methods.
3. Offer incentives for direct booking
Although distribution partners can be a great help, generally speaking, it is far preferable to attract direct bookings. This method is the most likely to produce customer loyalty, giving guests a lifetime value to your business, rather than a one-off value. As most direct bookings are made online, your website should be well-maintained.
4. Be aware of changing customer habits
A huge part of hotel revenue management involves using historical data to make decisions in the present and for the future. Over the years, you are likely to see changes to your customer base. These changes may be things like the average age of a guest, but they may be more subtle. For instance, you may notice a shift in the way the average customer books a room. Try to keep your finger on the pulse as much as possible and be aware of changing habits.
5. Place a focus on selling value
One of the best hotel revenue management tips is to think in terms of offering value as much as possible. By offering value-added extras, such as discounts on additional nights and even, when demand is low enough, a free additional night, you can afford to be braver with your prices, potentially resulting in greater revenue.
6. Forecast and map demand
Clearly, anticipating demand is one of the most essential parts of any revenue management strategy and this requires forecasting. Hotels typically have access to excellent information about their guests, especially in terms of where they are from. By comparing this information to historic data, it should be possible to identify areas where demand is growing and other associated trends, potentially leading to increased business from those regions in the future.
7. Only use automation in the right places
Many hotels rely heavily on automation and it can seem like a godsend. However, at times, automation can also be the enemy of effective revenue management. To be clear, there is still a role for automation within a revenue management strategy. After all, modern software is able to cope with fairly complicated decision-trees and you do not want staff to be bogged down by data entry. Yet, great revenue management also requires human decisions, thinking outside of the box and the occasional risk.
8. Prioritise mobile optimisation
The last of our revenue management tips revolve around mobile optimisation of hotel websites. Mobile is now one of the single most important revenue streams. Indeed, Google recently revealed that mobile web searches are now outnumbering searches originating from desktop.
9. Implement open pricing
Experts offering revenue management tips for hotels often emphasise the value of embracing an open pricing model. Open pricing allows hotels to utilise a wider range of different price points and to target specific market segments. It can also help hotels to avoid situations where rooms are unsold, because pricing does not meet the needs of the audience.
10. Embrace technology
Many revenue management tips for hotels are focused on pricing and distribution, but it is important to understand the role that technology can play in making a hotel more desirable as well. Modern hotel guests expect to be able to use wi-fi and connect multiple devices, with no friction and with excellent performance.
Going further, guests are increasingly seeking hotels that make use of the Internet of Things (IoT) to provide greater control of rooms, more automation, and a seamless experience. Then, of course, hotels can attract more guests and charge more for rooms if they can use technology to innovate and provide added excitement.
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