Do you feel that a hotel that gets the maximum number of guests is profitable? If so, you’re on the wrong track.
Hotel and resort businesses become more profitable when they earn more revenue regularly. You can do the same for your hotel by setting the right revenue management strategies.
This is where you need the support of an automated revenue management solution that gives you unbeatable results.
How does revenue management work for hotels and resorts?
The revenue management system for hotels works in the following ways:
1. Collects data
RMS collects data from internal (past booking patterns, popular room types, on what days there was a high demand) and external factors (market demand, competitor pricing). When hoteliers get access to such data, they can fine-tune their pricing strategies accordingly.
2. Forecasts demand
The revenue management solution for hotels uses machine learning algorithms to analyze historical demand and predict whether future demand will increase or decrease so they can set the right prices for different rooms.
3. Manages inventory
After analyzing various factors such as historical booking patterns, demand forecasts, market conditions, etc., the software then allocates the right room to the right customer segment helping hoteliers maximize their hotel revenue.
4. Manage multiple channels
Integration of revenue management software with a channel manager helps you effectively manage the inventory availability and rates across various channels including OTAs, hotel websites, and global distribution systems.
This way, you can increase your property’s visibility by being present on all the platforms where potential guests can find you.
5. Real-time analytics
Earlier, it was time-consuming for revenue managers to spot trends, estimate forecasts, and analyze the hotel’s performance.
That’s why RMS provides hoteliers with access to real-time metrics and detailed reports so they can refine their pricing models and make data-driven decisions in the future.
Benefits of hotel revenue management solutions
1. More revenue for hotels
In this fast-paced hospitality industry, you need to maximize your hotel revenue. It is possible when you anticipate market demand, constantly monitor competitor pricing, etc.
A revenue management solution makes it easy for you to maximize the average revenue per available room by getting access to real-time market insights.
2. Saves your time
Gone are the days when revenue managers spend their entire day publishing and printing reports each day. With revenue management, analyzing information is easy as everything is available at your fingertips.
On top of that, this software solution automates everything whether it’s managing inventory, setting pricing decisions, or implementing an optimal distribution strategy that makes your hotel more profitable.
As a hotelier, you already know that the hotel industry generates a bunch of data every day, and analyzing such immense data takes leaps and bounds of time, wasting human efforts. This is where you need to make a SMART move by investing in a smart solution.
3. Serve your guests better
As revenue management software automates everything, hotel personnel can better focus on serving their guests. By relying on this solution, they can make better decisions regarding price and inventory optimization.
Say for instance – You want to maximize the hotel profits, but you aren’t sure of market demand, how competitors have priced their products and the trends going on in the market during a particular season/ month. One way to do it is by manually analyzing demand patterns and competitors’ rates, but it would take days, weeks, and months.
Alternatively, the best option is to find a company that provides hotel revenue management software. This is where you can optimize your revenue by charging the right price from the right customer leading to an increase in the hotel’s revenue.
Revenue management strategies for hotels and resorts
Every hotelier needs to create an effective revenue strategy so that they can take their hotel business to the next level. But, to generate recurring revenue, you need to craft an effective strategy that increases your profit margins and maximizes your bottom line.
1. Hotel pricing
Price is an important factor that determines whether a guest is likely to choose your hotel or not. To set the right pricing strategy, you should study the market trends, and understand your customer.
But there’s no uniform pricing strategy that every hotelier goes with. To name a few, here are different price-setting approaches.
- Dynamic pricing
Hoteliers will not keep their room rates static. Revenue management software considers supply and demand factors and sets the price according to changing market conditions.
- Open pricing
It involves experimenting with different pricing levels during different periods so you can generate more revenue.
For instance – Normally you charge $200 for a luxury suite but suppose there is an elite car show near your hotel, you would increase the prices for this suite resulting in more revenue.
2. Segmenting the market
Not all travelers are the same, similarly, you will craft individual strategies for different types of travelers. Here, you will decide your pricing strategy depending on who you are segmenting to.
For Instance– You will go with a different pricing approach for young adventurous persons and follow a different pattern for someone who is a business professional. More importantly, identify who visits your hotel because every traveler has different needs and preferences.
Thus, if you want to get extra profit, then you need to know the art of segmenting your customers based on various factors such as demographics, trip’s purpose, length of stay, traveler status, etc.
3. Price forecasting
Price forecasting is not only important for rate planning, rather you can use it for budgeting purposes. An accurate forecast is important for fine-tuning your pricing strategies.
For instance – If you observe that a particular time of the year generates more revenue for hoteliers, then you can forecast for that period in advance.
There are various factors that you will consider before forecasting such as occupancy, revenue, room rates, reservations, etc.
4. Demand forecasting
Another important revenue management strategy that hotels should consider is predicting the future demand for hotel rooms based on historical data.
Suppose you noticed that every December, your hotel gets a massive number of business bookings, then you will predict that this December, you will see similar spikes.
Thus, creating a demand calendar is a game changer for your hospitality business based on past trends, customer preferences, etc.
5. Hotel revenue analysis
Analyzing your competitor’s performance and setting it as a benchmark is important, but it’s not a metric that you should be dependent on all the time.
However, evaluating your hotel’s performance against others helps you decide where you stand and how travelers will react.
Various factors come into play when deciding on revenue analysis of your hotel against competitors such as prices, quality of service, location, etc.
By doing an overall performance analysis, you can determine how your hotel is performing, where it is lacking, and why your competitors are doing good. By seeing their results, you can experiment with those strategies and see if you can get similar results or not.
Wrapping up
Now, you understand that to make your hotel more profitable, using the above-mentioned revenue management strategies can be a game changer for your hospitality business.
Still today, we find most revenue managers are struggling with manually creating reports and making spreadsheets all the time which is why they lose their focus on doing strategic parts that are data-driven decision-making and enhancing the guest experience.
