7 Key Factors of Revenue Management Strategies
Understand Your Market
Communicate with Other Departments
Communicate with Other Departments
To out-perform the market they are operating and to be successful revenue management strategy, it is important that the revenue team have a clear understanding of market they operate, demand pattern and the different local factors that might impact seasonal demand. Keeping that in mind target audience, potential guests and their requirements, needs and expectations.
You need to understand the competition that market and make strategic decisions regarding rate and discounts, this competition may not always be in the same location as your hotel.
Communicate with Other Departments
Communicate with Other Departments
Communicate with Other Departments
Once forecast strategy is updated, it is vital to communicate to all department to achieve the common goal. Sales and marketing will implement marketing strategy to achieve the best result, Operating team anticipate the expected number of occupied room and plan their staffing requirement to make best use of the available resources.
Communicating the forecast number will make team have clear understanding of what they must achieve, if there are any challenges, we can make the required changes.
Choose the Right Pricing Strategy
Communicate with Other Departments
Focus on Cost Effective Chanel – Book Direct
Optimise the hotel revenue, it is vital that correct pricing strategy that fit the hotel needs i.e. Airport hotel has different business need than luxury hotel. Therefore, different pricing strategy needs to me implemented to make best use of the location, length of stay, guest requirement, what they have to offer, which market segment they are targeting.
Good competitive pricing strategy is set based on hotels are in competitive set, where prices are set based on other hotels prices. This puts your business in direct competition and is good when your hotel has more to offer than your rivals do. During slow seasons, a discount strategy might be best, because a low-paying customer is better than an empty room RevPar focus. Another option is the value-added approach, where rates are higher, but additional value is provided through extras and freebies.
Focus on Cost Effective Chanel – Book Direct
Focus on Cost Effective Chanel – Book Direct
Focus on Cost Effective Chanel – Book Direct
It is certainly important grown gross revenue but also keep focus on cost of revenue to maximise profit for the hotels. We need to keep in mind to cater for all distribution channels to attract and acquire new customers, rather than where you want them to be, focus is to maximise the number of direct bookings on key demand days. We focus to drive offer exclusive incentives, value add promotions, loyalty points, for guest who book directly through your own website and direct with hotel.
Keep the record, Analyse and Review
Focus on Cost Effective Chanel – Book Direct
Keep the record, Analyse and Review
One of the important factors in revenue management is keeping the record of all events, analysing the trend and performance and implementing corrective action plan. Revenue management in hotel industry is not an exact science, it is an art. Use the historical trend for the hotel benefit to make optimise use of the situation.
Forecasting Strategies
Focus on Cost Effective Chanel – Book Direct
Keep the record, Analyse and Review
Forecasting and implementing the strategy based on demand pattern is One of the most important aspects of revenue management. Revenue Forecasting will allow you to anticipate future demand and revenue, enabling necessary adjustments to be made. Within the hospitality industry, high-quality forecasting relies on accurate records being kept, including occupancy, room rates and revenue.
Forecasting strategies rely heavily on using historical trend and data. Hotel may be out performed in particular period due to busy sports events like World-Cup, Concert or one-off special event which may not be repetitive, while forecasting and anticipating demand it is imperative to make the necessary changes to price structure keeping in mind with current business on the books, bookings trend, competitors’ rates etc. Looking for unconstrained demand, it is not an estimate of how many rooms you will sell, but instead an estimate of the demand for your rooms how many rooms people would like to buy. The most important part of doing this forecast is to ignore the number of rooms you have.
Segmentation and Price Optimisation
Making Optimise revenue requires you to make channel mix changes, this leads to the concept of selling the right room to the right person at the right price at right channel to identify the segment of your customer base. We have to identify different ‘types’ of customer and then look at these different segments and evaluate when they book, how they book and what hotel facility they book to identify the habit and trend.
When we understand and know our customer base better we can sell the right product to right person at right price. This will help us to optimise prices for those different segments. By doing so we will help to generate customer loyalty and maintain to generate repeat business. Yielding is often misunderstood as raising or lowering the public rates, but historically, it is about turning away less attractive guests. To do this, we open or restrict the rates (segments), room types or channels. Setting a minimum length of stay is one way to do it. Allocating number of rooms per segment based on demand is another option.