Following the re-opening surge in demand, hoteliers are recovering from the operational challenges with staffing and supplies, and finally have some room to breathe and look at the final quarter of the year leading into 2022.
Now is the time to determine how we will achieve our top line budget goals whilst we keep our bottom-line costs in check. Revenue Management strategy plays a key role here, but where do we start with this and how does revenue management look post-Covid?
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Advance Purchase Rates – what part do they now play in your rate strategy?
Pre-Covid, advance purchase rates were part of our normal rate strategy. However, during Covid, many customers felt the sting of this policy, which in turn left the booker with a feeling of no confidence because of the inflexibility and the fear of losing money. Whilst some hotels have chosen to move away from advance purchase, you may wish instead to consider adapting your terms and conditions and offer partial refunds, or the option to change stay dates, providing the booker with more security and confidence when choosing this rate.
Cancellation Policies & Short Lead Times
Cancellations have been rising gradually in the years leading up to Covid. Following Covid, the industry must review cancellation policies to ensure we are both protecting our business, and allowing a chance to resell rooms. We must also ensure that any policy falls in line with our customer’s expectations and does not act as a deterrent. Guests are absolutely more sensitive of cancellation terms so we must ensure any policy is realistic in terms of both rebooking potential and it must be deemed fair and reasonable in the eyes of the customer.
Post-Covid, lead times have become much shorter and, whilst it is advantageous to have advance business on the books, this may no longer be a reality. It is tempting to drop our rate to entice last-minute business when we see rooms still not sold with a week to go, but this is not recommended for every situation. We must remember our value position within our competitive set, and ensure our rates are reflective of this.
With corporate and international travel not likely to resume until 2022, we must review our market segments to identify how we can replace this business in the short term. Domestic travel has been our main source of business this summer and we need to remain focused on sustaining this and ensuring our marketing keeps this sector in mind. Historically, properties which successfully emerged from periods of crisis were diligent in reviewing their market segment mix to ensure that they did not put ‘all their eggs in one basket’. Now is a great time to review our own market segments to see what new markets we can develop and grow into. Looking at our packages and including options for local attractions and events is a great way of drawing in new customers and making our properties more enticing. This gives our customers another reason to choose our hotel.
Total Revenue Management
This is a term that has been around for a while, but hotels have often struggled with the concept. Historically we have been focused on room revenue management but now is the time to see where we can maximise incremental spend. In order to do this successfully, we need to create a revenue culture within our teams. Guarding the financial targets needs to become a thing of the past and sharing such information with our teams helps to create a true revenue culture. Implementing an upselling/cross-selling scheme within your property and incentivising the team will help you reach that common goal.
Our 5 Top Tips:
1. Review your cancellation policies
2. Short lead times – Hold your rate and keep your value positioning in mind.
3. Avoid OTA programmes like Booking.com’s genius. They dilute your rate and your profitability.
4. Review your market segments and your packages to make them attractive. Include options for local attractions highlighting things to do in your area.
5. Embrace total revenue management and a revenue culture. The results will see increased revenues and a happier and more engaged team.