Brand positioning drives bookings. When it’s well-integrated with revenue management, it boosts hotel profitability. The brand reputation takes up valuable mental space within the customer’s mind.
Some brands stand for luxury, while others stand for a clean bed on a budget. Even small, independent hotels can have a strong brand reputation. Such hotels will be most profitable when they integrate revenue management principles with traditional marketing activities such as managing their brand reputation.
The Franco Grasso Revenue Team (FGRT) has worked with over 2,500 small and medium hotels globally to grow their revenue and profitability. The strategy’s underpinning is incorporating revenue management principles in all revenue-generating activities.
Part of this approach is growing the hotel’s brand reputation online so customers can find the hotel and want to book.
5 Elements of Revenue Management and Brand Reputation
Hotels are like a jigsaw puzzle. With multiple interlocking departments, everything needs to run smoothly to make a whole. This is especially visible when it comes to revenue management and brand reputation.
Instead of having separate goals tracking different metrics, it makes sense to create shared goals. One shared metric could be Total Revenue Per Available Room (TRevPAR). Each department can track activities to this one to better understand the hotel’s profitability.
It starts with a rock-solid online presence.
1. The Online Presence Makes the First Impression
Prospective customers research hotels online. They expect welcoming, up-to-date photographs and positive reviews. Excellent ratings on OTAs like Booking or reviews portal like TripAdvisor, paired with revenue management techniques, can allow you to sell rooms three to five times higher than before.
Everything contributes to a positive brand reputation. Quality photographs, positive and current reviews, excellent ratings, and even breakfast can boost reputation and revenue.
The American Association of Marketing reports that 81% of people rely on reviews and pay attention to OTA ratings.
FGRT numbers show that 3-star hotels with a 9+ score on Booking can sell rooms at $1000 or more during high-demand periods like New Year’s Eve. Without revenue management, similar hotels were lucky to have reached $200.00.
See how this hotel doubled revenue and cracked TripAdvisor’s Top Ten.
2. Respond to Guest Reviews
Hotels that respond quickly to guest reviews build a positive brand reputation. Quick, polite responses demonstrate that the staff cares and pays attention. It can also help attract more reviews.
Brands that ignore their reviews do so at their peril. Competitors will rise online and attract more customers.
Beyond the online visibility advantage of responding to reviews, customer insights are golden. You can see what they like and what they complain about. Here’s how to please your guests, gain a positive review, and maintain your revenue management numbers.
3. Customer Segments Matter
Hotels cater to distinct customer categories. At any time, the hotel might host a group of business travelers, a friend group, or families on summer holidays.
Each category has different travel needs and motivations. While historical data can guide pricing forecasts and rate adjustments, revenue managers can refine those adjustments with accurate customer segment data.
Whether aligning corporate rates with the published OTA rate or identifying ways to improve family rooms with added incentives (and a higher rate), there are multiple ways revenue management principles paired with customer segmentation can drive greater profits while pleasing customers.
Customer data guides promotions, upsells, and ancillary revenue for hotels anywhere.
4. Reduce Spillage
Of course, revenue managers monitor channel managers and performance. However, spillage is a common (and expensive) mistake.
Spillage occurs when hoteliers sell too many rooms too early for low rates. When demand rises, the hotel is unable to recoup the below-market rates. Spillage happens for many reasons, but sometimes, it occurs because the rooms are priced too low. Or, perhaps the corporate contracts need revisiting. There’s no reason to sell group rates lower than your profit margin allows.
Enhanced communication and data sharing between revenue-generating departments help reduce spillage.
5. Reduce Spoilage
Spoilage is the opposite of spillage. Hotel inventory has a “sell-by” date, and if the pricing and inventory release aren’t well-managed, the hotel will end up with too many empty rooms.
Sometimes, spoilage is a pricing concern. The initial rate was higher than people were willing to pay. Revenue managers can adjust pricing, but sometimes, it’s too late to make much of a difference. In other cases, the cancellation policy might need revisiting or the dynamic rates changed rapidly.
Reducing both spillage and spoilage requires understanding customer segments, competition, area events, and channel and distribution. Understanding the market environment helps align pricing with brand reputation.
There are many ways brand reputation affects revenue management and vice versa. It starts with an excellent online presence and grows to include ancillary revenue, as well as aligning inventory and pricing with expectations.
Hoteliers who undertake the work to integrate these departments enjoy higher revenues. Download this Guide to Revenue Management and improve hotel profitability starting today.
