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With the help of performance data and hotel analytics, revenue managers make rate decisions, develop distribution strategies, and increase revenue generated at the hotel without compromising guest satisfaction.
Fremont, CA: Hotel revenue management is a complicated process. It's constantly in motion, requiring routine maintenance and occasional parts replacement. Operating the machine may seem overwhelming to those new to hotel revenue management, but understanding why and how each piece works can go a long way.
How does hotel revenue management work?
Hotel revenue management refers to various principles and practices that help hotel professionals predict what guests will do in the future.
With the help of performance data and hotel analytics, revenue managers make rate decisions, develop distribution strategies, and increase the amount of revenue generated at the hotel without compromising guest satisfaction.
What are the consequences of not managing hotel revenue properly?
A hotel's performance can be negatively affected if revenue is not managed effectively. Revenue managers and directors who do not diligently track, analyze, and use revenue reporting could:
- Drive business to competing hotels
- Negatively impact the hotel's reputation
- Affects guest loyalty
- Missed rate opportunities
Furthermore, sales and revenue directors may earn a portion of their salary from meeting revenue targets, and not meeting those targets could have a significant impact on their income. Develop revenue management strategies that align with your hotel's revenue goals and budget.
Here are some tips to better manage hotel revenue:
You should begin with an honest inventory
To develop a successful revenue management strategy, take a hard look at how the hotel is currently managing its revenue. In order to assess your hotel's current position, ask the following questions:
- How would you describe your revenue management goals and objectives?
- What is your revenue management style? Are you proactive or reactive?
- Do you have a group pricing strategy?
- Are you familiar with the area's events and attractions?
- Are you aware of your demand generators?
By understanding your revenue strengths and weaknesses, you can identify areas for improvement and create an informed revenue management strategy for your hotel.
Learn your market and become an expert
Seasonal changes and fluctuating demand are important factors in a successful revenue management strategy. Review planner sourcing behavior in your area and analyze travel patterns in your area to identify the major demand generators. Identify your hotel's peak, off-peak, and shoulder seasons to maximize rates and fill future need dates.
Create a calendar of special events, limit blackout dates, and sign up for Google Alerts. Keep up-to-date on local events, community projects, and businesses.
Make sure you know more about your market than revenue managers at competing hotels. Hotel revenue management strategies can be more comprehensive if you have more information.
Establish your budget based on future forecasting data
Hotel budgets can be thrown off by unexpected hiccups; however, proper forecasting and budgeting can prevent loss of revenue by not depleting the hotel's financial reserves too early or too often. To identify revenue opportunities that will impact budgeting decisions, hoteliers and revenue managers should examine historical data, hotel rate reporting, and competitive set performance tracking.
In establishing a budget, consider how your hotel performed over different seasons, during special events, during holidays, and other noteworthy events.
Gaining a holistic understanding of a hotel's performance history will help revenue managers recognize past market trends, as well as predict future trends.