Optimise Your Hotel Revenue Management Strategy

Due to the seeming urgency of implementing tactics, many revenue managers spend most of their time on their tactical revenue management. This leaves minimal time to focus on the bigger picture of your hotel’s overall strategic revenue management goals and comes at the cost of stagnation, while not reaching predetermined goals.

Time limitations usually result from:

• Lack of proper technology to supplement one’s employee
• Lack of technological training to utilize a systems full potential
• Manually working on tactical changes
• Lack of experience or training to optimize processes in forehand

Understanding your guests and market dynamics is the key to successful revenue management. Though, to the already mentioned limitation of time or technology, many hotels struggle with maintaining a bird’s eye view of their market.

Without a clear market overview and understanding of guest behaviour, identifying demand patterns proofs to be more difficult as they have become more unpredictable and increasingly dependent on various factors. This hinders many hotels to fully react and implement proper tactical changes in time and leaves missed business opportunities or loss of business to the competition.

Incorporating internal and external market data is important to broaden the view of your market dynamics as your hotel revenue management strategy strongly originates from this data.

Many independent hotels struggle in accumulating data from internal sources, while additionally struggle to find complementary data suppliers for their hotel or individual market.

This usually derives from an overwhelming amount of choice the marketplace has to offer and the sheer cost of potentially purchasing external data sets that cannot be utilized internally.

Not being able to utilize internal data sets is usually the result of data coming in through various systems. Having multiple systems that do not harmonize with one another can lead to data getting lost, while having a lack of overview functions or poor management skills leads to the same result.

Without the support of correct market data or securing only a limited amount of data sets (whether internal or external data), will result in not having a sufficient overview to define or redefine your revenue management strategy and an inability to enable tactical revenue management changes.

Whether on the side of tactical or strategic revenue management, the scope of traditional revenue management has broadened exceptionally over the past years through the advancement of technological changes.

New processes and approaches have emerged through technology and automation, while training, development and awareness of employees has stagnated mostly due to training costs or the fear of employee turnover.

Limited know-how and training leads to misguided actions, false internal guidance or the lack of innovative improvement. For example, when not being able to read data or knowing how to utilize data correctly in order to improve strategic goals.

Usually connected to the lack of in-house know-how, many hotels are faced with the challenge of establishing their own revenue management strategy.

Often defined on personal presumption and feeling rather than on actual market dynamics, data or industry guidelines, ill-defined strategies result in unrealistic targets, unfulfilled goals and even negative guest perception if room pricing for example, is overvalued. A result of which can lead to negative guest reviews and/or lost business opportunities.

While revenue management systems have simplified certain revenue management processes, the job is not done by simply entering data into a system. Many hotels face the difficulty on what to automate and how to automate certain processes in an optimal way.

In addition to automation, not having unlimited flexibility with most revenue management systems proofs problematic for hotels when entering a preferred pricing strategy. Having such limitations results in unnecessary manual labour for the hotel to make certain tactical changes or results in a pricing strategy not functioning as desired. Many revenue management systems are also based on a market algorithm that does not allow for unique strategic implementations to foster individual hotel standing.

Commission optimization is another major challenge for most hotels. How to reduce commissions, when to close high commissioned channels or how to optimize commission cost in general or automatically through systematic implementations, is often knowledge unknown to most independent hotels.

Hotel channel management, in which commission optimization falls, is also usually done via a separate system or manually throughout various portals. Such handling leaves room to human error and possible booking discrepancies. Manually working on this is once again time consuming and leaves employees to not being able to focus other important revenue management tasks.