hoteliers and revenue managers always feel the need to fine-tune their revenue strategies to stay ahead of the competition—even during prosperous times.
NB: This is an article from IDeaS
While revenue management is important across all industries, it’s critical within the hospitality industry since hotel and resort rooms are perishable commodities. In other words, any room that goes unused results in lost revenue.
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But by having a revenue strategy that reflects the uniqueness of your market, property, and guests, you can capture more revenue and profit.
So, how do you effectively generate more revenue for your hotel or hospitality organization?
Of course, forecasting and optimized pricing represent the backbone of any successful revenue strategy.
But how can your organization effectively price and forecast in ways that maximize revenue? And what other options do you have for generating more revenue?
Follow the six tips below to start generating more revenue at your hotel or hospitality organization.
6 effective revenue management strategies for hotels & hospitality organizations
1. Understanding your market
Generating effective revenue management at your property starts with having an understanding of your specific market and travel demands within it. This means knowing your inventory, including how it has performed in the past, what it’s worth on any given night, and what your competitors have to offer.
You can pull historical data and analyze trends using all this information to help build out short and long-term strategies.
2. Segment your guests to identify revenue opportunities
Split everything possible in your hotel into segments so you can track who’s doing what and what they are booking.
From how much to charge for available room types to what kind of corporate travelers your property hosts, you can segment everything to capture helpful data that can be used to find new revenue opportunities.
For example, maybe Corporation Q books an average of 8 rooms with you per weeknight at the standard room rate, but you hadn’t previously noticed this because you weren’t tracking data that closely.
But now that you have your businesses segmented, you can reach out to Corporation Q to see if they will book more rooms with your hotel if you offer a cheaper room rate or upgraded amenities, such as complimentary breakfast, parking, or upgraded room types.
3. Manage your inventory like a boss
If you operate a hotel with 285 rooms, you want to do everything in your power to fill all 285 of those rooms on a nightly basis. This means you need to stay on top of your inventory.
From making sure housekeepers clean and flip all your rooms in time for expected check-ins to knowing how many rooms to overbook each night, this part of your revenue management strategy needs to become a well-oiled machine to succeed.
Segmentation comes into play here, as you can pull that data to help you determine rates, including when to hold back inventory or when to lower prices and flood the market with extra booking opportunities.
Take it a step further with this hypothetical example: Through segmentation, you’ve determined 90% of your guests on weeknights are business travelers who want to stay in a king bedroom. Knowing you have that built-in demand, you decide you can charge more per night for your king room instead of a room with two double beds.
Then, on the flip side, if your property generates more business with families and vacationers on weekends, you can reverse course and charge more for rooms that have multiple beds those nights, knowing that’s the more popular room type.