The Best Hotel Revenue Management Practices
Unfortunately, it is not simply the case that you have a successful hotel just because there are a lot of people staying in it. What defines the success of a hotel is its revenue, which is the thing that people need to start trying to improve. Thankfully, this is possible with the help of some hotel revenue management practices, which are processes and systems designed specifically to boost the revenue of the hotel. While you would get a more well rounded education when it comes to hotel revenue management courses, we thought we would take a look at the main points here for revenue management.
Focus on Profit Management
In the past, the key performance indicators of a hotel management system were things like the occupancy rate, and the average daily rate. However, the modern hotel system operates on a different set of performance indicators.
The modern KPI for any hotel is going to be something like the gross operating profit per room, or the total revenue per room. At a fundamental level, the shift is towards focusing more on profit. Profit is a much more tangible and measurable entity than the total number of people in a room, or the number of people who stay at hotels every day, because this is changeable according to so many different outside factors. Profit is the one thing that paints a more realistic picture of how well the hotel is doing, so it’s useful for getting a better understanding of hotel revenue.
Encourage Direct Bookings
The average person visits at least five different websites before they book in a room at any hotel. This isn’t great for your business, because it means that in that time, they can find a better deal. Specifically, one of the places that people visit quite frequently as comparison websites. Now, this is where a website will, in exchange for a commission, advertise your hotel as being one of the better options.
This does have advantages, like enhancing visibility. Sites like trivago and hotels.com are very popular for people who want to showcase the best deals that they have on offer to as many people as possible. The only problem is, the people who suffer in this particular instance are you. The customer gets the room for the same price you would’ve offered it, but you have to then pay a commission fee to the website in exchange for the service. So, the only person who loses out for this visibility is you.
This can be avoided. If your website is suitably geared up to take advantage of search engine optimisation, and you offer enough in the way of free benefits, you can cut out the middleman. Encouraging direct bookings, the ones that go straight to your website and book from there are the ones that are more likely to generate and retain increased revenue. If you offer extra features that come free, like Wi-Fi, X amount of free room service, etc etc, then you can definitely help to enhance your revenue stream.
Mobile Booking
It’s estimated that nearly half of all travellers book hotel rooms using a smartphone. So, if you don’t have a mobile responsive website, then you are going to fall behind when it comes to maximising your revenue stream. Enhancing your website is especially difficult, making it mobile compatible basically boils down to having a shorter booking form with only vital information to put in, as well as a secure payment system. Everything else can be sorted on site, but as long as the room is secure and booked, people will come to your hotel.
Alternatively, you could create a mobile phone application, something which is a direct portal to all the services that you have. Some apps include the ability to order room service from the phone, so people don’t necessarily have to ring down if they don’t want to.
A mobile phone application can also be used to provide services that would be useful during the stay, like for example access to additional Wi-Fi, or the chance to contact the front desk for more information or resources, and it generally helps to maximise revenue stream by optimising your site to allow as many people as possible to directly booking a room.
Focus on Additional Extras
In addition to your primary revenue stream, the room itself, a good revenue management practice is to focus on the auxiliary revenue, the things which come with the room. Wi-Fi, food, TV, access to leisure facilities, the parking services, things like that.
With successful marketing and reasonable pricing, it’s possible to generate a good revenue stream on extra benefits of the purchase. Typically, your main target demographic is going to be the 18 to 34 age range, as these are the people most likely to spend more disposable income on extra features. So, a hotel bar might be a good idea, or a restaurant, or a pool table. Things like this really helped to accentuate the income and profit that you create.
Final Thoughts
Your primary objective is to cultivate a strategic approach to revenue management. At the end of the day, you need to make sure that you are properly marketing your hotel, and that you are maximising your man in revenue generated. This is the real indicator of success when it comes to any hotel because if a business isn’t doing well, they’re not generating enough revenue.
In some instances, this will involve taking a training course that will equip you with the knowledge required to overhaul your business revenue management practices. At the end of the day, if something isn’t working in the way that you wanted to, then you have to figure out why it isn’t working and take the appropriate steps to make sure it does. Generally, it’s important to focus on profit rather than traditional performance indicators like the occupancy rate or the daily number of guests. It’s amazing how many hotels have thousands of guests every year, but at the same time, don’t actually generate all that much in the way of revenue.
