Improve Your Revenue Management to Boost Hotel Performance
The professionalization of Revenue Management and the influence that the market has on it is a pulse of forces that leads to a natural evolution based on the continuous improvement and excellence in hotel competitiveness.
Implementing improvements on needs, trends or consumption preferences favors development of a positive impact on the traveler and on the profitability generated by the hotel establishment.
The ability of the revenue to influence the market will depend on small details given the competitiveness and exposure to parameterized algorithms. Having the ability to play our cards in a very focused way in the final objective will allow us to propose measures according to each situation, measures that are characterized by an effective execution, but always from a strategic point of view.
In order to propose a suitable revenue management strategy for our accommodation, we thought it would be interesting to determine some of the actions and factors that are most frequently taken into account, at the market level, to improve the performance of your hotel’s revenue management actions:
Prices based on loyalty. The objective of the price-based loyalty programs are not based on loyalty to a customer through low prices and short-term bookings. On the contrary, distribution consists of attracting and capturing the traveler with a product that connects with their needs through an attractive value proposition and at an adequate price. The aim is to identify the sensitivity of the traveler to the price as quoted and determine the objective of distributing at a market price with a product that provides greater added value. In this way we obtain the complete reservation and there are no in-between costs of any kind.
Impact analysis of alternative accommodations. It is important to analyze which accommodations of alternative types to the hotel product/service offered are competing directly at the level of product and price. As an example, according to the platformAirDNA , Airbnb revenues are expected to grow from 7 billion dollars in 2014 to 83 billion in 2020. Therefore, it is important that we are aware of how the market situation can affect the accommodations offered and how this, in turn, requires a technification or an improvement of product and an increase in margins on a more complete and professionalized value proposition.
Technological advances in revenue management. It can be said that it is vital for hotels to get onto the “wave of technology” in the handling of revenue management. In this way, it will be simpler than ever to visualize the sales cycle of the hotel and optimize the costs associated with the distribution. It is already possible to implement prediction algorithms or price update tools in real time as related to our hotel. To take advantage of technology as a competitive advantage, the hotels must incorporate the possibilities that the RMS (Revenue Management System) offer and implement them to enhance departments such as commercial/sales, marketing and, above all, revenue.
Opportunity for improvement in the generation of auxiliary income. According to a study conducted by the company EyeforTravel, the ancillary income for hotel bookings have increased in the last year from $80 billion to $140 billion. From this we can understand the importance of analyzing the traveler’s uptake, not as a process that ends in the reservation, but as the possibility of opening a wide range of opportunities linked to profitability and that can be obtained from the traveler at the hotel. In this way, a clear opportunity arises in the collection of information about the traveler and an approach to him or her with products that really connect with their needs.
Customization to generate direct bookings. The phenomenon of personalization plays a decisive role, not only in the face of exhaustively compiling the traveler’s information, but also because of the great interest generated by the prediction of customers with similar characteristics. Once that data is obtained in a natural way, we will have the chance to incorporate real intelligence into the decisions we make about the product we are going to distribute. Personalization offers significant advantages such as being able to offer a differentiated product outside of the standardization forced by the mass distribution OTAs to which we are accustomed to use.
On these principles we must be aware that the hotel will have to be consistent in the processes in which it is immersed. Market analysis, product professionalization and distribution optimization will be basic pillars on which to build improvements in the hotel’s revenue strategy.