“Hey Patrick, how is it that the properties you manage are coming back to life, and we are struggling to go beyond survival mode? I am doing everything you taught me”, asked a worried Jacob over drinks to his old pal Patrick.
“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.
Table of contents
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.
In conclusion
Hospitality will take a year or so to bounce back. That definitely does not mean you have to wait until then to make profits for yourself.
Along with the basic hotel revenue management practices, follow the above-mentioned strategies to go beyond just survival.
However, for any reason, if you’re not able to achieve the desired results by yourself, hiring a revenue and marketing management service provider would work best.
