Top insight of 2015 originally published on August 24, 2015…
A common problem often facing hoteliers is how to increase revenue per available room, so let me share some tried and tested solutions to this age old problem.
Although considered second nature by most modern revenue leaders, the adoption of length of stay (LOS) restrictions is the still the most effective way to increase revenue per room. To make a length of stay strategy even more effective, try implementing it through rate levels or market segmentation. However, to implement this strategy successfully requires the hotel to understand its booking patterns correctly.
Using one of the many hotel industry benchmarking tools, understand your current position within the marketplace. Use this data to identify whether there are opportunities, either in volume or through rate changes.
Hotels which tend to offer a variety of different room types can often benefit from reviewing the additional supplements for them which pose superior price points. By doing this, revenue can be increased with little or no impact on the volume of paid upgrades. In other cases, it can actually narrow the price difference between room types, increasing the volume to a higher level. By measuring the RevPAR alongside the room type, the hotel will be able to measure the success of these supplement changes.
Reviewing a room type and its attributes, for example the view, a balcony or a Jacuzzi, can allow a hotel to introduce new room type levels within a current room type category, and as a result charge a supplement.
By enhancing the offering in which a room includes, for example, access to the executive lounge or a solarium, a hotel can increase the perceived value of the rooms. As a result this can give a hotel a greater opportunity to increase the rates across various market segments.
About the author
Jesper Johansen is the Revenue Director at Michel’s & Taylor. Set up by Sir David Michels and Hugh Taylor, Michels & Taylor currently oversees, manages or advises over 100 hotels, from single assets to portfolios, from unencumbered to internationally branded. In addition to overseeing management teams on behalf of owners, Michels & Taylor also operates a pan-European consultancy operation and full service management company.
Jesper previously worked with InterContinental Hotels Group for over 8 years. In this time, he held various key commercial positions, which included working within all the main brands in this organisation. Most recently he led the commercial strategy for the opening of the InterContinental London Westminster & revenue managing the world’s largest Holiday Inn, Holiday Inn Kensington Forum. During this time he also worked on a 3 months project of assessing the revenue management function within IHG in Japan, resulting in recommendations for installations of tools & processes to improve commercial performance. Prior to this he worked in the re-introduction of the InterContinental Berlin into the IHG family & spent 2 years working in revenue management for IHGs properties in Heathrow. Before joining IHG he worked in Singapore in a commercial role in a top-end luxury hotel.