This is a question that hoteliers and property owners have redefined over the years in accordance with the latest strategies and technologies. Not only does effective revenue management provide a clear road map in terms of pricing and optimization, but it also offers a means by which a hotel can better gauge its success.
Therefore, there are many factors to take into account in order to adopt the most effective approach. This article will take a basic look at revenue management and define some of the most common practices so that stakeholders can make the right decisions at the right times.
What is revenue management?
Revenue management is a business technique that enables the optimization of your inventories and maximizes your profits. Its exact parameters evolve over time due to new artificial intelligence systems, processes, automation, and the general advancement of industry-leading tools, but at its core, it remains the same.
It involves promoting the most suitable accommodations to the appropriate client at the right prices and at the right times through the use of targeted distribution channels. This provides a cost-effective solution while still helping to ensure customer satisfaction.
This will often require the use of analytics and similar data points in order to develop the most appropriate strategies. Here are some common factors that may be analyzed:
- Predicting demand
- Determining behaviors (such as the times of the year with the highest booking rates)
- Understanding consumer spending habits
- Developing dynamic pricing packages
- Analysis of competitor’s pricing strategy thanks to business intelligence
Understanding these concepts will allow management to make informed decisions while ensuring that any revenue generated can be used in the most efficient manner possible. In other words, revenue management depends upon addressing the "who, what, where, why, and how" of the hotel industry.
Why is revenue management important in the hotel industry?
Revenue management is highly important to hoteliers because it allows them to maximize revenues and yields, using smart tech and big data. The main aim is to foresee market demand and react to changes in the market efficiently.
Without a doubt, these are challenging times for the hospitality industry. In that sense, it is important to invest all our efforts into breakthrough technologies and powerful systems that apply intelligent automation to boost yield, grow revenue flow, and enhance the guest experience.
Therefore, it’s essential for the hotel industry to adopt new strategies and systems such as advanced revenue management in order to stay afloat and reinvent itself, providing hoteliers around the world with major business success.
The revenue manager’s new functions
The revenue manager’s duties are changing over time due to the information technology improving and, therefore, it provides us with new business opportunities. Now, they have undertaken a series of commercial and marketing roles, while the most arduous processes are automated.
Adopting artificial intelligence in the hospitality industry
Using automated communication channels such as social networks’ instant messages, chatbots, and virtual assistants, allows the hotel industry to create a superior experience for guests and solve problems instantly.
Also, this helps to analyze and understand the data in order to improve some strategies like dynamic prices.
Highly-customized experience
Personalizing experiences and prices are possible through the use of powerful tools such as a PMS (property management system), channel manager, and so on. In such a way, it is possible to transform products and services based on guests’ preferences and lifestyles.
Hospitality clouds computing
Nowadays, hotels need to be in the cloud because of their agility (faster data access and simultaneity) and reachability (worldwide and multi-device). In other words, implementing cloud computing solutions within this industry gives a huge competitive advantage over other hotels. Firstly, it improves the guest’s experience due to the digitalization of all operations and customized offers. Secondly, it brings down hotel costs and higher productivity.
Direct bookings
Revenue management is crucial to building direct bookings. In addition, it can be a useful tool to be more efficient, boost sales, get higher profit margins, and thus save intermediary costs.
The perfect combination
Integrating revenue management (RM) into a PMS would be the best idea for your business because they’re innovative solutions that provide a better, more modern hospitality experience, and at the same time, greater management and quality services.
Social networks
Thanks to social media, guests have instant access to any information such as reviews, videos, photographs, feedback from others, etc. This has led many organizations to consider it as valuable information for revenue management and decision-making.
What are the most common revenue management strategies in hospitality?
Within the industry, all hoteliers still use common procedures and metrics, but each property requires its own special revenue management strategy. It should focus on its competitive environment, differentiating factors, and ideal customers – without imitating competitors. They are intended to improve the existing revenue stream, attract the right customers, and offer highly competitive prices (ensuring return bookings). Let’s take a look at a handful of effective strategies to consider.
Understanding seasonal variations
The hospitality sector is seasonal. In other words, booking rates will naturally vary depending on the time of the year. Currently, It’s important to have advanced management tools to appreciate these fluctuations to better predict factors such as occupancy rates and return on investment (ROI).
Seasonal changes can also impact other concerns such as the number of employees, the types of promotions that are being offered, and how much money guests are willing to spend at any given time. This point also serves to lead us to the next main strategy that should be embraced.
Developing dynamic pricing models
As mentioned previously, competition is rife throughout the hospitality industry. This is why in many cases price is crucial. Guests are not only looking for quality products and services. They are just as concerned about how much they can afford to spend when searching for accommodation.
These are some of the very same reasons why online aggregators such as TripAdvisor and Booking.com will partially base their client reviews on value for money. Properties should therefore adopt a more dynamic pricing structure. This will help to account for the seasonal variations mentioned above while simultaneously highlighting the fact that management appreciates the needs of the average visitor.
Embracing the digital edge and the Internet of Things
We’re living in an increasingly digital community. Therefore, it stands to reason that a portion of revenue management needs to revolve around adopting the latest services. A handful of examples include (but are certainly not limited to):
- Online bookings
- Virtual agents
- Downloadable smartphone apps
- A strong social media presence
- A clear, concise, informative, and attractive website
Consider the impact of the Internet of Things (IoT) in daily life and then think about how it also pertains to hospitality. Customers are now becoming accustomed to digital amenities such as location-based recommendations, hyper-personalized rooms, digital key fobs, predictive maintenance, and scannable QR codes that offer discounts.
