You’ve probably heard the term “revenue management strategies” if you’re at the corporate or management level in the hospitality industry. Hotel revenue management is a term that describes a method of maximizing a hotel’s revenue.
Normally, this process includes the following:
- Use metrics regarding a hotel’s revenue to predict demand
- Establish a dynamic pricing model
- Maximize the revenue the hotel or resort brings in
Although any industry may use a revenue strategy, the term is more appropriate in the hospitality industry because there are more controllable elements to net more profit. These elements include perishable inventory, fixed costs, and varying levels of demand. Using the appropriate data, each of these elements can easily be predicted to find ways to increase hotel revenue.
In the simplest terms, hotel revenue management strategies eliminate the risks of guessing when it comes to pricing strategies. The following section will highlight the most important elements regarding the strategic revenue management process.
Revenue Management Strategies In Hotel Industry
Using the appropriate data and the correct approach, developing a hospitality strategy to maximize revenue isn’t as difficult as you may think. The most important element of maximizing your hospitality revenue is to analyze the appropriate data and use it to your advantage.
The hospitality business is all about trends. In reality, analyzing data in a corporate setting is all about using trends to predict future outcomes in a way that benefits your organization. This is exactly what an effective revenue management strategy is all about. Each of the following items listed below is one of many strategies to increase hotel revenue.
1. Know Your Customers
When it comes to strategic management in hotels, one of the most important elements is understanding your customers. You must know where your revenue comes from and other factors that might play a role in seasonal demands.
It’s also crucial that you understand the element of competition. You should always approach your marketing campaigns and pricing with the competition in mind.
2. Optimizing Price
One of the best ideas to increase hotel revenue requires segmenting your customer base. Evaluate different demographics of customers and evaluate their habits regarding when and how they book rooms. Do they use OTAs, or do they book directly? This information is crucial to maximizing hotel revenue.
This strategy allows you to optimize prices based on these different segments. Once you accomplish this strategy, you can also minimize price changes, increasing customer loyalty.
3. Working with Other Departments
Implementing revenue management means working closely with different departments of the hotel. One of the biggest revenue challenges in the hospitality industry is the gap between different departments or roles. For example, hotel growth strategies between the sales and marketing departments should align.
When this alignment takes place, you can collectively address changes rather than separately. Bring all of the key decision-makers within separate departments and bring them together for a meeting. Work closely with them to overcome hotel revenue management challenges. Don’t be a dictator – this hardly generates favorable results. Instead, be a teammate and collaboratively work with them.
4. Prediction Strategies
Having a solid strategy for prediction is one of the best ways to improve hotel revenue. These predictions allow you to anticipate demand and revenue, which results in you making the appropriate adjustments in pricing and inventory.
Using this idea to increase hotel revenue means keeping accurate occupancy, room rates, and revenue records. A solid predictions strategy uses these records and historical data to spot ongoing trends. You must always be aware of current bookings, local events, and other elements that affect things presently.
5. Use SEO
Understanding how to maximize hotel revenue requires a basic understanding of SEO. Utilizing search engine optimization (SEO) is one of the best ways to attract customers. You can overcome many hotel revenue management challenges by using SEO to make your website and business visible.
If you correctly leverage SEO, you can snag business from consumers that aren’t searching for your hotel specifically. This is how to maximize hotel revenue using a content strategy. Take advantage of blog posts and relevant search topics to garner more attention.
6. Effective Pricing Strategy
There’s not one hotel pricing model in existence that will guarantee success. Instead, consider the best strategy based on your hotel specifically. Keep in mind important factors such as who your target market is, what you have to offer, and the ever-important competition factor.
Using a pricing strategy based on the competition is one of the most effective ways to maximize revenue. This keeps your finger on the pulse of the trends in the area based on your rivals. Don’t be afraid to utilize a discount strategy during the slow season. A room rented at a low rate is much better than a room not rented at all.
7. Rewards for Direct Bookings
Many customers use online travel agencies (OTAs). It’s important to utilize all avenues for filling up your rooms, but it’s also crucial to maximize the number of direct bookings you have.
The driving factor behind this is the fact that direct bookings mean you don’t have to pay a commission to a third party for selling one of your rooms. Instead, use that revenue towards a rewards program for customers that book directly. A points-based system is one of the perfect ways to implement this strategy.
8. Don’t Forget Mobile
Mobile has become one of the most important revenue streams in the hospitality industry. Think about it – how many of your customers were on the road, local to your hotel. They whip out their smartphone, use Google, and book a room using their credit card online.
If your website isn’t optimized for mobile use and is clunky or takes forever to load, this is a surefire way to lose a customer. Pages must display properly and load quickly for all mobile users. Customers want to book hotels on their phones without switching to desktop mode.
Capitalize on These Benefits
Hotelogix can help with your revenue management strategy in several different ways. Our Hotel Rate Shopping Tool can help you get the skinny on the competition. This tool will help you dig up information on their rates and adjust yours compared to theirs.
Do you want more information on tools like this? Schedule a demo with one of our representatives and learn more about how we can help maximize your revenue.