Ensure Your Hotel Profitability Through The Correct Hotel Revenue Optimization Methods

What we have learned, especially in times of a crisis, such as with COVID-19, is that historical data in revenue management must be ignored to a certain degree and a more present or futuristic approach is needed within our current market dynamics.

Revenue management systems solely based on historic data for example, have failed to cope early on with the new market dynamics resulting from COVID-19. This led to false price recommendations and room price calculations, where hotels with limited expertise in-house, were challenged on how to tackle a newly created situation. Reactions were too slow and tactical changes to a strategy could not be properly implemented in time to negate further revenue losses.

This situation left many hotels backtracking, while trying to restore their standing and not knowing how to prepare for the future. As vaccines now become more available and with each country having their own plan towards recovery, demand spikes are likely to occur more frequently and unexpectedly. Switching pricing strategies in time will be key, but knowing when to do this, can only be done through a long-term forecasting approach.

If not complimented by a proper system, employees will have to manually open and close online platforms, which can lead to unnecessary time consumption and potential errors.

The opening and closing of channels is also highly dependent on the expertise of one employee that is limited in working hours and where wrong judgement can lead to preventable revenue loss.

Multiple interfaces within this element of revenue optimization also results in longer reactions times, where potential double or over booking situations can occur.

Automated processes with the right strategic implementations, will reduce time constraints, improve efficiency and lower your commission costs without neglecting your market visibility or quick reaction times.

Markets everywhere can suddenly generate demand where the origins are unknown. Hotel bookings suddenly appear one after the other, but room prices have been left unchanged. Such an occurrence can be due to a sudden announcement of a concert location or a football match during out of office hours, a holiday, a weekend, but can also have no reason at all.

Acting upon such demand before-hand is nearly impossible if not prepared for and even harder without the right data set to illustrate such possible demand curves. Knowledge is key on how to prepare and through systematic implementations you will be able to catch on to such peaks at any given time. Doing so will significantly impact your top-line revenue and your rooms will no longer be sold under value.

Minimum length of stay restrictions come with experience of revenue management, market know-how, trends and the understanding of travel behaviour. The key is to generate business on “shoulder dates” that are typically low in demand, while retaining a good average daily rate on longer bookings.

Multiple tactics and cleverly set rules, allows for maximum revenue optimization on rather weaker days. Understanding how to animate guests into booking longer stay periods and rewarding them for doing so, is however an important skill set required when placing restrictions.

Major market events are easy to handle as they usually occur frequently. The challenge lies more in keeping an overview of new events that enter the market, while evaluating their impact on ones´ owns hotels.

Research on a regular basis is required in keeping up to date, while evaluating event impacts can be fostered through market expertise and understanding the demand patterns resulting from an event. Only then can a proper categorization and a pricing strategy be implemented for a specific event that will result in your revenue optimization.

Every feature within a room has a potential value it creates that can be embedded into a room price calculation. Knowing what features are of value and how to communicate them properly towards your guests is crucial for the correct room price calculation.

The simple naming of room categories is just as important depending on who you are planning to target and what kind of market you are in. Such seemingly simple changes can and will result in major booking impacts through physiological effects. It is also of equal importance to maintain a clear overview about the products and services your competition is offering. This will allow you to constantly evaluate where your benefits lie and how you can use this to generate more bookings.