27 April 2016

What about Revenue Management?

Spiros

Revenue Management for hotels

To make the most out of your hotel’s potential for profit you need to carefully analyze and predict guest behavior in order to have the appropriate approach when deciding on the best practices concerning availability and pricing. After all, the ultimate goal of every hotel business is to maximize ROI and revenue. Successful revenue management means that you have decided on the best possible procedures concerning the available sales channels of your hotel. In other words, you need to carefully work on every single sales channel in coordination with your marketing department to reach the highest level of awareness, bookings and, consequently, revenue.

However, today’s digital landscape compose a very harsh working environment for hotel managers. Although technology makes daily procedures much easier and way more effective than before, at the same time, it is this exact technology that demands for more time and effort from your end. What I mean is that with the rise of the current online room distribution channels, your potential guest can search and book a room via a great range of media and that makes it very hard for hoteliers to do their job. Nowadays, it is much better and more effective for hoteliers to either outsource or hire a revenue manager. In fact, if you see below the channels that you need to watch, control and optimize in order to have the right balance of room distribution, price and cost for each of them, you will soon understand the need for that manager.

Channel 1: Your Website (online)

The channel I trust the most in terms of profitability and level of control. Your hotel’s website is by far the most effective sales channel. There is no commission, no third parties and no need for contracts, it’s all yours and you can do whatever is better for your business. Even if there are other costs included in promoting your own website and booking engine, direct bookings cost 10 to 15 times less than reservations through other channels.  

Channel 2: Mobile App or Mobile Web (online)

The shift to mobile is the next big thing in hospitality. An increasing number of hotels turn their marketing efforts to mobile devices either through a mobile-friendly or responsive website or through a mobile app. In any case, this channel is quite similar to the previous one as it also concerns your website, your booking engine and, of course, your app. There is better control over the entire procedure, without implying that it is an easy one though.

Channel 3: OTAs (online)

A commitment you will (and should) never get rid of. There are commission, obligations, rate parity and so on, OTAs are undoubtedly offering you increased visibility, traffic and bookings. Especially for smaller or newer hotel businesses, OTAs should be an indispensable part of their sales strategy. The countless advantages associated with your presence on major OTAs are undoubtedly necessary for your success.

Channel 4: Social Media (online)

With the rise of social media marketing and the popularity of these networks, you should absolutely use them as a sales channel as well. Whether it is through apps or CTAs on your profile, hotel bookings through social media are here to stay. Social networks attract potential guests for reviews, comments and visual material on your property anyway, so you should absolutely try to convert them to customers through these platforms as well.

Channel 5,6… (offline) 

Although we are paying too much attention to online channels and that makes great sense due to their expansion and the constantly increasing attention they get from travelers and your potential guests, you should still focus on your offline sales channels as well. Be it CRO, direct sales from the hotel, GDS, travel agents or any other offline channel, you have to properly organize your actions and make the most out of any of them. Keep in mind that although travelers increasingly turn to the web for inspiration, research and bookings, there is still a great number of them that trusts and follow the traditional way.

That been said, now you probably understand the importance of having a revenue manager handling all those sales channels and their optimization. However, our discussion for that matter does not end here. Revenue management includes a wide range of activities other than managing sales channels and developing an effective price strategy. You have to focus on the allocation of your rooms, the return of your marketing efforts (which should include your price promotions), your current or potential customers’ engagement and many more. But for now, keep in mind that our professionals in revenue management can advise or help you handle all your different online sales channels, quickly and effectively.