Every year, you may be applying several strategies to increase your revenue. But, often some strategies work while some do not.
NB: This is an article from eZee Absolute
And that’s common among hotels. That’s why we are presenting you with 13 hotel revenue management strategies that actually work (especially in 2020).
1. Think again on OTA connections
To sell the right room at the right prices, you need to have the right DISTRIBUTION of the rooms as well. For that, you have to give fresh thought to your OTA connections:
- Select the regional as well as international OTAs
- Consider your property type and your target audience
- Last but not least, OTAs that fall into your budget.
Let me give you an example to have a better idea:
If you’re a BnB in Europe, then you should connect to some regional OTAs like, eDreams Odigeo ass well as global OTAs like Expedia, Booking.com and likewise. Since you are a BnB, you can consider OTAs such as Airbnb and bedandbreakfast.com that will help you target your potential guests. When you zero in your distribution method, you should also consider that they should be light on your pocket.
Moreover, you should not limit yourself to 2-3 OTAs. More the OTA connections, the wider is the exposure. And more exposure is more bookings and more revenue.
2. Adopt uniform distribution method
When you have selected the right OTAs, it is very important to select the right distribution method as well.
Basically, you receive booking via OTAs, walk-ins, through phone, travel agents and your website.
Now, many of you still prefer the allocated inventory distribution method. In this method, you allocate some number of inventory to a particular channel. You should avoid practicing this, as there are chances of losing potential booking opportunities.
Instead, you should start the uniform inventory distribution method and list all your inventories on all channels. With this inventory method, you get bookings from channels and you can utilize your inventories to the fullest.
PROTIP: Use technology like channel manager to effectively practice this distribution.
3. Perform guest segmentation
Segmentation is a key element of hotel revenue management. Targeting all types of customers for your hotel is a waste of time and money. Therefore, segmenting and pitching the right set of guests is important and is one of the key hotel revenue management strategies.
One of the best ways to segment your audience is by their reason for travel. It could be a family holiday, wedding, tourist event, adventure, relaxation, business, etc.
Not only that, identifying your guests and evaluating their habits; for example, what kind of rooms they’re looking for while booking a hotel, what hotel facilities are they looking for, and other factors will help you optimize your room rates and showcase your services accordingly.
You can also analyze and drill down the segment that is giving you more business. In this way, you can strategize accordingly to make more revenue from them and pitch other segments too.
Hence, knowing your target audience is important to plan and execute your hotel’s revenue strategy for earning big profits.
4. Do competition analysis
I’d say competition analysis is one of the fundamental hotel revenue management strategies. You may ask how?
Basically, with competition analysis, you can understand yours and your competitors’ strengths and weaknesses. You can know your position among your competition and eventually work to win against your competitors.
First things first, not every hotel next door is your competitor. You have to define your competition set (AKA compset). There are certain parameters that you should consider before considering any property as your competitors. Some of them are:
- No.of rooms
- Room types
- Accommodation type
- Size of property
- No. of OTA connections
- Number of services
- Average ratings and reviews
Once the RIGHT compset is defined, you can analyze their rates via tools like Rate Shopper. You can check and compare their current pricing strategy and update your rates accordingly.
This will not only help you in strategizing and managing revenue, but it’ll also provide you with proper forecasting. So, you can attract the right kind of guests at the right time and maintain the revenue you earn.
5. Make your hotel website responsive
As the facts stand in 2019:
1/3rd of the total bookings were made through mobile and this percentage is going to increase in the upcoming year.
Having said that, you have to focus on your hotel’s website. For that, if you don’t have a hotel website, you should get one made. Make sure your website is:
- Responsive and easily navigable
- Should have attractive photos and videos
- Should be optimized using different SEO strategies
- (If you’re clueless about the hotel SEO, here’s our step-by-step guide to doing hotel SEO. Optimize your hotel website, rank higher, and get more bookings.)
- Should have an integrated booking engine to gain direct bookings
- Should provide all the required information about your hotel and your offerings
If your website doesn’t have these parameters, there are chances of losing significant bookings and revenue. So having a full-fledged efficient website will definitely pose as an assured revenue management strategy for hotels every year.
6. Emphasize on getting more direct bookings
Needless to say that OTAs are a great platform to advertise your hotel and services. But along with that, a significant chunk of your revenue is deducted as a part of their commissions.
Having said that, you can get a booking engine that allows you to handle your own direct commission-free bookings right from your hotel website. You can take the following actions to increase direct bookings:
- Get listed on metasearch engines like TripAdvisor and Trivago
- Give discounts on direct booking
- Showcase your online reviews
- Have a chatbot to attend to all your guests’ inquiries
- Highlight your amenities
…and there are many other ways to increase your direct bookings. You can find out more from here.
7. Practice yield management
Yield management is an inseparable part of revenue management in/for hotels. There is a common misconception that revenue management is the same as yield management. But, that’s not the case, while talking about yield management for hotels, it encompasses the revenue generated through the room charges or occupancy, whereas revenue management involves a whole lot more than just occupancy.
Yield management is all about demand and supply. You have to set different rates for different occupancy levels.
You can define different occupancy slab and set different rates for each slab. As you can see as the occupancy increases, there is a percentage or amount increase in the basic room rates of a hotel.
On top of this, it is considered as the most important tool to balance the revenue that you earn, especially when the demand is less. Hence, yield management proves to be the most practical way to increase your revenue.
Here’s how you can practice yield management strategies to get more revenue.
