The food and beverage and hospitality industries go together like “bed and breakfast,” “cheese and wine,” and well, “revenue” and “management.” From rooftop views to custom craft cocktails to Michelin-star restaurants, there’s been no stopping today’s hotels from bringing their “A” game to their F&B initiatives.
A hotel’s approach to their revenue management initiatives isn’t really that much different. And similar to the dining experience of hotel patrons, revenue management can also be served up in a four-course menu. Below are four main courses and why they are so important to a hotel’s revenue strategy:
First Course: simple forecasting starters
Forecasting hotel demand is an important component of RM. Hotels use forecasting to accurately predict the time frames throughout the year that bring them higher or lower occupancy, demand and revenue. Accurate forecasting also provides hotels with data and analytics that can help hotels drive successful changes through future marketing and pricing strategies.
Different types of forecasts help hotels accomplish different functions. Operational forecasts help manage a hotel’s resources, while financial forecasts are intended to provide owners and investors with an outlook on revenues and profitability. Revenue management forecasts, however, estimate future demand so the hotel can effectively manage that demand to achieve revenue objectives.
It is important that revenue management forecasts contain historical and future information, as well as incorporate in market-relevant and competitive information that will inform a hotel’s overall revenue management strategy.
Second Course: Dishing up successful pricing
Serving up the right price to the right customer at the right time can be a challenge for many hotels. With so many potential pricing ingredients, what makes up the right pricing mix? Enter: the dynamic pricing approach. Using a dynamic pricing approach – which is the continual adjustment of prices based on the value of demand – will help determine the highest price that a guest is willing to pay to stay at a hotel.