What are the most common revenue management strategies in hospitality?
Within the industry, all hoteliers still use common procedures and metrics, but each property requires their own special revenue management strategy. It should focus on its competitive environment, differentiating factors, and ideal customers – without imitating competitors. They are intended to improve the existing revenue stream, to attract the right customers, and to offer highly competitive prices (ensuring return bookings). Let’s take a look at a handful of effective strategies to consider.
Understanding seasonal variations
The hospitality sector is seasonal. In other words, booking rates will naturally vary depending upon the time of the year. Currently, It’s important to have advanced management tools to appreciate these fluctuations to better predict factors such as occupancy rates and return on investment (ROI).
Seasonal changes can also impact other concerns such as the number of employees, the types of promotions that are being offered, and how much money guests are willing to spend at any given time.This point also serves to lead us into the next main strategy that should be embraced.
Developing dynamic pricing models
As mentioned previously, competition is rife throughout the hospitality industry. This is why in many cases price is crucial. Guests are not only looking for quality products and services. They are just as concerned about how much they can afford to spend when searching for accommodation.
These are some of the very same reasons why online aggregators such as TripAdvisor and Booking.com will partially base their client reviews on value for money. Properties should therefore adopt a more dynamic pricing structure. This will help to account for the seasonal variations mentioned above while simultaneously highlighting the fact that management appreciates the needs of the average visitor.?
Embracing the digital edge and the Internet of Things
We’re living in an increasingly digital community. Therefore, it stands to reason that a portion of revenue management needs to revolve around adopting the latest services. A handful of examples include (but are certainly not limited to):
Consider the impact of the Internet of Things (IoT) in daily life and then think about how it also pertains to hospitality. Customers are now becoming accustomed to digital amenities such as location-based recommendations, hyper-personalized rooms, digital key fobs, predictive maintenance, and scannable QR codes that offer discounts.
Promoting and selling ancillary products and services
One mistake that can often be made by newer hotels is the belief that their main objective is simply to offer rooms to their clients. While this may represent the core of the organization, we need to remember that effective revenue management should always seek to rise a property head and shoulders above the competition. This is why other on-site amenities should be promoted with equal enthusiasm.
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The main takeaway here is that revenue management should also focus on any other amenities that may be present. Guests may be provided with the ability to purchase on-site items such as towels, soap, and bathrobes. A hotel could choose to implement a promotional campaign for a very popular branded restaurant. Some properties may even be able to partner with nearby third-party companies (such as tourist agencies) in order to offer guests the ability to visit nearby locations.
Sponsoring events and attractions
The hospitality and entertainment sectors are closely intertwined. This is why it makes perfect sense to offer guests additional options during their stay. One well-known example is to provide clients with travel discounts when using public transportation.
Still, there are other strategies directly related to on-site revenue management. Hotels equipped with meeting halls can rent out these locations in order to hold business seminars and conferences. Not only can these and other actions represent a welcome source of additional income, but they are also all excellent ways to increase loyalty and overall brand awareness.
Proactively analysing important hotel metrics
Finally, we should mention the more technical side of revenue management. After all, managers and stakeholders need to be able to appreciate how their property is performing on a regular basis. It's always much better to ask "how are we doing" in contrast to "how did we do?". This is why the metrics listed below should always be taken seriously:
As some of these variables can be confusing, a growing number of properties are choosing to outsource such services to third-party revenue management software solutions.??
Conclusion
Revenue management is not something to be taken lightly to achieve long-term success due to hoteliers handling historical and current data. It also should be in line with dynamic strategies, the needs of your hotel and customers.
It goes without saying, of course, that artificial intelligence and automated processes play an important role in this sector. These systems have helped to simplify and automate all hotel operations, creating more memorable experiences as well as better profits for business.
You know how highly competitive our industry is. It’s essential to make any revenue management improvements sooner rather than later in order to remain one step ahead of the game.
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