The COVID-19 pandemic has brought a tremendous amount of uncertainty to the travel industry, including the revenue performance discipline, with many accommodations resting their success – and in some cases survival – in their revenue managers’ ability to effectively anticipate market trends. While this is a challenge unlike any other, it presents the opportunity for revenue managers to demonstrate the value you provide to broader travel industry.
With 2021 underway, many questions remain unclear, such as when travel restrictions will ease, when demand will return, and how to effectively price inventory when traditional revenue management approaches are no longer reliable. However, the more informed you are, the more you can make confident decisions. Without the right resources and access to data, forecasting revenue and predicting peak travel demand is difficult to pinpoint. One proven solution to better evaluate market conditions and make data driven decisions is through revenue performance technology, something 85 percent of lodging properties still do not use.
Having a revenue performance solution in place allows accommodations operators to make more informed decisions and ultimately drive true revenue growth. There are many solutions available in the market that have helped drive clarity and data-driven decision making.
In tandem with revenue performance technology, post-COVID-19 recovery will depend on operators’ abilities to identify and adapt to new trends. As you continue to evolve your revenue performance strategy this year, here are a few key recommendations to consider:
- Think forward, not backward: Historical data has become less reliable when forecasting future trends or patterns in the current travel environment. It is now more important for accommodations operators to utilize forward looking demand data as a guide to better understand where the market is heading and how to take the right pricing actions.
- Re-evaluate the competition and traveler motivation: With traveler shopping behaviors and motivations shifting, properties are doing more to inspire customer confidence and offer flexibility. And with more competition for demand, your competitive set is likely providing more assurances to customers. It is important to regularly compare your rates and the flexibility of your policies against similar competitor offerings.
- Explore dynamic pricing tactics: Dynamic prices, even in times of low demand, can help you capture bookings and generate necessary revenue for rebound. Current low demand conditions have made it difficult to sell higher priced inventory, so consider new pricing categories for all your room and accommodation types and assess how traveler demand responds from there. Also, consider providing better deals for increased length of stays to help control turnover cost.
- Collaborate with your network: Look to your local tourism authority for access to additional data across your market. This data can help identify your capture rate by comparing your conversion rate against the market average. Tourism organizations and local businesses may also be interested in collaborating on marketing opportunities and deals to promote your property and drive demand.
- Experiment with new approaches: COVID-19 has eliminated many of the levers and incomes revenue managers can normally test. Though most of these options are no longer available, don’t be afraid to test out new pricing approaches, especially if your old pricing models are ineffective. With travelers becoming more price sensitive, look to add more value to your products to help protect your ADR (average daily rate).
One example of successfully targeting long-term demand during COVID-19 comes from Expedia Group partner Janet Chen, General Manager of the Beimen WOW Poshtel in Taipei. To make early booking even more appealing to travelers, Janet created several promotions that gave discounts based on how far in advance travelers booked their stay. After loading long-term inventory, Janet saw a 150% increase in net room nights and a 392% increase in revenue. By setting up a long-term booking strategy, Janet is confident that she can capture bookings from travelers eager to explore the world again, when it is safe.
Optimizing revenue performance is critical to ensuring the longevity of your property. With the right solutions and tactics, revenue managers can help mitigate loss, drive demand and position their properties for success post-crisis.
About the guest author
Vivek Bhogaraju is the GM, Revenue Performance Solutions, Lodging & VR at Expedia Group. To learn more on building a successful revenue performance strategy, visit the Life at Expedia Group blog and access a series of online instructional videos to help you succeed.
In 2020 Expedia Group continued to evolve its revenue performance technology, creating more value for partners by implementing new features on Rev+. Powered by Expedia Group’s proprietary search data from all Expedia Group sites, new Market Recovery Insights help partners understand how travelers are searching for their markets and how their respective markets are recovering from the impact of COVID-19. Leveraging purpose-built data science models, accommodations partners can also view current market occupancy metrics to better understand how their market is performing on a daily basis on future dates.
Additionally, Expedia Group expanded access to its revenue performance insights through a new application program interface (API). Rev+ Insights API externalizes the insights from Rev+ to connectivity provider platforms like property management systems and central reservations systems, creating operational efficiencies and improving decision-making for accommodations partners that use these platforms to manage their day-to-day operations.