Now that we’re a couple weeks into 2019, are the revenue management plans you have in place going to maximize your profits this year?
NB: This is an article from Rainmaker
Are you taking all the factors affecting your pricing strategy into consideration? Are you offering the right room to the right customer? What does your channel mix look like? In a recent webinar we discussed “The 5 Rights of Revenue Management.” Every situation is different, and sometimes you may only need to focus on one of the below categories – but all five should have a place at the table when making the tough revenue management decisions.
Right Customer
Is your property accurately segmenting your guests? Segmenting will vary based on your specific hotel, but it is essential you have an idea of who is typically walking through your front door and booking your rooms. Are they paying your highest rate or fighting for discounts? When pricing your rooms and managing your customers you should be thinking about why guests are coming to your hotel, what is bringing them to your area and what type of traveler they are. All these factors affect your pricing strategy and the first step is ensuring you understand your customers.
Right Product
What mix fills your hotel? It’s important to maximize that mix to put the most profitable business into your hotel. Different guests require different room types and these room types need to be available to right person at the right time. For example, have two bed rooms available during high leisure travel times or offer a suite for a low upgrade fee when they are not in high demand. This may seem second nature, but it is essential that hotels use their inventory wisely to maximize their revenue potential.
Right Price
It’s no secret different customers are willing to pay different prices based on their specific needs. When pricing rooms, hotels need to take in to consideration the price you think your rooms are worth, what you can sell your rooms for and the demand for your product to maximize the RevPAR for your hotel. Take a step back and make sure your hotel is pricing based on demand and value.
Right Channel
One of the largest focuses for revenue managers today is channel mix. Are you offering the right room to the right person on the right channel? Although you may be offering the same rate across the board – the fees associated with certain channels will make some bookings less profitable. It is essential that you pay attention to these associated costs and fees to make sure you’re maximizing your revenue potential by utilizing the most profitable channels. Look at where your business is coming from and make sure your channel mix is optimal.
Right Time
The age-old question: Do you want to sell out first or sell out last? As you know, revenue management is no longer just about occupancy. If you sell out first, how much are you losing in rate? Could you have charged more? This opens the conversation on the “right” time to sell out your hotel and what rooms you need for each type of traveler at any given time. For example, do leisure travelers book further in advance? You’ll also want to analyze your stay patterns. Is your hotel always sold out on Wednesday? This prevents guests from booking a Monday – Thursday pattern. Your hotel should be analyzing your guests’ stay patterns to allow for the most profitable length of stay. Optimize your booking pace and aim to sell out last to make the most room revenue possible.