8. Perform demand forecasting
Analyzing your past and present data is important as it helps you in channelizing your marketing efforts. How to figure out which strategy is working for you? Although, don’t you think that extracting the right data, and actually going through them in detail is quite hectic?
Here’s when demand forecasting comes in the picture. It is the prediction of future business performance. In which, data is of utmost importance. This is how you can perform demand forecasting:
- Data Collection: Gather data such as peak and weak season, long weekends, festivals and so on.
- Analysis: Find out how you’ve performed on these occasions. Then predict how you’ll be able to perform the coming year.
In that case, a comprehensive hotel management system helps you get detailed reports and business insights that include the revenue you earned, your best selling factors, your ADR, and more that will help you make the precise decisions in your hotel revenue strategy.
In the end, this data analysis will help you come up with better revenue management techniques to implement.
9. Try multiple pricing strategies
Pricing strategies play an important role in hotel revenue management. There are several different pricing strategies. Some of them are as mentioned:
Segmented rates:
In this strategy, segment your customers and offer different rates to each customer segment.
For example:
- Following the rate parity strategy, the rates for the open market should be the same.
- On the other hand, offer negotiated rates to the corporate segment and in return ask them to commit a certain number of rooms for the negotiated rates.
- Connect with a tour operator and sell them some rooms at special rates.
Rates as per the length of stay (LOS):
Adjust your prices on the basis of your guests’ length of stay.
For example: Mandate the length of your guest’s stay by offering them good prices.
Get 3N/2D stay at Avalanche Resort and at 200 USD only.
Offer packages:
A package is a room rate clustered together with other products and services.
For example: Free meal package
If your guests have selected a European plan, then offer a free meal for the first day as a package.
Now, you should select the pricing strategies based on your target audience and the season.
10. Partner with local business
You may have not considered it important enough, but partnering with local businesses can actually pose as the promising revenue management strategy for hotels.
After rooms and extra amenities, activities make up the next largest revenue source for hotels. Local partnerships can expand your revenue streams and provide authentic experiences for your guests.
If you are located in a place where there are scenic destinations, then you can offer your guests a city-tour. If you are nearby an amusement park then you can tie up with hem, and offer tickets at some discounted rates.
Likewise, you can explore many such additional avenues of extra revenue. Besides, those businesses around your property will be open for such a partnership.
11. Adopt latest technology solutions
Now take a look, technology is all around you. It’s in the payments you make (digital you know), it’s in the shopping you do, the services you consume, basically everywhere. The current and the future generation is tilting towards innovative technology. You know why? Simple – the ease of use.
Hence, providing quick service through the latest technology is key to increase bookings and hotel revenue. However, the question is: which technology solution you will use to streamline your operations and increase productivity?
I’d say a complete suite of seamlessly integrated solutions can be a shot to your arm. With automated solutions, you can provide quick and better services. Besides that, these days technology such as chatbot is being used to assist with basic operations and information and improve guests’ experience.
Other than that, hotels can perform the quick operation at their voice command with a digital assistant, thus reducing their time and effort in getting a task done.
Moreover, these days, a few hotels have started practicing the Internet of Things (IoT) as well. For example, there are IoT solutions that adjust room temperature depending on room occupancy, energy management systems, in-room concierge and what not.
Here’s how the next-gen technology like IoT can increase your hotel revenue and expand your business.
12. Manage your reviews
The first thing guests check before visiting a hotel is its reviews. With the increasing number of online platforms, guests often communicate and interact online to share the experience they had. That’s why hotels these days need to focus on their hotel reviews and reputation and put it to good use as a part of your hotel revenue management.
Customer ratings affect hotel revenue. How? Well, today people can search and find all the travel and hotel information provided by the different sites. Let’s take TripAdvisor for example. TripAdvisor provides the information and reviews written by the guests about the particular hotel and its services.
And this ultimately influences the final decision of the guest who wants to book a hotel. This way, hotel reviews have a greater impact on the current and future guests that you may welcome at your hotel.
Therefore it is necessary for you to respond to all the reviews. (Especially, the negative ones.) You can utilize ready-to-use review response templates to regulate your review management.
13. Redesign your loyalty programs
Guests often need to travel to the same location again. Mostly these kinds of guests are business travelers who prefer to utilize services from trusted hotel brands. Hotels need to face this fact as soon as possible and make good use of it by running some good loyalty programs.
Now, don’t you think guests will prefer hotels that offer discounts or rewards to value their frequent guests? Well, hotel loyalty programs are the best way to do that and increase repeat guests as well as direct guests, thus making them an undeniable aspect of your hotel revenue management strategies.
The sad thing is – only a few hotels consider the loyalty program as an important part of their marketing strategy. But the truth is loyalty programs can be a key factor in the guests’ decision-making process. Especially, the guests who frequently visit your hotel. Employing a stable hotel loyalty program software can strengthen a hotel’s reward programs.
Bonus: Expense management
We’ve discussed several strategies to drive more revenue. But if you look carefully, one important aspect is controlling your expenses. You may ask how?
Because, if you don’t control your expenses, you will have the same profit margin.
It is quite obvious, that while you are already handling numerous activities, you may not realize when the routine expense becomes UNCONTROLLABLE. Basically, you have to scrutinize your expenses and try to optimize that. Here are 9 best cost-saving ideas for hotels, you can explore them, optimize your expenses and increase your revenue.
Therefore, in order to increase your profit margin, expense management stands as a crucial strategies of hotel revenue management.
