2020 has been a year that none of us expected and no one was prepared to cope with – least of all the travel industry.
NB: This is an article from Fulvio Giannetti, CEO of Lybra
While the second wave of COVID-19 has put hotels in a more precarious and uncertain position, there is real hope for the recovery of the global travel industry on the horizon, with the beginning of the administration of vaccinations in countries around the globe.
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In planning for 2021, many hoteliers (like you!) are trying to identify ways to get back to pre-COVID revenues, because of the light at the end of the tunnel; however, that isn’t the best strategy today, due to the ongoing depressed demand that all global markets are still experiencing. Instead, hoteliers should be focusing on preserving business, by capturing as much of the existing demand as possible using out-of-the-box revenue management strategies to price your rooms more competitively.
So, how can you capture as many bookings as possible, even if there is very limited demand in your destination?
Here’s the good news: you can do it using technology that you already own – your revenue management system (RMS). As well as suggesting room rates, your RMS can actually be used in many creative ways to help your hotel survive the ongoing pandemic, no matter how demand changes over the coming months.
Here are 6 out-of-the-box ways that your RMS can help you capture more demand in 2021:
#1: Monitoring hotels’ market for potential opportunities by forecasting future demand
In order to capture the bookings that are coming into your market, you first must know about the travelers who are interested in your destination; that’s where your RMS’ ability to forecast future demand becomes very valuable.
Once you know who is interested in coming to your destination, when they are interested in coming and from where, you have the ability to target your marketing and pricing to suit those exact travelers – making it much more likely that they will book with your property over your competitors.
So, how does your RMS help you predict future demand?
Machine-learning based RMS collect and analyze millions and millions of data sets (a.k.a. information) that are collected online from a variety of sources – including future flight search data, competitor pricing, a property’s online reputation, market data, local events, etc. Data is key to hoteliers’ success because it is the only way that hotels can obtain a better understanding of what is to come, both in the short- and long-term. Real-time market demand indicators offer information about the projected number of travellers who will be coming to a destination and ensure that hotels are earning as much revenue as possible from each new booking.
Future flight search data is of particular importance as a predictor for travel demand, because actively searching for flights, shows travel intent – giving you a strong indicator that the traveler will also be looking for a hotel in your destination during their trip.
Flight search data also helps revenue managers establish whether it is primarily domestic or international guests who are interested in traveling to your location. For example, a US hotel may see greater domestic demand at the moment because of the border restrictions, but a property in Italy may see more demand from other countries within the EU (international demand). Again, by determining which travelers are interested in traveling to your destination, your marketing team can update your campaigns according to the real-time demand, to capture as many of those bookings as possible.
There are other types of market data that are hugely important for RMS to factor into their pricing calculations – including local events, demand pressure, compset pricing, etc. – as it helps the RMS establish an accurate assessment of future demand – 365 days in advance.
In addition, market demand data is important as it enables you to evaluate where your property ranks’ in the marketplace. By comparing overall city demand vs. your individual hotel’s demand, your RMS can pinpoint specific, actionable opportunities for your property to adjust your marketing, pricing and inventory allocation to ensure that your property is the most attractive to potential guests that are already planning a trip to your destination.
#2: Demand generation
As I’m sure you know from personal experience, most hoteliers have limited data and no time to optimize their hotel ads, so they rely primarily on OTAs for most of their business at an incredibly high cost of acquisition (who, as we all know, spend billions on Google to move traffic away from property’s brand.com sites).
Although investing in Google and social media advertising can feel risky, online ads can help your property maximize demand generation opportunities. By integrating your RMS with a metasearch management solution that optimizes online ads, you’ll be stimulating demand, while driving more direct bookings.
Here’s how it works: your RMS’s market demand data can trigger a targeted hotel online ad campaign in the metasearch management solution, designed to stimulate demand. By following this practice, revenue management evolves to become proactive, rather than reactive, as you are creating the right campaign, generating the right price, at the right time, at the lowest cost.
#3: Understanding your potential hotel guest’s perception of value for your hotel property
We’ve all heard the phrase, “perception is not reality;” in the hotel industry, this is absolutely true – and your property’s perception (by potential guests) could be losing your hotel many bookings, without your knowledge.
Hoteliers often forget that, as the decision makers, it’s important to view your property through the eyes of potential guests; understanding potential guests’ perceptions of your property’s value – both individually and compared to the other properties within your destination – is important because, in order to get more bookings, your hotel has to be perceived to have strong value and a good reputation.
Through data analysis, your RMS can evaluate all of the factors that impact your property’s perception in the eyes of potential guests, giving you a better understanding about whether or not your property is aligned with how guests actually perceive your hotel within the market.
If you find that your property is perceived to have lower value than other properties within your destination, it is unlikely that you will be the one who captures the bookings that are available within your destination, so it’s important to take action to ensure that your actual value offering matches the perceived value that potential guests have of your property.
#4: Helping hotels to attract longer staying guests
A new trend has emerged because of the long quarantine periods that many countries are imposing on travelers; many travelers are choosing long-term stays of a month or more, rather than the traditional week or two-week vacations that were popular, pre-COVID. This is a HUGE opportunity for hoteliers because long-stay customers end-up costing the property less (vs. multiple short-term stays, which will cost your property more in commissions and transaction fees) and make it a safer stay (by reducing the guest turnaround).
To attract these highly valuable customers, you should price long-term stays more competitively, using length-of-stay (LOS) pricing in your RMS. This will make your property more attractive to potential extended-stay guests and emphasize the value of your property, encouraging more bookings and revenue.
#5: Integration between operational systems
There has always been talk, in the hospitality industry, about the importance of all of your operational technologies being integrated, but that statement is truer now, than ever.
In order to open-up again, many hoteliers have had to lay off or furlough their support staff to cut costs, leaving them overloaded, struggling to keep the property running smoothly; the last thing that anyone – especially a hotel trying to operate with a smaller staff – needs is manual data entry to update pricing and booking information between the property’s various operational technologies.
After all, these solutions – RMS, PMS, CRS, etc. – were designed to make hoteliers’ lives easier by minimizing the manual tasks associated with property and revenue management so it’s hugely important that your RMS is integrated with your hotel’s PMS and all other operational solutions that you use at your property.
#6: Decrease your property’s tech spend
Innovative, machine learning-based RMS are not just there to help your property price your rooms; they can also decrease your ongoing tech spend. Consolidating all of a property’s owned internal and external data in your RMS makes it possible for the solution to offer revenue management functionality, plus rate shopper, online reputation management, CRI (Choice Relative Index), competition analysis and market/demand analysis functionality, at no extra cost.
To survive the pandemic, and the resulting depressed demand, your property must make full use of the tool that you already have – your RMS – and optimize its functionality to create new demand, capture existing demand and drive direct bookings at a lower price. Your RMS can help you optimize your property’s financial performance, today, tomorrow and in the post-COVID world (fingers crossed that’s sometime in the very near future!), so get started today, by implementing these tips and watch as bookings come rolling in.