Promoting and selling ancillary products and services
One mistake that can often be made by newer hotels is the belief that their main objective is simply to offer rooms to their clients. While this may represent the core of the organization, we need to remember that effective revenue management should always seek to rise a property head and shoulders above the competition. This is why other on-site amenities should be promoted with equal enthusiasm.
The main takeaway here is that revenue management should also focus on any other amenities that may be present. Guests may be provided with the ability to purchase on-site items such as towels, soap, and bathrobes. A hotel could choose to implement a promotional campaign for a very popular branded restaurant. Some properties may even be able to partner with nearby third-party companies (such as tourist agencies) in order to offer guests the ability to visit nearby locations.
Sponsoring events and attractions
The hospitality and entertainment sectors are closely intertwined. This is why it makes perfect sense to offer guests additional options during their stay. One well-known example is providing clients with travel discounts when using public transportation.
Still, there are other strategies directly related to on-site revenue management. Hotels equipped with meeting halls can rent out these locations in order to hold business seminars and conferences. Not only can these and other actions represent a welcome source of additional income, but they are also all excellent ways to increase loyalty and overall brand awareness.
Proactively analyzing important hotel metrics
Finally, we should mention the more technical side of revenue management. After all, managers and stakeholders need to be able to appreciate how their property is performing on a regular basis. It's always much better to ask "how are we doing" in contrast to "how did we do?". This is why the metrics listed below should always be taken seriously:
- Overall occupancy rates
- The ADR (average daily rate)
- The revenue associated with each room (RevPAR)
- The gross operating revenue attributed to each room (known as GOPPAR)
- In terms of on-site restaurants, how much revenue each seat can potentially generate per hour (sometimes referred to as RevPASH)
- New Kpi that compares a room with the total inventory (ReRTI)
As some of these variables can be confusing, a growing number of properties are choosing to outsource such services to third-party revenue management software solutions.
Conclusion
Revenue management is not something to be taken lightly to achieve long-term success due to hoteliers handling historical and current data. It also should be in line with dynamic strategies, and the needs of your hotel, and customers.
It goes without saying, of course, that artificial intelligence and automated processes play an important role in this sector. These systems have helped to simplify and automate all hotel operations, creating more memorable experiences as well as better profits for businesses.
You know how highly competitive our industry is. It’s essential to make any revenue management improvements sooner rather than later in order to remain one step ahead of the game.
Best Revenue and OTA Management Company In India for Hotels
Revgrow360 believes in providing a 360-degree solution to all hotels starting from website designing, operation strategy, and selling the right room to the right client at the right time. We will work as a team and will handle the entire online marketing especially revenue management of the hotels completely.
We will be completely responsible to take care of your online revenue and work on the incremental revenue growth month on month. We understand the competition, pricing strategy of competition, distribution strategy, making pricing strategy of our own, creating demand calendar, market segmentation, and forecasting, creating a rate strategy sheet every month, upgrading of rates through distribution channels, Online distribution strategy according to live situation.
Scope of work:
- Gap Analysis and OTA Audit
- System setup & Mapping
- Pricing and Managing Online Channel
- Strategies & Tactical to Optimize Room Revenues
- Hotel Positioning -(Rate Parity, Content, Dynamic Pricing, Ranking)
- Hotel Visibility Enhancement / Standardized Content
- Relation Management with Key OTA’s
- Dedicated one point of contact for the hotel
- Support with hotel systems integration-Yield Optimization
- Develop and improve strategies with hotel approval
Daily Reporting-Sell Report-Content
- Daily 90 days pricing
- Hotel Data Analysis
- Competition Market shopping
- Demand Calendar
- OTA Pick up / Analysis
The Benefits:-
- No, Startup fees or any changes on every month’s contract
- Personalized revenue management service.
- Save time and money, stop revenue leaks
- Yield management is seamless & real-time
- Cost-per-reservation analysis
- 24/7 revenue management support
- No more managing extranets
- The hotel can focus on guest satisfaction & service scores
- Support for Ownership, GM, Front Desk, and Sales Team
- Enhance RevPAR performance -Capture share
- Cost-effective solution without hiring
Request you to find the details below of Revenue Management of one hotel for better understanding:-
Importance of Revenue management:-
Revenue management increase hotel bookings online through online portals and we increase bookings to your hotel through our Online Marketing activities and in collaboration with our online portals.
Our Services;-
We are a one-stop solution for Online Travel Agents(OTA’s). We take control of your hotel’s online presence and help in increasing bookings through our collaboration with online portals. We work with Leading online travel Portals across the world. We provide dedicated Revenue Management and Inventory Management. This is a part of our OTA management.
What do we offer to Hotel?
Who are we partnered with?
We as a team undertake property of a minimum of 15 plus rooms so as to assure them an incremental revenue growth every month. We are managing 55-plus hotels across India.
Please find the best rates below. We have 3 modules for our client: –
- Per night room booking: Rs.250 per night.
- Fixed amount: Rs.14999/- per month.
- Fixed commission:10 (Ten) percent every month on total revenue.
The channel manager charges an Extra 3500+Tax per month will be Provides As a complementary Basis.
Best Digital Marketing Agency For Hotel
Contact With The Best Digital Marketing Agency In India For Hotel
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