Best Hotel Revenue Management Strategies to Apply
There are several strategies that will help you increase your revenue.
But, I am presenting you with the 13 solid hotel revenue management strategies that you can
apply right away.
Let’s go through all of these in-depth.
You need to have the right DISTRIBUTION of the rooms to sell the right room at the right prices. For that reason, you have to give a fresh thought to your OTA connections:
Let me give you an example to have a better idea:
If you’re a B&B in Europe, then you should connect to regional OTAs like eDreams Odigeo and global
OTAs like Expedia, Booking.com. Since you are a BnB, you also need to consider OTAs such as Airbnb
and bedandbreakfast.com that help you target your potential guests.
Moreover, you should not limit yourself to 2-3 OTAs. More the OTA connections, the wider is the exposure. And more exposure means more bookings and more revenue.
Besides selecting the right OTAs, it is equally important to select the right distribution method
as well.
Now, many of you still prefer the allocated inventory distribution method in which you allocate a
fixed inventory to a particular channel. However, you may lose potential booking opportunities in
this scenario.
Instead, you should apply uniform inventory distribution method and list all your inventories on
all channels. As a result, you get bookings
from all the possible channels and your inventory is utilized to the fullest.
Segmentation is a key element of hotel revenue management. Targeting all types of customers for your
hotel is a waste of time and money. Therefore, segmenting and pitching the right set of guests is
important.
One of the best ways to segment your audience is by their reason for travel. It could be a family
holiday, wedding, tourist event, adventure, relaxation, business, etc.
Not only that, identifying your guests and evaluating their habits; for example, the kind of rooms,
hotel facilities and location they’re looking for. Of course, there are several other factors which
will help you optimize your room rates and showcase your services accordingly.
Besides, you can analyze and drill down the segment that is giving you more business. In this way,
you can strategize to make more revenue from them.
Hence, knowing your target audience is important to plan and execute your hotel’s revenue management
strategies.
I’d say competition analysis is one of the fundamental hotel revenue management strategies. You may ask how?
Basically, with competition analysis, you can understand yours and your competitors’ strengths and weaknesses. You can know your position in the market and eventually work to stand out.
But first things first, not every hotel next door is your competitor. You have to define your competition set (AKA compset). There are certain parameters that you should consider before considering any property as your competitors. Some of them are:
Once the RIGHT compset is defined, you can analyze their rates via tools like Rate Shopper. You can
check and compare their current pricing strategy and update your rates accordingly.
This will not only help you in strategizing and managing revenue, but it’ll also provide you with
proper forecasting. As a result, you can attract the right kind of guests at the right time and
maintain the revenue you earn.
As the facts stand in 2019,
1/3rd of the total bookings are made through mobile. And this percentage is going to increase in the upcoming years.
Having said that, you have to focus on your hotel’s website. And get one made if you don’t have a hotel website.
Ensure the following characteristics of your website:
If your website doesn’t have these parameters, there are chances of losing significant bookings and
revenue. So having a full-fledged hotel website will definitely pose as an assured revenue management
strategy for hotels every year.
Once you have your hotel website made, ensure that you measure its performance from time to time.
Needless to say, OTAs are a great platform to advertise your hotel and services. Though, a
significant chunk of your revenue is deducted as a part of their commissions
That is why, you can get a booking engine that allows your guests to book with you directly from
your website. Certainly, that means you get commission-free bookings. So, you can take the following
actions to increase direct bookings:
…and there are many other ways to increase your direct bookings. You can find out more from here.
Yield management is an inseparable part of revenue management for hotels. There is a common
misconception that revenue management is the same as yield management.
But, that’s not the case. Yield management for hotels encompasses the revenue generated through the
room charges or occupancy. Whereas revenue management involves a whole lot more than just occupancy.
Yield management is all about demand and supply. You have to set different rates for different
occupancy levels.
On top of this, it is considered as the most important tool to balance the revenue that you earn,
especially when the demand is less. Hence, yield management proves to be the most practical way to
increase your revenue.
Here’s how you can practice yield management strategies to get more revenue.
Analyzing your past and present data is important as it helps you in channelizing your marketing
efforts. How to figure out which strategy is working for you? Although, extracting the right data
and actually going through them in detail is quite hectic.
