Revenue management helps hoteliers achieve the highest profits by identifying the most relevant market segments and offering them the right products and services at the ideal time.
This means that as a revenue manager, you face the responsibility of optimizing and maximizing your hotel’s revenue, a job that sounds much simpler than it is and can make a massive difference in a property’s top line.
To help you tackle some of today’s most common issues facing revenue professionals, we asked revenue managers which challenges make them lose sleep and how to address them.
Which revenue management tools do I really need?
To handle the tactical side of revenue management, start with data collection and analysis so you can decide on daily pricing, opening and closing channels, overbooking, special deals and discounts or rate fences.
As you probably know, making situational decisions about all this every day is tedious and time-consuming and it impacts your property’s performance on a daily basis.
Using a revenue management system (RMS) can help you do this considerably faster and better since it automates and optimizes your pricing. Now, instead of doing manual research, you can rely on the system to handle the complex rate calculations while you spend more time on strategies.
“When speaking with hoteliers, we often hear that revenue managers feel they spend too much time on tactics and daily operations like pricing. Setting rates automatically by using an RMS makes them much more efficient, optimizes revenue and frees them up to focus on their strategy and long-term goals,” Atomize CEO Alexander Edström says about the advantages of an RMS.
But with all the tools on the market, it can be difficult to pick one. Remember that more technology is not necessarily the answer. Rather, you need the right amount and type of tech solution for your property.
Here are some questions to ask yourself when you’re researching an RMS:
- What are the costs and the ROI?
- How reliable are the price recommendations it provides?
- How often does it update its data sources?
- How much time will it help you save?
- Will it help you stay ahead of your competition?
How can I make sure my data is clean?
Now that you have your RMS and other tech tools lined up, it’s time for the next crucial step. To ensure your system provides you with reliable data, you must set up your rate codes, source markets, market segments, nationality codes and other important information correctly.
Getting this wrong will lead to your output data being inaccurate and you will not be able to make the data-driven decisions you need to stay ahead in your market.
To get this right from the start and keep your data clean, here are some steps to follow:
- Properly train all staff who use your PMS, RMS and other systems
- Regularly review and clean your systems (e.g. merge profiles, etc.)
- Remove outdated discount and promotion codes
- Update custom group codes
Following these simple steps can have a great impact on the quality of your data and the decisions you base on it and it can decide whether you stay ahead of your competition or not.
Which are the best strategies for my hotel and my market?
Especially in fast-paced, competitive markets, you need a dynamic revenue management strategy to be successful.
That’s why revenue managers must have a firm understanding of their market, guest segmentation, distribution landscape and how to make data-driven decisions.
To stay in the game, follow industry experts and current trends, go to conferences and share ideas with your peers. Also, see what is working in your market by keeping a close eye on your competition and overall developments. Now, this doesn’t mean you should copy them, but rather get inspired to adapt and test new strategies at your hotel.
“I only see opportunities in revenue management. One of the biggest opportunities is the knowledge gap since the level of understanding and implementation of revenue management is very different from hotel to hotel. With the right training and education, revenue management has the potential to gain importance in the hotel industry because of the immense value it brings hoteliers,” says Thibault Catala, founder of Catala Consulting.
How can I encourage trust in my data and strategies among my colleagues?
Having great tools and strategies is only the first step. Now your team and the hotel’s management to be behind you. Since revenue management and all the data points you work with can feel overwhelming for some colleagues, you need to build trust through transparency from the start.
Without that, you will often find yourself in conversations where you have to justify your decisions and defend every decision you make. To save yourself and your team this trouble, only work with systems whose data you trust completely and present your strategy and the thought process behind it as clearly as possible.
If you’re working with an easily accessible cloud-based RMS, for example, you could even do a quick demonstration for your team, so they see how you collect information and use it to make your decisions.
In short, the more transparent you are from the get-go, the better the dialogue will be, and everyone will be on the same page.
How can I maintain my property’s market positioning?
Since positioning and pricing are key in daily operation, you may be concerned about staying in line with a frequently changing market. Constantly checking the competition to see when they update their rates so you can re-align is very time-consuming.
An automated RMS is the best way to tackle this challenge since it offers live optimized rate suggestions and ensures that you’re always positioned the way you want to be.
“We let our RMS recommend the rates per room type several times per day and manually review some suggestions. This saves us a lot of time and since it learns quickly, we need to do less and less manual price modifications now,” says Olivia Byrne, Company Director at Eccleston Square Hotel.
What is the best way to handle group booking requests?
Quoting group rates is challenging since you want to both offer a good rate for the group itself and have to price your remaining rooms correctly while waiting to hear from the group.
Since getting this right can have a big impact on your occupancy, revenue and reputation, it’s important to understand that quoting group rates is not the same as setting public prices.
To better approach group requests, go through the questions below:
- How many guests and room nights are requested?
- Will guests use other departments (e.g. F&B, spa, MICE…)?
- Which dates are planned?
- Which room types are needed?
That’s not it, of course. Now it’s time for a displacement analysis and for you to determine if it’s better to take the group or sell your rooms on the open market, which can feel like quite a gamble.
An automated RMS which uses historical hotel data and market information to create optimized rate recommendations both for groups and your remaining rooms can speed up the process and help you make the best choice for your hotel.
It will also give you an edge over your competition since you’ll likely be the first to submit a proposal. Considering that, according to a recent Skift report, less than 20% of hotels use an RMS, your advantage is maximized.
How can I leverage upselling and ancillary sales?
Pushing ancillary sales via upselling and cross-selling can increase a hotel’s revenue from existing guests. Upselling to a higher category can optimize a hotel’s profitability when working with groups.
For example, you could attempt to upsell transient standard room bookings, so the lower category is available for the group. That way you generate extra revenue and avoid having to give free upgrades in case your standard rooms are all full.
But even if you don’t work with big groups, upselling and cross-selling are still worth it. Offering guests extra products and services positively impact your top line and boost the guest’s experience at your hotel.
As with revenue management, a tech-driven approach is the way to go to get the best results in terms of guest experience, conversion and efficiency.
To read the full article, visit https://www.atomize.com/article-for-revenue-managers