Hotel revenue management may seem like another type of management from a host of management types in the business landscape, but revenue management is at the heart of the entire hospitality industry, where a revenue manager must orchestrate reservations and room price that way. that maximizes revenue.
The main job of a revenue manager (traditionally) around the clock was to monitor fluctuating rates and update their own inventory rate according to the market equation to sell inventory at the highest possible rates in the shortest possible time and at the same time maintain a high occupancy. , RevPAR and ADR. However, as times have changed and technology has advanced in almost every industry, there are countless hotel revenue management tools, such as Rate Shopper, Channel Manager, Rate Optimizer, Online Reputation Manager, which have halved the work of revenue managers. and doubled the efficiency.
Also, with the advancement of technology, some pros and cons of revenue managers have emerged that can guide you in shaping your revenue generation strategy. Let’s analyze some of them here:
• Look at the bigger picture – A smart approach for a successful Revenue Managers should be to stop focusing only on the revenue generated by the sale of the room, and start focusing on the revenue generated by a particular guest, that is, pay more attention to the life cycle of the guest or the life cycle of the client, as some may want to call it. As part of managing the guest experience, a hotel / revenue manager must keep track of their existing guests, including their options and preferences, and present them with various services that they might purchase during their next stay. To explain it in more detail, depending on the person or the demographic profile of your guest, you can suggest other services of your hotel such as spa, club, gym, disco, etc. This practice creates new revenue streams and increases overall revenue even when low-priced inventory has been purchased.
• Healthy mixing and inventory distribution – In the midst of searching for maximum bookings, a revenue manager must be aware of the art of creating a fine balance to list their rooms for sale on online and offline channels. Neither depleting all inventory through OTAs nor selling all of them outright would be a good approach. The tools come to rescue a requirement in this. A competent online channel distribution manager can give you a lot of support here. The revenue manager must control the spending patterns of direct and OTA customers so that he can optimize sales with the right mix of OTA bookings and direct bookings to achieve revenue goals. Modern channel managers allow revenue managers the flexibility to turn on and off any OTA channel that they feel is not delivering the desired results or is proving to be very expensive.
• Competition monitoring – For better income generation, it is always suggested to be attentive to competitors in the market. A good revenue manager should look at the prices, promotions, strategies and processes of his / her competitors that he / she can also adopt for his / her hotel if necessary. In a hotel business where prices fluctuate on a daily basis, it even becomes mandatory to keep a constant eye on the daily rate of the competition. The good news is that you have tools for that; Hotel rate buyer. This tool helps you monitor daily room rates for your default set of components. It doesn’t end here, these tools help you with a host of other jobs like; an intelligence on the general market offer and average market rate for your city, including Airbnb market offer and average market rate, rate and availability reports for your property on different OTAs and meta search sites, a comparison of your OTA ranking versus your determined composition set and eyeball competition. Advanced tools even support event tracking for your city to allow pre-change in hotel room rates if necessary. Competitors can protect you against the failure of any new business practice in the industry, and if it becomes a success, the suite can be followed.
• Focus on the hotel’s brand image and online reputation – Developing strong customer loyalties can help a hotel stand out from the competition. Your hotel reviews are very important to building a strong brand image. Customer reviews and ratings have a direct correlation with customer booking preference and therefore revenue. Even the most competitive prices may not attract customers if the reviews are not positive. According to research, only price is valued more than positive reviews in online travel booking. However, many consumers expressed that they will not book a room in a hotel in the absence of positive reviews, even if the price is very low.
The industry is realizing that managing Online Reputation Management is neither a one day job nor an easy one to do. Especially with so many social media sites, check the sites to track your guests’ reviews as guests are present everywhere. Brand images are created over the years and break down in no time. A very important reason why many hotels, whether independent or hotel groups, are adopting online reputation management tools. It is also increasingly used by major hotels for restaurant reputation management.
Some of the DONORS that a revenue manager should follow when creating strategies for better revenue generation are as follows.
• Impractical offers – Exclusive offers and packages are new fads and undoubtedly a powerful technique for attracting customers to bookings. However, a revenue manager should be aware of the hotel’s potential for no-deal bookings. It has often been observed that revenue managers keep offering useless deals just to keep up with their competition, losing a portion of the hotel’s revenue.
• Overbooking – Reserving more than the available inventory for fear of cancellations can sometimes be a smart decision. However, this process needs to be optimized to a great extent, as any incorrect assumptions can lead to problems for the customer and cause serious damage to the hotel’s brand image.
• Reliability in a single / limited channel for sale – A smart revenue manager never depends on one booking channel to sell their room inventory and always maintains a profitable mix of OTA channels to get more bookings. Hesitation in accepting new approaches from revenue managers may be a reason for a hotel to lag behind in revenue generation. MRs must also monitor the performance of each of their channel partners. Set booking targets for all channels, check bookings volume and length of stay (LOS) of bookings, analyze their profitability, etc. However, at the same time, the focus is on direct bookings and walk-ins. This not only reduces the hotel’s dependency on OTAs, but also helps save large OTA commissions, thereby increasing profits.
• Neglecting social media– Social networks have become the most raw and honest platform for customers to express their opinions, share their experiences, express their complaints and even book. Ignoring the power of social media can be suicide and therefore a revenue manager must ensure proper engagement of hotel staff and management with clients on social media.
• Playing too safe – Business is about being bold and taking calculated risks. Playing too safe and practicing mundane business practices can keep your bread going, but for a business to thrive it is very important to take risks. By employing the latest strategies, taking roads less traveled, the results can be extraordinary. A revenue manager must know the art of taking calibrated risks.
Over time, many new approaches would be tried, some of them would work, and some of them might fail. In this industry dominated by competition, change is the only constant and revenue managers need to prepare for whatever kind of turmoil the industry may witness.