Now, more than ever, revenue management is the cornerstone of running a successful, profitable, hotel. The increase in available data and ways to track and analyse it may seem like it has complicated the industry, but it also provides a wealth of new opportunities for your business to turn a profit.
The most successful hoteliers are savvy operators who continually look for ways to learn and improve the way they do things, gaining an edge over the competition. But only a small percentage of independent hoteliers use revenue management strategies and thus limit their revenue-generating potential.
Read on to learn the strategies that will help you realise optimal revenues and profit for capacity-constrained and perishable assets (rooms, in this case). Implemented correctly, a 50 room property can see an increase of $100,000-$200,000 each year.
Revenue Management Strategies
You need a revenue management strategy to remain sustainable – that’s the short story. Ideally, you’ll even be able to turn a tidy profit each year. The best hotel revenue management strategies recognise that hotel pricing is fluid, and can change from one day to the next. It’s critical that any hotelier creates a revenue management strategy that is adaptable to the current conditions. Often it’s more important to focus on your own business and be confident than to worry too much about competitors, at least at first.
Every hospitality business strategy has to have the customer at its heart. How do travellers behave in the current landscape? How do they book and travel? How do they experience and explore? What do they require? What are their expectations? It’s vital you have an idea of these factors if you want to squeeze the most value out of each guest that enters your door. The better you know the guest the more guest loyalty you can generate, which is extremely important for recurring revenue. If you know you have a certain amount of guests returning each year, that’s more rooms you don’t have to worry about and you can focus more on up-selling and cross-selling.
Part of this is knowing what’s going to happen a year in advance, not simply a couple of weeks. Planning how to price and what to promote 12 months from now will really set you up for success, because you’ll already be prepared for the travellers who are dreaming of their ski holiday, summer getaway, or event-based trip.
Let’s go into some specific strategies that will help you gain revenue and increase profit.
Hotel Pricing Strategies
There’s no pricing strategy that is perfect for any hotel. Each property must consider the pricing strategy, or strategies, that work best for its particular brand. A revenue manager will spend a lot of time analysing data and other influencing factors to ensure the business is operating with the best possible chance to maximise income.
There are a number of questions that should surround your pricing strategies:
