Hotel Revenue Management: No Luxury. It’s Need of the Hour!

Revenue Management! Revenue Management! Revenue Management!

Yes, that’s what I am talking about (AGAIN) in this blog. But why am I emphasising (I would rather say re-emphasising) on it? 

It’s because hotels are still not taking this strategy seriously. They are either operating in denial or under the influence of some myths.

That shouldn’t be the case, at all.

Revenue management is a blessing in disguise. And with this blog, I am going to put the accent on the importance of hotel revenue management.

Revenue Management for Hotels is REAL

The best way I can explain the importance of revenue management in the hotel industry is by giving you a scenario.

Imagine a hotel without any sort of revenue management strategy. It has set prices for all its rooms that remains the same throughout the year; even during the times when the demand is high.

Is it likely to make any significant profit? I really don’t think so.

Now many of you (especially the ones who aren’t pro-revenue management) might say that hotels would still make good money and sustain without such strategies in place.

Yes, that’s true (to some extent). 

But when it comes to the broader picture, it is much more than just sustaining.

The hospitality industry is highly competitive and is ever-evolving. And to stay ahead of the curve, accommodation providers need to hit the jackpot. Meaning, they MUST boost their overall revenue so that they can scale.

This is how the scenario looks like with revenue management

For instance, a hotel is well aware of all the nuts and bolts of revenue management.

From customer segmentation, demand forecasting, inventory management, to applying dynamic pricing, the hotel never leaves a stone unturned.

When the demand is high in the region, the hotel owner knows what sort of pricing to keep, how to create packages, what should be the ideal cancellation policy and more.

As a result, the hotel has rarely seen any sort of downfall.

If this doesn’t convince you that revenue management for hotels is real, then I don’t know what would?

Why are Hotels Still Shying Away from it?

Demand-based variable pricing is at the core of hospitality revenue management. And this is where hotels get into the dilemma of whether to implement it.

Also known as dynamic pricing, this strategy is based on not just consumer demands, but also on competitor pricing, seasonality, current occupancy, and other factors.

Many hotel managers believe that this way of pricing hotel rooms is unfair and might even alienate guests by affecting their experience.

THIS IS NOT TRUE.

Hotel revenue management doesn’t decrease guest satisfaction. Rather, it is more about a win-win for both guests and hotels.

That’s not all. Various other myths are swirling around that are making hotels sceptical about it.

In one of our blogs, we have debunked some common myths about revenue management systems and managers. Do give it a read.

Read: Common Myths About Hotel Revenue Management

The Articles You MUST Read About Hotel Revenue Management 

No matter how much I emphasise revenue management, it is never enough. During all these years in the hospitality industry, I have witnessed first-hand how properties reaped the benefits of hotel revenue management.

Not just that. I have also researched and written about a lot of articles on this aspect in-depth.

And here are some of the articles on revenue management I want you to go through.

Do hotels need a revenue management system?

A revenue management system is used to optimize hotel room pricing and inventory. To do that, the software analyses various types of data such as internal data, market supply, and customer demand.

Now, hotels that solely rely on revenue managers think that they don’t need any sort of software.

However, that shouldn’t be the case.

A revenue management system is more like a companion to revenue managers. It simplifies their tasks and enables them to reach their higher potential. Thereby, boosting the hotel’s revenue.

Click the button below to learn about the advantages of having a revenue management system at your property. The points information in this article is legitimate.

The dos and don’ts of revenue management

Revenue management, no doubt, is one of the most prominent aspects of a hotel. However, it’s a tricky task to get it right. 

It is not just about survival; it is much more than that. Hoteliers need to consider going beyond the basics of this phenomenal revenue-boosting strategy.

So, how to do revenue management for hotels?  Is there a way to hit the jackpot? 

That’s exactly what the following blog discusses — all the strategies of revenue management to improve your overall bottom line.

Get it in-house or outsource it?

There’s a huge dilemma among hoteliers; they aren’t sure whether to go with an in-house team of revenue managers and systems or opt for outsourcing.

Both in-house and outsourced revenue management have their own set of pros and cons. Further, it depends on the hotel what suits them best.

However, as a hospitality blogger, I have done my research. I found that the hotel industry is dynamic; technologies, strategies, services, everything keeps evolving. And, revenue management is no exception!

For hotels to keep up with the industry and take advantage, they need to stay abreast with all the latest trends. And in that case, outsourced revenue management wins the race.

To learn why is it so, click the button below.

How to hire the right revenue management service provider?

For instance, you have decided to work with a revenue management service provider. But, how are you going to determine whether it’s worth your money and time?

Knowledge of all the parameters to assess service providers gives you an upper hand. However, it’s understandable that not every hotel owner would have the know-how of revenue management. If you’re also one of them then, we have got something for you.

In our article on picking the best revenue management service provider, we have covered almost every single element of this process. You can even use it as a step-by-step guide.

If you follow all the mentioned steps, and more, then Congratulations!!! You’re this close to hiring the right revenue management service provider for your hotel.

Hotel revenue management strategies for 2022

While I have listed all the prominent articles to show the importance of hotel revenue management, I have kept this for the last.

The hotel industry has witnessed all the peaks and valleys in the last two years. It has become certain for them that “the effective strategy of yesterday is no longer relevant today.” Meaning, it is time to hunt for the latest tactics.

Here are all hotel revenue management strategies that are going to benefit your property in 2022. Try them out and witness the impact for yourself.

Revenue Management is the Need of the Hour for Hotels

Last year was pretty good for the hotel industry. Restrictions were lifted, people were travelling, hotels were getting booked and whatnot. It seemed that things are getting back to normal, all over again.

But, we only see one side of the story. While many hotels were reaping the benefits, many were still struggling to revive.

I have been in constant touch with hoteliers from various countries and segments. And one of the common reasons was a broken strategy; a strategy where they failed to price their rooms the right way; a strategy that didn’t focus on guest segments and preferences.

Let me get this straight.

The covid-19 pandemic has changed the way people travel; the needs and wants of guests have transformed drastically in the last two years. Moreover, it is likely to remain the same for the coming years as well.

This is where revenue management comes into the picture.

With the help of data, revenue management practices enable hoteliers to find solutions to what may seem like complicated problems. And this is what differentiate profitable hotels from the ones that don’t leverage revenue management.  

Now, if you say,

“Harsh, I understand that my hotel isn’t making the profit it deserves. But that doesn’t mean I will raise the room prices. It might upset our guests.”

This is what most hoteliers think of when someone tells them about strategies to boost revenue. They feel it actually alienates their guests and drop their sales.

Again, that’s not legit.

The thing is, revenue management is not about raising prices at any time. Rather, it is based on the grounds that say if a hotel is recognised as quality, then it has all the rights to price its room higher.

Talking about the guest satisfaction aspect, people will definitely pay the price you set for your rooms if you deliver value. Period.