During the first few days of a new year, everyone is busy planning their personal new year’s resolutions. But although most of us spend the beginning of each year focused on self-improvement, we rarely think about new year’s resolutions for our business and revenue.
For hotels, this is an especially important practice because your revenue management practices can make-or-break your hotel’s profitability for the coming year. So while you’re planning your resolutions for 2015, consider adding one for your property: to get your revenue management in shape for the coming year!
Here are four steps that every hotelier and revenue manager should take this January in order to ensure that their revenue management practices are in tip-top shape for the year ahead.
Abandon Deep Discounting
I wrote an article at the end of 2014 discussing the problem with deep discounting as a revenue management practice. I won’t repeat the entire article but here’s the key takeaway: “Deep discounting is counterintuitive because giving away rooms for practically nothing results in a drastically decreased RevPAR and because it can damage a hotel’s brand.” In short, if you do choose to offer deep discounts at any time this year, you could be damaging your hotel’s profitability over the long term. Even if it does result in a short-term boost in occupancy, it’s unlikely that the budget shoppers who book at this bargain-basement rate will spend enough on food and beverage or other incidentals during their stay to actually make the promotion worth your (financial) while.