Why digitalization is a key success factor in hotel revenue management
The Corona crisis has led to a lot of rethinking in the hotel industry as new norms have formed. There is no question that the future lies in networked platforms, personalized offers and integrated solutions. We have been observing for some time that the pandemic has increased competition among hotels and thus is putting pressure on sales and profit, which is likely to intensify even further.
If hoteliers have not already done so, it is about time they start thinking about process optimization in order to remain competitive. One starting point is the digital possibilities within hotel revenue management. However, it is challenging to understand the complex service and product offerings and to choose what suits the respective hotel.
How is digitalization evolving in hotel revenue management?
The pandemic has shown the industry that due to ever faster changing market situations and the tight staffing market, digitalization, and therefore automation through technology, will take or has already taken a central role. Revenue management aspects such as distribution, channel management, rate loading or reporting will experience more and more automation in the future, leaving hoteliers more time for their overall strategic approach and, above all, guest services.
However, digitalization in the hotel does not change the fact that the basic framework of yield or revenue management will continue to exist: The goal continues to be successfully selling a room at the right price, the right time, and to the right guest. This depends on various complex factors. For example, many hotels are still challenged to shift from a traditional and static pricing strategy to a modern and dynamic one in order to incorporate as many factors as possible into room rates. The design of the rate strategy needs to be continuously monitored and fine-tuned. This is the only way hotels can keep up with the pace of market trends and secure productive revenues for the future.
Hotels can benefit from digitalization if they first recognize and understand the direction of change and thus find promising strategies for their own success. Innovative technological and service-oriented solutions, especially in revenue management, will inevitably define success and growth for hotel operators.
Investing into digitalization for you hotel – how can you find the right way?
A suitable strategic approach and the right investments in digitalization will have an immense impact on the success of each individual hotel. So, make strategic decisions first before investing in the digital optimization of your processes on this basis.
However, it’s not just pure revenue management that needs to be considered: Even a sophisticated rate strategy does the hotel no good if the increased online visibility of a hotel is not ensured. More visibility leads to more reach within the target group, which in turn should be known from strategic consideration.
Investing in visibility means investing in online marketing efforts. Your strategic approach lets you conclude which measures reflect the appropriate marketing mix, such as:
- Search Engine Optimization (SEO)
- Search engine advertising (SEA)
- Social media marketing
- Optimization of website content
- Optimization of content on the pages of Online Travel Agencies (OTAs).
In each case, this requires visual content creation, aligned with the right targeting, and extensive data analysis as a basis for optimization. Hotel channel management systems facilitate and automate the implementation of the communication strategy. They also increase hotel ranking, visibility, and guest engagement with the aim of increasing booking volumes. Thus, direct marketing and professional hotel revenue management are linked.
In combination with the right business intelligence tools, these measures enable hotels to tailor their offers to the individual needs of potential guests and increase guest loyalty. Using business intelligence tools allows revenue managers to identify demand curves months in advance and get a bird’s eye view of the market. Pricing decisions are then based on real-time events and future market developments rather than historical data.
This allows pricing strategies to be adjusted on an ad hoc basis, using constant forecasts and controls, which ultimately leads to higher utilization with better rates and thus more profitability.
Digitalization enables simplified data collection, analysis, and interpretation. This is an important added bonus for making the right decisions. Operational efficiency can reduce costs, while increasing performance and revenue results. But beware: simply investing in digital tools is not a revenue management strategy! stieren ist noch keine Revenue-Management-Strategie!
Technology isn’t everything – you also have to know how to use it
We are convinced that digitalization in hotels does not mean simply acquiring a few digital tools. To increase performance, you also need the right know-how! Only then can digitalization be seen as an important success factor.
However, finding and retaining a qualified revenue manager is a real challenge nowadays. Therefore, we at HotelPartner offer not only a revenue management software, but a synergy of technology, experts, and know-how to support individual hotels and hotel chains to optimise their distribution and room sales. Hoteliers can choose from a variety of service packages to best determine what suits their requirements and the implementation gets taken care of by HotelPartner. We will be happy to provide you with non-binding advice in a free consultation. Simply get in touch with us.
The fact is that most sophisticated revenue management systems are not effective on their own. They highly depend on the data that is being fed to them, the applied algorithms, and the know-how of the user. The same is true for business intelligence tools. If the flood of data is not properly understood or interpreted, it leads to wrong decisions and few strategic measures.
Therefore, it is important for us to develop a sustainable solution concept together with our partners. After creating an individual revenue management strategy together with a hotel, we use our proprietary revenue management system together with our business intelligence tools and the data we collect in over 170 markets. By constantly monitoring the markets, any market change, no matter how small, is always under control. This ensures that we actively seek the best prices and refine strategies according to market events. The service level is always individually adjusted to the respective partner hotel and its specific needs or market situation. If you would like to use the possibilities of digitalization in revenue management as a competitive advantage in your hotel, we would be happy to advise you on the best solutions for you. Contact us, we are here for you.