In the modern and dynamic environment of today’s hotel industry even the most seasoned professionals can be challenged to meet all of the skills required. Hotel management transcends so many areas of expertise including technology, customer service, and finance, that it’s almost impossible to cover all bases.
Not the least of these challenges is revenue management. For hotels this can become an incredibly complex and time-consuming strategy to stay on top of.
Revenue management is essentially about predicting demand and optimising the price and availability of your rooms to meet that demand in a way that is suitable for your business as well as your guests.
Many businesses across the entire hospitality industry have dedicated revenue managers who bury their heads in data all day, every day, to analyse the market changes and their competitors. Such is the fickle nature of the market, prices can not only change from day to day, but hour to hour.
But what if you run a hotel and you’re not a revenue manager and don’t have the scope to hire one? Given how important it is to set your rates correctly, you can’t afford not to find a revenue management solution.
Here are some tips on how to price your rooms even if you’re not a revenue manager.
6 fundamental revenue management strategies
#1 Place more focus on guests than your competition
A lot of hotels will set benchmarks by finding a competitor with a similar offering and setting their prices accordingly. A better tactic is to analyse historical and future data combined with communication from guests to set a daily rate that travellers are willing to pay. This way, competitors are taking cues from you, not vice versa.
Using more guest data in general can only be a positive. With the historical knowledge of who your guests are and when they come to stay will allow you more forewarning on what your rates should be at different times of the year.
#2 Be agile with your analysis
While historical data is dependable, you can’t place all your stock in it. You need to respond to current events and trends to make sure you don’t miss an opportunity. Monitoring events and activities in your local area will let you design attractive promotions for customers. The further in advance you do this the better.
You can also look at what promotions and emails your competitors are pushing, as well as any new channels or newsletters in your destination for early warning of demand.
#3 Maintain vigilance in case of market shifts
Because prices are subject to so many variables you need to be constantly evaluating the market and deciding if you need to make changes. Unexpected spikes in demand could occur at any moment in busy destinations and you need to be responsive to this.
Last-minute bookings are also rising as more people begin to book their stay on a mobile device.
#4 Be creative and specific in your planning
Most hotels generally have a low season. For example, summer locations may experience a drop-off during winter. However, with the right strategies you can turn this weakness into a strength by boosting the bookings you receive in these periods.
Particular discounts or packages help to keep your occupancy steady and your revenue consistent, meaning you can more easily work towards a profitable business.
Your SEO keywords should also reflect seasonal changes to make sure you’re capturing people searching for your destination in off-peak times.
#5 Analyse and segment your channels
Each of your distribution channels will differ slightly (or significantly) in terms of the business they receive. Different segments may also display varying booking behaviour, the patterns of all travellers are not going to be the same. By looking at this data you can identify the different periods when certain channels are more or less popular and put your own plans in place.
#6 Invest in technology to help you
No one can adequately cover all of this on their own. Luckily the amount of tools and technology at your disposal is exploding.
Identifying and connecting to the right channels has never been easier than with channel management, revenue can be driven in a simple manner directly through your website, and a pricing intelligence tool will take care of all your analysis and rate-setting worries.
With a pricing tool you have a powerful resource at your disposal to:
- Make long-range forecasts
- Watch local competitors
- Develop customisable rules and notifications
- Analyse data reports
- Make real-time decisions
When it comes to revenue management it’s always important to remember to set your targets early, stay up-to-date on trends, and use technology for fast and accurate strategy implementation.