17 Top Hotel Revenue Management Strategies to Adopt in 2024 [Bonus Inside]

 

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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.

Finding ways to grow your hotel revenue?

Get this FREE guide to your hotel revenue management
Download now

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.

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