Revenue management has always been important for hotels. In a business selling a fixed number of rooms, being able to predict demand and optimise pricing to maximise overall revenue has historically been an important weapon in the armoury of a skilled hotelier.
But as technology and consumer behaviours evolve, revenue management is not only becoming more data-driven and complex, but also increasingly integral to a hotel’s performance – influencing everything from pricing to marketing strategy and service delivery.
Keeping pace with these changes is particularly challenging for smaller portfolios or independently-managed hotels, but doing so is vital for their future success.
Here are five top tips for hoteliers to consider.
Take it seriously
Don’t be dismissive about the importance of revenue management even if your operation is modest in size. It is every bit as vital as every room counts and pricing mistakes are felt more keenly.
Independently-managed hotels are in competition with those which have the resources, tools, expertise and data at their disposal to give them a huge competitive advantage in driving revenue and getting the mix of business right. But it is not just about the top line – being able to accurately forecast demand can be invaluable in helping the hotelier plan staffing levels which are in turn vital for ensuring your guests have a good experience. This can make the difference between a loyal guest and a positive review, or a lost guest and a negative one.
Data data data
Data is vital in the travel industry. Firstly, because guests have more information than ever before. They have instantaneous visibility of their travel options in the palm of their hand, they’re able to see the offerings of all your competitors, look at guest reviews, and compare pricing.
Secondly, OTAs and large hotel groups are highly advanced both in the volume of data they have access to, and the ability to analyse it. They know how many customers are coming, how much they are willing to pay, how they research and book their travel plans, what they are searching for online, and what’s important to them. They know when, where and how to target promotions to capture the right guests at the right time, what events are causing booking spikes, and how economic factors are influencing travel habits from different countries.
Hotels must understand how to access and effectively leverage this data to build a fluid pricing strategy that is adaptable to constantly changing market conditions, otherwise they will lose potential guests. Some of them are choosing to outsource. At Accor, for example, we have formed specialist teams to interpret masses of data pertaining to different key cities or regions. We have made this expertise available to those inside and outside our estate and we are seeing more and more of our franchise partners and even independent hotels seeking to tap into it.
Get up to speed on RMS technology
The human mind is only capable of processing and utilising so much information at any one time. But the volume of data the industry is dealing with is rising exponentially. Hotels now need sophisticated automated tools to collect and process quality data in a timely manner for revenue management to be effective.
Technology now allows for a granular, instantaneous picture of trends and insights and ultimately hoteliers that don’t keep up with the technology are likely to be outgunned by the competition.
Assess your expertise
While having a top revenue management system is important, the tools are only as good as the people using them. It takes real human expertise to process all the information and analyse it in a way that produces an effective strategy.
Often smaller hotel groups don’t have sufficient scale to afford a dedicated revenue manager, so the responsibility falls to the General Manager, or a senior sales, marketing or reservations person – all of whom who are already busy with other responsibilities. While this situation may have been workable in the past, in competition with specialists armed with the most sophisticated tools and vast amounts of data, it will only result in lost business.
For hoteliers without scale, it is inevitably becoming more difficult to look after revenue management effectively due to the need for the latest technology, high-level expertise, and access to the quantity of data required to ascertain meaningful information and make accurate forecasts and recommendations.
However, there are options available, whether from independent consultancies or from hospitality service providers such as ourselves, who have evolved a revenue management offering based on being a leading hotel manager. Tiered services now exist so that this expertise can be provided accessible to hotel groups of all sizes beyond the larger management estates and brands.
Revenue management has evolved significantly in the hospitality industry and is now a much more sophisticated, data-driven function. However they choose to do it, it is vital for hoteliers to keep up with this rapid evolution if they are going to continue to compete.
By Karelle Lamouche, senior vice president of sales and marketing, distribution and revenue management at Accor Northern Europe