Revenue management is beginning to play an increasingly significant role in established hotels around the world and although independent property owners were slow to warm up to the idea, the benefits of implementing such a strategy are quickly becoming apparent.
While large hotels have the resources to hire a dedicated revenue manager, smaller and mid-sized properties will have to assign the task to an existing employee who works in a similar area – such as the general manager or the head of sales.
Managing multiple tasks can get challenging but with the right resources, you will be able to develop a better understanding of how and when to implement revenue management strategies. Here are five great tips to help get you started –
Offer better value:
There had been a long standing belief among hotel owners that offering lower prices than the competition helps drive more revenue – it took a 10-year study of over 4,000 hotels, named ‘Competitive hotel pricing in Europe: An Exploration of strategic positioning’, to debunk this myth. According to the study, it was the hotels who maintained higher rates than competition that recorded higher revenue. Before you raise your prices however, you need to make sure that your property offers more value in order to justify the increased pricing to an extent.
Implementing the right technology can go a long way towards ensuring this – by mechanizing tasks and freeing your staff from the hassle of repetitive duties, they can spend more time delighting guests. Offering additional services like free spa or parking benefits are also great ways to rationalize a higher price.
Focus on social media:
The value of a strong social media presence cannot be overstated in this industry – but merely having a presence on all channels isn’t enough. In order to successfully draw more revenue from social media, you must keep your audience engaged with creative posts, interactive contests, and other activities that encourage users to share their experiences on your property. A high level of engagement and positive reviews adds a layer of credibility to the hotel’s brand – guests today will pay more for a service when it’s been recommended by others, even strangers. With a solid social media presence on multiple channels, you can sustain higher room rates even during periods of low occupancy. Don’t just stick to Facebook and Twitter though, make the most of TripAdvisor, YouTube, Foursquare, Instagram, Snapchat, and the rest too!
Select the right channels:
OTAs are a necessary evil. They do charge hefty commissions but they also spend billions of dollars annually on marketing and advertising – budgets that not even the largest hotel chains today can afford. Moreover, a number of guests visit a hotel’s website after seeing it on an OTA, boosting direct bookings and hence profitability.
But that’s definitely not a cue to go and list your hotel’s inventory on as many online agencies as possible! Evaluate each OTA in terms of its commission charges, global spread, and the type of marketing exposure provided – avoid ones that focus on regions where your hotel is already well-established. Seamless integration to your property management system and channel manager is also of critical importance, anything less will simply not do in today’s digital era where bookings are made every second.
Prioritize your website:
Your hotel’s own website should always be the most important revenue channel – this is an independent hotel’s best source for commission-free bookings. Set aside a budget for Search Engine Optimization (SEO) and online advertising. Similarly, work on optimizing the website by improving loading times and page design. Ensure that the call-to-action is clearly displayed in a prominent position so guests know exactly where they need to go when they’re ready to book.
The booking engine is probably the most important part of the site – be absolutely sure that you have a reliable and efficient booking engine with real-time integration to your property management system.
Hospitality as an industry is evolving at breakneck speed. Technology, booking trends, spending patterns, guest behavior, nothing stays the same for too long and keeping abreast of the latest developments is mandatory. Even though revenue management depends more on data from the past, knowledge about new happenings can help you come up with better strategies for the future – the growing interest in last-minute deals is influencing the way millennials book rooms, and hotels that quickly respond to these emerging trends will be the first to benefit.
A number of independent hotel owners underestimate the value of revenue management, deeming it an unnecessary, time-consuming process. Considering that we live in an era of online sales and meta-searches, revenue management practices like dynamic pricing strategies can go a long way in helping owners get the most from each deal – the cumulative lost revenue your property incurs due to a lack of revenue management can be quite unpleasantly surprising!