Revenue Management

aims to optimise a hotel or financial results by maximising revenue… selling the right room, to the right customer, at the right time, for the right price, via the right channel, with the best cost efficiency.

Make effective use of performance data and analytics to predict demand, establish a dynamic pricing model and maximise the amount of revenue that the company brings in. It is significant as hotels have a perishable inventory, fixed costs and varied levels of demand leaving no chance for guesswork in key pricing decisions. 

1. Understand Your Market

Where demand comes from and the various different local factors that might affect seasonal demand. Who is your audience and their needs, wants and expectations. What is competition that exists within the market and make strategic decisions regarding price, discounts and advertising with this competition in mind. 

2. Segmentation and Price Optimisation

The concept of selling the right room to the right person at the right price requires you to appropriately segment your customer base. To do this, you need to identify different ‘types’ of customer and then look at these different segments and evaluate when they book hotel, how they book them and other habits. When this is carried out, it allows you to optimise prices for those different segments. One of the key advantages of this is that once prices are optimised for a particular segment, price changes can be minimised. This, in turn, can help to generate customer loyalty from those who appreciate the price consistency you offer.

3. Work Closely With Other Departments

It is important to achieve close collaboration with sales and marketing, in order to ensure that your revenue management strategies and their individual departmental strategies are in alignment with one another, and so that you can address challenges collectively.Work with them to make adjustments to your revenue management strategies, rather than imposing your will, which might be met with resistance. Close collaboration will also help to ensure that you are always presenting consistent messages to customers and clients.

4. Forecasting Strategies

One of the most important aspects of revenue management is forecasting, which allows you to anticipate future demand and revenue, enabling necessary adjustments to be made. High-quality forecasting relies on accurate records being kept, including occupancy, room rates and revenue. Most forecasting strategies rely heavily on using historical data to spot trends. However, forecasting also requires an awareness of current bookings, competitors’ performance, local events and wider industry trends.

5. Embrace Search Engine Optimisation

Search engines offer one of the single biggest opportunities for those operating in the hotel industry to attract customers, which makes search engine optimisation an important part of a robust revenue management strategy. Through SEO, you can improve the visibility of website on search engine results pages. As a consequence, you can improve the chances of attracting business from customers who are not specifically searching for your hotel, but who are searching for a hotel in your location. To achieve this, it is best to operate a solid content marketing strategy, and ensure your website’s design is optimised for SEO purposes.

6. Choose the Right Pricing Strategy

There are many different pricing strategies and no one strategy will guarantee success. Instead, you need to consider the best strategy for the hotel, based on what you have to offer, who are you trying to attract and what strategy competitors are employing. A competitive pricing strategy, where prices are set based on other hotels prices, puts your business in direct competition and is good when your hotel has more to offer than your rivals do. Yet, in slow seasons, a discount strategy might be best, because a low-paying customer is better than an empty room. Another option is the value-added approach, where rates are higher, but additional value is provided through extras and freebies.

7. Incentives For Direct Bookings

While it is certainly important to cater for all distribution channels and meet customers where they are, rather than where you want them to be, it is also sensible to try to maximise the number of direct bookings that are made. The primary reason for this is because direct bookings do not require commission to be paid to third parties, which means they are ideal for maximising revenue. One option is to offer exclusive incentives, such as loyalty points, or freebies, for customers who book directly through your own website.

8. Focus on Mobile Optimisation

Mobile has become one of the single most important revenue streams. As a result, any hotel that is operating without having prioritised mobile optimisation is already operating at a distinct disadvantage compared to their competitors. Make sure your website is optimised for mobile viewing, meaning it loads quickly, the pages display properly on mobile devices and all buttons are fully functional. In addition, you need to ensure your booking process is also optimised, so that customers can book rooms from their mobile device, without needing to switch to desktop.