Insights

How to adapt to a new era of revenue management in 2021

revenue management future demand dataNow that vaccine distribution has finally begun, the first signs of increased travel demand in Europe and North America are cropping up for May 2021 and beyond.

While this is good news, hoteliers are not out of the hot water yet. The coming months will remain challenging. A data-driven approach supported by innovative tech tools and top-of-funnel demand information remains the best way to navigate these times and prepare for demand recovery. 

Read on for expert insights on how to implement this approach at your hotel.

How to adjust to a changing demand landscape

Due to travel restrictions and lockdowns slashing international travel, many hotels had to adjust to a primarily domestic market to survive the hard times and maintain cash flow.

Today, the focus must shift towards a long-term approach that will get hotels through these slow months and make the most of recovery from the start. 

Here are four ways you can start doing that today:

  1. Examine source market data: Know where your future guests are from and target these markets with relevant offers. Use advanced market intelligence software to get the needed insights.
  2. Evaluate your business segments: How has your business mix changed since spring 2020? What are the recent trends? Finally, consider how things will likely develop in the coming months and look for promising new opportunities. This will boost your business’ sustainability in the long run and help you weather future crises.
  3. Focus on your domestic market for now: International travel won’t go back to pre-COVID-19 levels for a while yet. In the meantime, focus on the domestic business and leisure market with targeted offers.
  4. Optimize distribution: Evaluate your distribution strategy to find chances for improvement. Find new sales channels (e.g. niche OTAs), let go of expensive, underperforming partners, and work on getting more direct bookings.

Use future market data for a competitive advantage

Using the most recent market data to optimize your room rates is a must in markets where every booking counts. But how about taking things to the next level and looking into the future? 

Today’s most advanced hotel tech tools can capture live hotel booking intent. They also use forward-looking data from OTAs, GDSs, flight searches, alternative lodging, and meta-review sites to find new revenue opportunities for your hotel. 

Using an RMS with access to such sophisticated forward-looking data will allow you to make the best data-driven pricing decisions for your property. Many players in the revenue optimization field are looking at how they can ingest market demand data to help capture future travel and booking demand with the optimal rates and offers.

Getting the most out of recovery with real-time pricing optimization

Making the most of even the slightest demand changes is crucial in these uncertain times. By using forward-looking data to see the first signs of traveler intent, you can take advantage of demand shifts your competition hasn’t even discovered. Now, you can always be the first to react to high-compression days, market anomalies and demand shifts. Knowing about new opportunities early ensures that you always stay ahead of the game. That way you have more chances to maximize your revenue through real-time rate optimization.

The role of future demand data in forecasting

“Historical reference points don’t offer the guidance they once did. Hotel forecasting is extremely challenging in these times, however, looking into the future and planning for it has never been more important. Revenue managers must focus more on current and forward-looking data to predict demand and adjust pricing at the right time,” says Alexander Edström.

This is easier said than done. Since our times are unpredictable, having forecasts for a few different scenarios can help you be ready for whatever happens. However, this takes valuable time and staff hours. Especially with many hotels running on skeleton staff, that adds to the challenge. 

A powerful business intelligence solution helps you create forecasts based on hard data like real-time demand information, search volume, competitor performance, and several other variables. Gone are the days of painstaking manual work and relying purely on historical and on-the-books data.

Say no to rate dumping

While it may be tempting to drop rates to drive demand, use this strategy with extreme caution. While business at lower rates may help you cover costs right now, you may find it challenging to increase your prices again later. 

Instead of simply cutting rates, do a comprehensive market analysis first. What are your competitors doing? Which value-adds could you provide instead of lowering prices? Create and test packages and promotions to attract guests and see which ones do well for your property. 

This is no one-size-fits-all situation, so do some testing to discover what works for your market and your audience. Finally, use an automated RMS to get optimized rate suggestions based on real-time demand data, so you always make the most of even the slightest demand shift. 

Shifting perspectives: introducing total revenue management

Given all the recent changes, this is the perfect time to reevaluate your approach to revenue management. Shift to total revenue management now to be ready for a competitive recovery phase. 

Start this process by embracing technology wherever you can. The idea here is not to replace your staff with robots but to support them by automating time-consuming manual tasks. This gives them more time to strategize and handle work that can’t be automated. When you pick new tech tools, try to go for ones that integrate. This will make it easier to set them up and use them to their fullest extent. 

Finally, get all departments on the revenue management train. Use upselling and cross-selling to promote services in supporting departments like F&B, the spa or recreation. You can do this manually or scale your efforts with an upselling app. This will help you boost revenue across your property and lift your topline. 

Of course, implementing all these points can take quite some time and feel overwhelming. But the sooner you start, the better. Begin with an action plan and create a realistic timeline. Then get your available team members on board and take your first steps towards generating more revenue for your property and getting ready for the upcoming recovery phase. 

Tags: , , , , , , , ,
About the Author:
Join over 60,000 industry leaders.

Never miss a trend.

Related Articles:

Related Articles

Lessons learned in 2020 spark new digitalization trends for frontline workers in 2021
Top seven features for a guest messaging platform
Menu