For hotel owners looking to grow their business, a robust revenue management strategy is of the utmost importance, helping to optimise business results.
Revenue management is a popular concept within the hotel industry, and is used to optimise a hotel or resort’s financial results by maximising revenue. Typically, it requires businesses to make effective use of performance data and analytics to predict demand, establish a dynamic pricing model and maximise the amount of revenue that the company brings in.
The most successful hoteliers are savvy operators who continually look for ways to learn and improve the way they do things, gaining an edge over the competition. But only a small percentage of independent hoteliers use revenue management strategies and thus limit their revenue-generating potential.
The best strategies are based on the understanding that hotel pricing is fluid, and can change from one day to the next. This is why you should never be afraid to increase your rates. Customers actually expect increases over time – most businesses where consumers spend money are varying their prices based on demand and shifts in costs.
Effective hotel revenue management strategies can also help hoteliers:
- Better manage resources
- Protect against rostering too many staff during slow periods
- Ensure adequate numbers of staff are working during the busiest times
With all this in mind, revenue management can drive the entire business plan when implemented effectively. Your hotel distribution strategy is also a vital part of your revenue management plan. Make sure you are on the internet distribution channels that promote your destination online. They have the strong marketing power and can put your hotel in front of many customers you can’t contact directly.
There’s no pricing strategy that is perfect for any hotel. Each property must consider the pricing strategy, or strategies, that work best for its particular brand. A revenue manager will spend a lot of time analysing data and other influencing factors to ensure the business is operating with the best possible chance to maximise income.
STAAH’s own ConvertDirect Booking Engine has a feature called ‘Smart Pricing’. This feature is designed to enhance the process of setting up deals offered on ConvertDirect. It allows you to set up deals to dynamically calculate pricing based on applicable conditions and the ability to target some specific markets.
A competitive pricing strategy, where prices are set based on other hotels prices, puts your business in direct competition and is good when your hotel has more to offer than your rivals do. Yet, in slow seasons, a discount strategy might be best, because a low-paying customer is better than an empty room. Another option is the value-added approach, where rates are higher, but additional value is provided through extras and freebies.
Having a revenue strategy is vital is fighting against the fittest when it comes to competition in the hospitality industry. It will ideally optimise and strengthen your results when planned right.
Want to know more about our Smart Pricing feature? Email us marketing@staah.com