Revenue management has always been the least understood part of an independent property’s operations – hotel owners do accept that proper revenue management strategies can boost occupancy, but they don’t consider it something crucial to a hotel’s success.
The truth is, it is!
The scenario within hospitality is changing. Unlike before, an increasing number of independent hotel owners are beginning to take up active roles in their property. While it’s beneficial to the management team to have the owner around the hotel at all times, it can often lead to increased pressure on the hotel’s administration. Managers may find themselves having to justify all their decisions to a person primarily concerned with the ROI.
Revenue management is by no means a new industry practice, but its value is not always appreciated by owners and managers may face an uphill task convincing them otherwise. However, today we have a scenario where guest trends and booking patterns are changing so rapidly that having a robust revenue management strategy is absolutely imperative.
Revenue management helps hotels lower costs
Booking trends today are dependent on a number of factors such as the economy of the region, season, average age of travelers, and so on. As a result, the best rate to sell your room today might be very different from the optimal rate tomorrow. Having a revenue management strategy in place not only helps determine the best rate to sell rooms at, it also enables the hotel to plan ahead by optimizing manpower for periods of higher demand and avoiding over-staffing during periods of lower demand.
By better managing resources as per their need, properties can make the most of their resources and lower costs by avoiding unnecessary expenses.
Attracting the ideal guest
Not all business a hotel receives can be called ‘good business’. While ensuring maximal occupancy is important, repeat customers are a lot more lucrative than new ones – it costs more to reach out to new guests everytime. A full hotel need not always be profitable – bad revenue management like selling rooms at too low a rate or paying out heavy commissions can leave hotels losing money even during maximum occupancy!
Automated revenue managers help hotels better identify the right customers who can provide the greatest long-term value for the property’s future.
In order to identify these guests, hotels need to evaluate all guest spending activities and not just the room data – restaurant, bar and gift shop expenses can help properties get a clearer picture of a guest’s preferred activities and their overall value.
Hotels can also use this data to make better decision regarding promotions and marketing campaigns.
Revenue management improves branding
Proper utilization of revenue management strategies can play a big role in increasing a hotel’s bottom line. Not only does better pricing improve the property’s occupancy, it also ensures that the hotel is selling all its rooms at the highest price possible and generating the maximum RevPAR it can at the time.
While data collection and report building were extremely time-consuming tasks that hoteliers had to go through in order to get the required data, revenue management today can be implemented easily with advanced, automated software on the cloud platform.