Goal: Maximize revenue and optimize occupancy when Covid-19 is over.
The hotel industry has become more competitive with growing demand from customers demanding the highest quality and best price at any given time. With growing competition it becomes more important for hotel managers to price their rooms in the exact right way – and that can get tricky if you are not constantly monitoring the market.
In these unprecedented times of Coronavirus it is important for hotel managers to use the time and space well to analyze and optimize every part of the operation. When there are less guests visiting your hotel you should use the time well to clean and tidy up the basement.
“In a dynamic business environment, revenue management is vital and becomes more complex when the market changes fast“
To apply a successful revenue management strategy for your hotel there are many factors to consider. Here we list four vital components;
Hotels are constantly under pressure to find new ways to be in line with technological developments and demands in our industry in order to maximize their visibility online and provide the best customer engagement possible. With the purpose of maximizing total revenue, hotels need to be able to offer the correct pricing and products in relation to competition and demand on a day-to-day basis, so that it corresponds to the experience and expectations of the guests.
Rate categories and restrictions
Different types of guests will have different needs and behaviors when looking for your property. Therefore, it is important to analyze how you can increase sales by offering the correct rates, taking cancellation policies, length of stay and amount of guests into account. You need to analyze the expectations of your guests in order to accommodate both your business and the guests in enjoying your services.
Managing prices through business intelligence
Computers are now able to take over certain aspects of our day-to-day life, this is well apparent in revenue management. With a system that provides a business-intelligence algorithm that uses the information on the competition, average daily rates, inventory and market demands we gain insight and data that would be impossible to obtain and evaluate manually. Applying rules and settings into this algorithm to the specific needs of a given property and constantly monitoring and adjusting the system according to any developments is the key factor to success when it comes to revenue management for hotels.
When is it necessary to raise or lower prices?
The human aspect of revenue management is still invaluable in the continuous analysis of what is happening in our market. Not all values can be measured by an algorithm or business intelligence, thus it is important to be able to make decisions in relation to marketing strategies and specifics concerning your business. It is also important to understand your top and bottom threshold and when it is necessary or not to lower prices. Are you possibly giving too much discount sometimes or would you receive the same amount of bookings for a little bit better price? This can be a defining factor in your revenue over time.
Not every hotel has a dedicated revenue manager or staff with the required skillset and/or time to dedicate the time needed to fully take advantage of the increased profitability a successful strategy can deliver. That is why outsourcing revenue management can be a smart move.
Operational services for hotels
It has become a growing trend in the travel industry to outsource specific parts of the hotel operation to companies that specialize in the field of revenue management, sales optimization, booking office and guest management. The benefits of outsourcing these parts of the industry results in growing sales, reduction of cost and what is most important, positive guest experience – and those three key factors of the operation sound like good music in the ears of the hotel management.
Revenue management is one of the single most important factors of a successful hotel operation. The turnover for a hotel on an annual basis can differ tremendously in a positive way for the operation if revenue management is taken into account and taken seriously. Dynamic & competitive pricing, rate categories, restrictions, business intelligence and market demand are just a few of the factors that need to be considered when implementing a credible business plan for any given hotel.
What does the future hold for tourism ?
We will travel again and hopefully that will be sooner than later.
Now, more than ever, it is important to be ready with a pricing strategy when travellers start to look into their next adventures. Therefore, it is important to take the long view when looking into your pricing strategy particularly when market conditions change drastically like in the past months.
Outsourcing parts of your business to companies that work around the clock to maximise the revenue stream of our business might be the single most important step into the 21st century for your business.