In virtually every industry, revenue management is a core business principle that determines the right circumstances under which to sell a product or service. It is a multi-layered process that involves analyzing data gathered from a multitude of sources to empower effective decision making.
Businesses first perform market analysis, competitor analysis, performance analysis and any other analysis that deals with the distribution of their product and service offerings. Next, they use this data, along with historical data concerning inventories, price lists, previous demand, etc., to segregate their customer base into broad and then narrow groups.
Following segregation, businesses use analytics to predict consumer behavior and optimize the prices for aspects such as demand in the market, current stock, market share and market worth.
Now hotels primarily deal with people in a direct manner. Hence, forecasting consumer behavior is all the more crucial for them, necessitating the need for effective revenue management.
But, owing to the complexity and long-term nature of the process, revenue management can be quite challenging. There is a reason why only some big hotels implement it perforce.
But not for long, as we plan to make revenue management approachable for everyone.
Below we have put together a list of five revenue management tips you can employ to augment your earnings. So without further ado, let's dive into their details.
1. Fine-tune the Data Collection Process
Optimal revenue management essentially revolves around the data a hotel collects and examines. It bases itself on the analytics a hotel computes after sifting the large amounts of data it possesses.
However, there are times when hotels end with more data than they can process. And in such circumstances, getting overwhelmed and overburdened is inevitable.
To prevent your hotel from falling prey to such situations, you need to calibrate your data collection process. You need to fixate on the type of data you will collect along with the most appropriate method of collection for it.
Doing so will streamline the entire process and ensure that you can distil valuable insights from the data much more feasibly.
2. Study the Market Inside-out
For hotels, seasons play a significant role in manipulating the influx of guests. A hotel situated on a hill station will rarely receive guests in December. Similarly, a beach resort will get fewer bookings during monsoons.
Then we have other factors, such as geography, local competition, etc., that specify the number of visitors a hotel will host.
In short, a hotel has to deal with several elements at once to stay profitable.
Hence, if you know the anatomy of the market, like the demand for specific rooms or services, consumer habits & demographics, rising trends, the length and purpose of stay, etc., you can very well figure out a profitable response to its changes.
You can churn out special discounts, offer specific additional services during each season, upgrade your hotel rooms, etc.
The goal is to read and adapt to the market instead of maintaining a consistent outlook of the hotel.
3. Opt for Enhanced Digital Transformation to Stay a Step Ahead
Today, digitization is more of a necessity than a novelty for hotels. Thanks to the ever-spreading internet and the recent pandemic, consumers want a stay experience that is safe, contactless - based out of their smartphone screens, and highly customizable.
Therefore, you should invest in digital hospitality solutions that offer more than just online room bookings and digital payments.
For example, MyCONECT, a South-Korea based digital hospitality firm, has come up with a software tool that streamlines guest journeys to the point that a consumer can control their entire stay at a hotel through their smartphones.
Real-time room availability status, self-check-ins/check-outs, mobile keys, and valet service are just some of the features MyCONECT offers as a part of its digital hospitality package.
Integrating your hotel with such technologies will allow you to cater better to the changing needs of the consumers while staying at the top of your game at any point in time.
4. Close the Gap between Price and Value
Regardless of how wealthy a customer is, they want a stay experience they can feel was worth the amount they paid.
Conversely, if the amenities you offer during their stay undercompensate the amount guests offer, chances are you won't be seeing them again.
And this is one factor that you can leverage to attract more guests. You don't have to sell yourself dirt cheap or make impossible compromises on pricing. Use the insights you recorded in tip #1 to figure out the market worth of a product or service and accordingly optimize the price you associate with it.
Providing adequate value for the amount you charge will also earn you loyal customers, thereby increasing brand value.
5. Hire a Revenue Manager
Revenue Management is a laborious process requiring utmost dedication and focus. Hence, it is understandable that it might not be every hotel owner's cup of tea. But, given that it offers so many benefits, skipping on it would not be a good choice.
In such scenarios, leaving everything to revenue managers is the next best thing you can do. These professionals are well-versed in using analytics to increase your hotel's cash inflow by a notable margin. And their services do not cost a fortune.
So, if you can't do revenue management by yourself, don't feel down. Simply hire a revenue manager with a great track record and favorable customer reviews.
Revenue management is a constant process that requires regular monitoring and tinkering to maximize profits. After all, the hotel industry is ever-changing, adapting itself to newer technologies and consumer trends much faster than one can blink.