As odd as it may sound, but managing your health and managing your revenue has many things in common; both if followed by proven strategy, gets you great results. To start planning your hotel revenue management strategies for the year, you need to decide how much to spend on digital marketing, which channels to optimize, and where to make investments in new technology while keeping up with the budget allocated for the financial year.
So, how to actually plan your hotel revenue management strategies?
Now, most businesses don’t have an adequate budget to fully invest in all aspects of digital marketing. That’s why in order to initiate planning the hotel revenue management strategies, there is an ongoing struggle to optimize the expense between the practical reality of running a business and a wide array of marketing options. Everything you do from a budgeting perspective must start with your business goals.
At the very outset, you must decide what is of most importance for you:
- Are you trying to drive more revenue?
- Do you care mostly about customer acquisitions?
- Do you wish to maintain or grow your brand?
- Are you interested in building brand loyalists?
Depending on your goals, the hotel revenue management strategies you implement and technology you deploy may differ.
Knowledge yourself with market segments
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The first step to hotel revenue management strategies is defining your hotel’s relevant target audience. A crucial step towards more control over your business, it is the market mix of your hotel, which makes it worthwhile for you to spend time and understand this. Once you zero in on your market segment, it will let you set up appropriate rates for the right inventory in order to maximize revenue from various areas of business. Plus, you need to constantly ensure that your budget is used in the most logical method to track your business performance and success.
Begin by looking into which category of guests you mostly cater to, what is their buying behavior, why are they booking with you and how’re they doing it. All of this will enable you to apply valid and targeted actions to your business and measure your profits from time to time.
Relevant market segments will differ for each hotel, but they will surely deliver the advantage of being able to drive more business and monitor your performance regardless of where your hotel is located and which type of hotel it is. This is where the actual hotel revenue management starts, which will gradually take your hotel business to new heights of recognition and success.
Analyze the booking behavior patterns of your guests
In most industries, the time and place where the business is conducted are of essence and hospitality is no different. From where your booking was made, when was it made, for which dates, you need to keep an eye on each of this parameter. Each of your target audience has their own preferences on when and how they’d like to book with you. Leisure groups usually book few months in advance, some few weeks in advance, some even at the last minute. Understanding this too will help in planning the revenue management strategies for your hotel to fill the holes.
Now, in the bookings made at your hotel, you can see a pattern which will indicate on your high and low occupancy seasons. And this can be immensely helpful when it comes to forecasting the rates you put up at such times and how much inventory you keep open. Understanding these kinds of patterns and taking appropriate action on the same should definitely be a part of your strategy.
Think about supply and demand
When it comes to hotel revenue management strategies, supply and demand is a principle that should be cleverly implemented. Measuring and monitoring the supply and demand of your hotel rooms is also one of the tactics you should employ when it comes to boosting your revenue growth.
Prices tend to rise when demand exceeds supply, which is why effective rate management is the most practical way to increase revenue. It’s simple, you just need to focus on high-profit bookings instead of high volume bookings.
As a result:
By increasing bookings on low-demand days and by selling rooms at higher room rates on high-demand days, you can increase its profitability.
In short, your room rates should be higher when there’s high guest influx at your hotel, and lower when the occupancy is low.
Analyze your hotel’s past data
Data is important and spending a considerable amount of time in analyzing your past and present statistics can help you in channelizing your marketing efforts. The hotel software that you’ve invested in should give you detailed reports that include the revenue you earned, your best selling factors, your ADR, and everything else which can help you form important decisions for your business. This data will help you extract ideas and come up with better hotel revenue management strategies for increasing your hotel’s revenue.
Upgrade your online inventory distribution strategies
The old school ways of your inventory distribution on OTAs and GDS doesn’t work as expected these days. You need to gear up and put up appropriate and attractive content to describe your hotel, location, and services; offer different packages and run promotions regularly to get more bookings, and have more OTA connections for your hotel to witness your revenue rise.
Keep up with mobile trend
There’s no denying that mobile is now one of the strongest marketplaces when it comes to booking travel. People have less time to sit at home and research so whether it’s via mobile browsing or on an app, they love to use their smartphone to find deals and make purchases. Getting equipped with new mobile trends is one of the keys to productive hotel revenue management strategies.
51% of smartphone owners use their device for travel-related activities so a mobile presence is non-negotiable for your hotel.
With this tech-savvy world, it becomes important for you to be that ‘A’ grade hotel. This, in turn, will help you to analyze your hotel’s data for increasing profits. Here’s the bottom line: to grow revenue from mobile, you need either a responsive or adaptive website, and you need to follow conversion best practices on mobile.
Go for direct bookings
Well, you can’t ignore the fact that direct bookings also play a significant role in your hotel’s revenue generation. In your hotel revenue management strategies, don’t leave out direct bookings.
A majority of your guests prefer to book direct with you.
Plus, you shouldn’t let go a chance to gain unlimited commission-free bookings. You can let your guests book from your website easily, engage with them and know their preferences; which will make them feel valued.
Like hundreds of fellow hoteliers, start working on increasing direct bookings on your hotel website.
Test and measure
Another trick to planning your hotel revenue management strategies is analyzing each of your promotions and pricing strategies. This will give you an idea of what worked, and what didn’t.
As the travel market keeps on changing, it becomes impossible to answer or bring a solution to pricing. However, the internet is perfect for testing, so keep experimenting. Continuously try new ideas and offers, but make sure you set up reporting and measure the results!
So, the key to successful hotel revenue management is:
- To sell the right product (guest room, banquets, ancillary services)
- To the right customer (business, leisure, government guest)
- On the right day (weekday, weekend)
- For the right price (rack rate, corporate rate, group rate, government rate, discount rate)
Without appropriate hotel revenue management strategies, you are simply leaving money on the table. Not only will your booking pace be slower than it should be, but you’ll often be charging a lower price for your room than ideal rate, and lose many booking opportunities when you keep high rates than required. So, it’s extremely important to start optimizing your pricing as much as possible.