In our office, we like to begin each week as an opportunity for new successes. We forget about the challenges and obstacles we may have experienced the week prior, because every week is a chance to start over. Each week is a chance for our team to strive for excellence, and so far, it’s a philosophy that has served us well.
Today, it is your property’s chance to start over as well. You can revamp your revenue management strategy, simply by following these seven simple steps. Using these tips, you will see drastic increases in your bookings and RevPAR, and ensure that your property has seven days of revenue management success every single week.
Monday: Forget your comp set
For revenue managers, a particular property’s comp set is a very important metric. Revenue managers compare room rates, occupancy, inventory, etc. with the properties in their comp set in order to calculate rates and determine whether their revenue management strategies are a success (or a failure).
Customers don’t.
When they are searching for a hotel room for their upcoming vacation, they look at all of hotels in the destination within their desired price range and star rating not just the few properties that you have decided are your direct competition. By only basing your pricing on what these few properties charge (instead of considering the prices of all of the hotels in your destination), you are unable to price your rooms at the best available rate, which would help you to secure a higher number of bookings.
Tuesday: Let technology play its role
This doesn’t mean that technology should replace revenue managers. Definitely not! In our view, technology in all industries is there to help us perform our tasks better. Think about how much easier it is to communicate or do research now that we have computers and the Internet. It’s the same with revenue management systems.
Using sophisticated software can help a revenue manager do their job more effectively. A general rule is that 80% of a revenue manager’s time should be spent on tasks that directly generate income, and only 20% should be spent on admin tasks (data analysis, updating rates and inventory, etc.). Unfortunately, the reality of the industry is that most revenue managers are spending at least 50% (or more) of their time on admin work, which means that the property’s finances will suffer. Using a RMS can help revenue managers by taking those tedious tasks off their hands, leaving them free to focus on strategy, interdepartmental planning, etc. all of the tasks that actually make a property more money in the long run.
Wednesday: Think outside pricing patterns
Many revenue managers use common pricing patterns, like selling a property $199 instead of $200. Yes, consumers do tend to unconsciously prefer the $199 price but trust me when I say that you aren’t the only revenue manager using this strategy. Instead, you should set your property’s room rate a few dollars less (i.e. $196, $197, or $198). There’s nothing that consumers like more than a good deal and even though it’s only a few dollars, it will make a big difference in how many potential guests choose to book with you versus the competition. It also helps you to win the business without losing $10 (as you would if you followed the rule that your rates should always end in 0 or 9 to be more attractive to potential guests).
Wondering about Thursday through Sunday’s tips? Check back next week for four more important tips to create week- and year-long revenue management success for your property.
About REVPAR GURU
REVPAR GURU helps hotels to analyze complex data – including historical rates, the rates of competing properties in the same destination, pricing trends and environmental factors – to determine the right rate, at the right time, to secure the highest number of bookings. REVPAR GURU's system calculates room rates up to a year in advance, and continues to update the rates automatically multiple times every day as factors change, across all online channels including OTAs and direct channels.
In short, REVPAR GURU helps hotels to increase their occupancy and their revenues.
Headquartered in Miami, Florida, additional information can be found at www.revparguru.com or by calling +1.786.478.3500.
