Effective revenue management is critical to maximizing revenue and profits and ensuring long-term success.
NB: This is an article from Hotellistat, one of our Expert Partners
While the basic principles of revenue management apply to all types of hotels, resort hotels have important strategic considerations. This blog post highlights the challenges and opportunities faced by these types of properties. How can good revenue management succeed here?
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Seasonal highs and lows
The primary challenge for resort hotels is to maximize revenue during the high season and ensure a minimum of revenue during the low season. Many resort hotels need to generate 80% of their total revenue in 20% of the year. Profitability and guest satisfaction during the quiet periods require creative marketing strategies and attractive special offers. The ability to respond quickly to changing market conditions is crucial. The traditional high and low seasons have evolved, not least due to the pandemic. Emerging travel trends have led to so-called micro-seasons, where demand for certain events or experiences increases. Effective revenue management requires flexible pricing that adapts to real-time demand profiles.
Segmentation through the establishment of personas
Classifying guests based on their preferences and behaviors to enable tailored offers and pricing strategies is essential, especially in resort hotels. It is therefore particularly important to select the right customer relationship management (CRM) system. Travelers should be grouped by market characteristics such as demographics, reason for stay, length of stay, booking channel, and preferences. In addition, you should investigate whether they are new or returning customers. Segmentation allows you to offer discounts to loyal customers or create customized packages to maximize revenue.
Optimization of the business mix
Diversifying the business mix by including wholesalers such as tour operators ensures consistent, reliable business in the form of a base occupancy, especially in the low season. However, it is advisable to evaluate this mix regularly in order to convert more tour operator business into individual business, which is usually more profitable. By regularly reviewing and spreading the business across as many shoulders as possible, the risk of financial losses due to market fluctuations, economic cycles, or industry-specific problems (e.g. insolvencies) can be reduced. If one business area is affected by a crisis, profits from other areas can help to offset the losses. A diversified business mix makes a company more resilient to external shocks. If an industry or market segment is affected by unpredictable factors, more stable business areas can keep the company on track.
Introduction of per-person pricing
One strategy in resort hotel revenue management is per-person pricing, where prices are based on the number of guests in a room rather than a flat rate per room. This pricing strategy can effectively attract larger groups or families, leading to higher revenue and therefore profits if implemented and promoted cleverly.
Dynamic pricing per room type
In high season, ensure that larger rooms or rooms with a view are priced at a supplement to maximize revenue. However, in low season, rooms with a view may not be as impressive as in summer. Therefore, when demand is low, it is important to ensure that room-type surcharges are reduced to maximize hotel occupancy. Doing this manually takes a lot of effort. Therefore, the use of a revenue management system (RMS) is recommended. This must be able to adapt the prices of room types to current demand and change them dynamically.