Here’s when demand forecasting comes in the picture. It is the prediction of future business
performance. In which, data is of utmost importance. This is how you can perform demand forecasting:
In that case, a comprehensive hotel management system helps you get detailed reports and business
insights that include the revenue you earned, your best selling factors, your ADR, and more. These
reports will help you make the precise decisions in your hotel revenue strategy.
In the end, this data analysis will help you come up with better revenue management techniques
to implement.
Pricing strategies play an important role in hotel revenue management. There are different pricing strategies, some of them are as mentioned:
Segmented rates:
In this strategy, segment your customers and offer different rates to each customer segment.
For example:
Rates as per the length of stay (LOS):
Adjust your prices on the basis of your guests’ length of stay.
For example: Mandate the length of your guest’s stay by offering them good prices.
Offer packages:
A package is a room rate clustered together with other products and services
For example: Free meal package
If your guests have selected a European plan, then offer a free meal for the first day as a package.
You may have not considered it important enough, but partnering with local businesses can actually pose as a promising revenue management strategy for hotels.
Following rooms and amenities, activities make up the next largest revenue source for hotels.
Local partnerships can expand your revenue streams and provide authentic experiences for your
guests. And don’t forget – those businesses around your property will also be open for such a
partnership.
If you are located in a place with scenic destinations, offer your guests a city-tour. If you are
nearby an amusement park then you can tie up with them, and offer tickets at some discounted rates
to your guests.
Likewise, you can explore many such additional avenues of extra revenue.
Now take a look, technology is all around you. It’s in the payments you make (digital you know), the
shopping you do, the services you consume, basically everywhere. The current and the future generation
is tilting towards innovative technology. You know why? Simple – the ease of use.
Hence, providing quick service through the latest technology is key to increase bookings and hotel
revenue. However, the question is: which technology solution you will use to streamline your operations
and increase productivity?
I’d say a complete suite of seamlessly integrated solutions can be a shot to your arm. With automated
solutions, you can provide quick and better services. Besides that, these days technology such as a
hotel chatbot is being used to assist with basic operations and information and improve guests’
experience.
Other than that, hotels can perform the quick operation at their voice command with a digital assistant,
thus reducing their time and effort in getting a task done.
Moreover, these days, a few hotels have started practicing the Internet of Things (IoT). For example,
there are IoT solutions that adjust room temperature depending on room occupancy, energy management
systems, in-room concierge and what not.
Here’s how the next-gen technology like IoT can increase your hotel revenue and expand your business.
The first thing guests check before visiting a hotel is its reviews. With the increasing number of
online platforms, guests often communicate and interact online to share the experience they had.
That’s why hotels these days need to focus on their hotel reviews and reputation. This also forms as
an essential part of your hotel revenue management strategies.
Managing your online reviews is a crucial part of a hotel’s revenue management.
You see,
Customer ratings affect hotel revenue.
How? Well, today people can search and find all the travel and hotel information provided by the
different sites. Let’s take TripAdvisor for example. TripAdvisor provides the information and reviews
written by the guests about the particular hotel and its services.
And this ultimately influences the guest’s final decision to book a hotel. This way, hotel reviews
have a greater impact on the current and future guests that you may welcome at your hotel.
Thus, it is necessary for you to respond to all the reviews (especially, the negative ones). You
can utilize our free and ready-to-use review response templates to regulate your review management.
Guests often need to travel to the same location again. Mostly these kinds of guests are business
travelers who prefer to utilize services from trusted hotel brands. Hotels need to face this fact
as soon as possible and make good use of it by running some good loyalty programs.
Now, don’t you think guests will prefer hotels that offer discounts or rewards to value their
frequent guests? Well, hotel loyalty programs are the best way to do that and increase repeat
guests as well as direct guests. This makes them an undeniable aspect of your hotel revenue management
strategies.
The sad thing is – only a few hotels consider loyalty programs as an important part of their marketing
strategy. But the truth is loyalty programs can be a key factor in the guests’ decision-making process.
Especially, those who frequently visit your hotel. Employing a stable hotel loyalty program software can
strengthen a hotel’s reward programs.