Hotel Revenue Management Strategies That Work
by travelboom
Hotel revenue management strategies make the most of hospitality budgets by connecting the right guests with the best offer at the optimal time. For these pricing and distribution tactics to work, hoteliers must have access to accurate data on room inventory, customer preferences, and channel performance. With these insights, the hotel’s staffing, rate structuring, and marketing efforts can be more strategic, reducing wasted efforts, resources, and money. Read on for a list of proven hotel revenue management strategies that work when you need to turn a profit.
Identifying Demand Patterns
Anticipating demand using historical data helps hoteliers predict costs and resource needs. When you see seasonal peaks and annual events affecting occupancy rates and reservation types, then you can adjust room pricing, add-on services, and staffing to achieve the most efficient, profitable combination. When a lower demand is forecast, deploying special promotions encourages bookings and evens out revenue.
Dynamic Pricing Strategies
There isn’t a one-size-fits-all rate strategy for hotels, but dynamic pricing can prevent properties from forfeiting income. This tactic uses real-time booking data for market demand, competitor rates, and seasonal considerations to determine when to increase or decrease rates to boost occupancy and revenue. Even static pricing with set weekday rates, a weekend rate, and peak-season pricing will leave money on the table.
Segmentation and Targeting
A family with young children and a solo business traveler will be attracted to your hotel for different reasons. Segmenting the hotel’s advertising audiences into groups with similar characteristics creates opportunities for tailored messaging to maximize your cost-per-click ad dollars—and your profits. The ‘reason for travel’ is a good starter category to distinguish business-focused guests from vacationers, but further refining this by the length of stay, lead time, and booking methods can offer even better results.
Strategic Distribution Channels
A hotel can expand its visibility and increase profits by selling rooms through a variety of channels, like direct booking platforms, online travel agents (OTAs), and metasearch engines. Though OTAs charge high fees, using these strategically with other channels keeps commissions in check without forfeiting potential revenue. And when your hotel’s website is properly optimized, you’ll attract traffic with loyalty perks or exclusive discounts to balance spending in other channels with cost-effective direct bookings.
Revenue Management Technology
These days, basic forecasting spreadsheets have been replaced by complex hotel revenue management programs capable of analyzing data, identifying trends, and automating tasks. With booking engine data integration and comprehensive reporting, hotel marketers and managers make data-driven decisions that maximize revenue and drive business growth. Automated pricing and AI-based optimization help hotel brands do more with limited staff.
Value-Added Services and Upselling
Armed with data about your customer base, targeting guests with upsell opportunities is easy. Nurturing these leads through email marketing, in-app push notifications, or even hotel room technology, such as a room service app or digital concierge, catches guests’ attention at the right time. When travelers are offered services that match their interests or spending preferences, they’re happy to add tailored experiences that make their stay memorable and earn the hotel extra income.
Collaborations and Partnerships
Pooling resources with local businesses or sister brands allows your hotel to split the costs of advertising and expand its reach. Whether you choose grandiose experiential marketing events or simple joint ventures, both businesses will get a boost in revenue and recognition. A transportation company and a hotel partnering together may offer guests discounted rides during their stay. Or, a property and a popular restaurant or attraction can entice guests with curated package deals. Influencer marketing for hotels is another way to boost your visibility, and these collaborations get brands in touch with new customers, without overextending the hotel’s marketing staff.
Continuous Monitoring and Adaptation
Staying ahead in the competitive hospitality industry requires hoteliers to remain agile and responsive to market dynamics. Continually improving offerings based on guest preferences and adapting to industry trends requires adept tracking and accurate data. Success also entails watching competitors to see how your property stacks up against a brand in a similar price range and location. If you see rates drop or rise, you should be set up to adjust quickly and effectively. Hotels with limited staff can implement this revenue management strategy using AI-based software to reduce the manual workload.
Staff Training and Engagement
Every staff member is part of the revenue management team, whether they realize it or not. Invest in hospitality training and development programs to ensure that employees have the skills to anticipate guests’ needs and offer better services. Doing this will increase loyalty and yield higher revenue returns from repeat business. Training employees to recognize inefficiencies that affect the bottom line also helps keep your property profitable.
In a tough economy, every dollar counts. That’s why hotels must implement revenue management strategies to turn profits during unpredictable times. Accurate customer tracking and an understanding of hospitality industry trends can help get you there. If you’re ready to update your revenue management strategies to use data-driven insights and industry-leading tactics, contact TravelBoom to learn more.