Hotel revenue optimisation strategies focus on striking the perfect balance between supply and demand to ensure you make as much money as possible. You want to sell the right room, to the right guest, at the right moment, at the right price, via the right booking channel – the one that charges the lowest possible commission.
NB: This is an article from Little Hotelier, one of our Expert Partners
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As a small, independent hotelier you may have heard the terms hotel revenue optimisation and hotel revenue management. They get to the heart of what a hotel business is, and are critical to understand if you are to succeed in a competitive market.
Execute effective hotel revenue optimisation strategies and you’ll optimise your revenue by making as much money as possible from a limited resource: your rooms.
Why should small hotels invest in revenue optimisation strategies?
By investing in hotel revenue optimisation software, by capitalising on revenue optimisation analytics, and by employing revenue optimisation techniques, an independent hotel gives itself the best opportunity to make more money.
The reality is that larger competitors invest heavily in hotel revenue optimisation. By making an investment of your own, you give yourself an opportunity to be more competitive and profitable.
Hotel revenue optimisation is an investment that can deliver a tangible and sizeable return.
Factors that affect the hotel revenue optimisation cycle
The hotel revenue optimisation cycle generally runs the course of a year. Peaks and troughs will feature throughout that cycle, and a hotelier will need to consider a number of factors to effectively optimise revenue at every point.
1. Market demand
Most hotels see a spike in demand on weekends when compared to weekdays. Public holidays and popular local events will also affect how much you can charge per room. The greater the demand on a given date, the lower the supply, and the higher the price you can charge.
2. Seasonality
Seasonality essentially describes market demand in broader strokes: usually defined as peak, shoulder and low seasons. These might follow the four seasons of the year, or they could be defined by school holidays, festive seasons or local events.
3. Competitor pricing
Optimising revenue isn’t simply a matter of charging top dollar. A hotel needs to price itself appropriately in order to win business, so it’s wise to research what local competitors are charging. An occupied room is almost always better than an empty room, but if you’re being regularly undercut you might face a high vacancy rate.
