Supply and Demand: Are you maximizing room revenue?

The theory of supply and demand is one of the fundamental principles of economics.

However, it’s not something constrained to leading economists.

And when it comes to maximizing your hotel’s revenue, supply and demand is a principle that should be cleverly implemented.

For those less familiar with the theory – or if swotting in school is nothing but a distant memory – let’s use ice cream as a refresher (pun definitely intended)…

Demand is the measure of how much a certain item is wanted. The demand for ice cream is typically weather-dependent. So, in the winter demand for ice cream goes down.

Supply, on the other hand, is the measure of how available a certain item is. The supply of ice cream is fully-dependent on demand. So, in the winter demand for ice cream goes down, and therefore the supply goes up.

The next piece in the supply and demand puzzle is price.

There’s absolutely no point in monitoring supply and demand if you’re not going to use the fluctuations to your advantage.

Price has a big role to play and is the connector in the supply and demand theory.

Let’s look at ice cream again as an example – but this time in the summer months.

Demand for ice cream in the summer is high, causing the supply to become limited. So, an ice cream vendor can charge higher prices during peak times.

Measuring and monitoring the supply and demand of your hotel rooms is the number one tactic you should employ when it comes to boosting your revenue growth.

Here are 5 important things to consider in order to maximize bookings and revenue at your hotel at any time of the year:

1) Generate demand – don’t just manage it
Strategic control of your hotel’s inventory is the name of the game to engage revenue management disciplines.

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