Revenue management is often the least understood – but arguably the most integral – pillar of a hotel’s profit strategy. Amid discussions of the guest experience, staff efficiency, and property management, hoteliers have to peel back the layers of their business to determine if their property is truly optimized from a financial perspective.
NB: This is an article from iVvy
Much like a new restaurant, managers are tasked with the responsibility of managing reservations in a way that consistently brings in the most revenue for their business, while also ensuring staff are equipped to meet that demand, and guests leave happy. And of course, there are no shortage of elements to consider – guest demand, time of year, forecast, the revenue potential of each prospective booking, the list goes on. So, the better questions become– how can hoteliers ensure they are selling the right room to the right guest(s) at the right time, and for the right price – for all aspects of their business? How can they consistently match supply and demand? What processes or tools do they need in place to better navigate this industry-wide conundrum? To better maximise revenue opportunities from group business, hoteliers need to take a holistic approach and fold revenue strategies into their sales and catering processes.
Group business is on the rise
In the realm of hospitality, hoteliers are continuously faced with the pressure of filling rooms despite obvious fluctuations in demand according to season. While transient business makes up a large portion of a hotel’s revenue, it is not necessarily a consistent revenue stream during shoulder seasons and economic downturns. When occupancy is booming, that’s great – but what about when it’s not? This is where the value of the group segment is truly revealed. In fact, recent studies show that the lifeline for many hotels appears to be the group segment, which is showing booking numbers up nearly 7% in March compared to the same period in 2015. Meetings and events business represents up to 60% of overall revenue for many hotels. Compared to other segments, group business has seen the most stabilized growth over the last six to nine months – an uptick that our industry can’t afford to ignore.
Revenue management for groups is still the missing piece of the puzzle
In the case of groups and events business, the hotel industry has been pretty proactive. More and more hotels have implemented comprehensive venue management systems to attract and manage bookings, streamline communications, and adopt the booking process into a more accessible, efficient exchange. However, there is still a big gap when it comes to giving sales teams the tools and platforms that empower them to market intelligent pricing and enforce an insight-driven revenue management strategy for group business. The need for hotel and event managers to understand the impact of group business is critical to profitability and efficiency. Revenue management for groups is still the missing piece of the puzzle.
Although the case for group business seems to gain momentum every quarter, a problem still exists. While transient business was granted a much needed, industry-wide revenue management makeover years ago, the group segment was seemingly left behind. Hotel sales teams dedicated to the group segment are left with an overtly manual playbook when it comes to pricing and forecasting. Even beyond the initial capture of leads, a manual process does not allow hoteliers to effectively identify room rates. If anything, legacy sales processes have forced group pricing to take a back seat in favor of fulfilling occupancy rates.
The complexity of manual communications and back and forth has led to a largely broken and ultimately ineffective negotiation process, which has (more often than not) put hotels in a position to choose a break-even point or minimum acceptable rate (MAR) that is too low and entirely misinformed. As a result, these hotels lose out on potential income while rapidly consuming valuable resources (their staff) in the upkeep of those manual, cumbersome processes, rather than taking advantage of real-time market and demand shifts. This does not make for an effective group management strategy, and in an industry climate where effective revenue management can make or break your hotel’s success – this should be a significant concern.
Revenue management goes beyond guest rooms
Many hoteliers are moving beyond rooms-only revenue management, aiming for a total property approach. To capitalize on the growing number of groups and events revenue opportunities, hoteliers are seeking out dynamic-pricing strategies to optimize the profitability of their venue spaces.
Fortunately for those hoteliers, the rise of advanced technology that is specifically designed with group business in mind, is changing the game. Hotel owners are finally learning to leverage venue management systems with integrated revenue management capabilities to supercharge their group business conversions and profits. These next generation, science-based solutions enable properties of all types and sizes to optimize pricing strategies and foster better synchronization between revenue management and sales. Hotels using dynamic venue management platforms have unparalleled visibility into group business trend data, business performance, and competitive positioning trends. This helps to optimize profits across more revenue streams — everything from guest rooms and meeting spaces to food and beverage, catering, A/V equipment rental and more. By creating a connection between revenue managers and event sales managers, seamlessly pulling data from other sales tools to strategically manage meetings and event functions, hoteliers can now create ideal pricing scenarios to enhance strategic decisions, capture forecasts, and increase revenue.
Ultimately, technology to maximize revenue from groups is now a ‘have to have’ – not a nice to have.
As a hotelier, ask yourself: Is group business the missing piece to your revenue management strategy? If so, what tools do you have in place to change that?
