It is not an easy job to incorporate the best principles and practices of hotel revenue management in order to improve overall revenue. Particularly focus on hotel revenue management.
Smart hotel revenue management is all about how quickly you can find new revenue opportunities. And how well you assess competition pricing policy, plus local market demand.
Moreover, it also depends on the extent to which you understand the importance of hotel business intelligence, on decisions pertaining to revenue management.
However, even the smallest of miscalculations can backfire and sabotage all your hard labor towards maximizing revenue at your hotel.
Here are the top 5 mistakes you must avoid
Failure to provide a strong and well-structured inventory distribution plan through OTAs, GDSs, hotel websites, etc will result in an ineffective revenue management strategy.
Inefficient inventory management leads to issues like overbooking, double booking, underbooking, etc.
These problems contribute to other issues such as guest disappointment, loss of income, and business opportunities.
Additionally, not monitoring sales channels’ performance is also not ideal when we talk about hotel revenue management.
You need to know which distribution channels are working for you in order to give you more revenue. Hotel owners need to grasp this clearly – it is mandatory that you have the right plan in place to allow more direct bookings.
You are the website of your hotel as you find the right balance with your OTA partners. Also, you cannot disregard the strong presence of offline travel agents and must collaborate with the leading GDSs.
In short, it’s a must to have a good inventory distribution strategy, both online and offline, to maximize your RevPAR.
You really cannot ignore the importance of guest service, when you aim to improve your hotel’s revenue.
You simply cannot go wrong here. Why? Here is the explanation – if you can increase your reputation score just by 1%, you will be in a position to increase your hotel’s ADR by almost 7%.
Moreover, increasing your reputation score will also help you to increase your occupancy by 1.4%. Now, this is what you want to achieve, right?
Best-in-class guest services increase their (guests’) happiness; they become your loyal customer and they give you repeat business.
They also write positive feedback about your property on various review sites and on social media platforms.
This helps you improve your online reputation and rating. And with an enhanced online reputation/rating, you will be certainly in a position to increase your room price.
On what basis can you come up with an occupancy forecast and room pricing, if you are not in a position to analyze local market demand?
How would you beat the competition if you don’t track their pricing? To do all these with ease, you must understand the importance of business intelligence in revenue management.
Key metrics on such aspects will surely help you to analyze and increase ADR while improving the occupancy.
As you know that higher ADR is the key to your hotel’s profitability, too much focus on ARR or occupancy might not help you in the long run.
Hoteliers’ failure to change room rates is another major mistake they commit.
While having a static rate will weaken your hotel position, occupancy-based dynamic pricing can help you to reach your full revenue potential. Set pre-defined rates for different occupancy levels.
For instance, an offer a 10% lower rate when occupancy is at 70% and roll out a discount of 20% when occupancy goes below 50%.
This helps you generate more demand during off-seasons, and earn more revenue when demand is on the higher side.
This is the most serious mistake that hoteliers must avoid in today’s highly competitive business environment. With the absence of a smart cloud-based PMS, you cannot –
- Have a strong inventory distribution plan
- Manage guest reviews and improve reputation score/rating
- Have KPIs at your disposal to make data-driven decisions
- Apply occupancy-based dynamic pricing
In addition, the Cloud PMS comes integrated with a sales management solution. Without this, you cannot establish relational rates and apply various rates and forms of support for a single stay.
In short, with the help of a revenue management solution, you can optimize Gross Operating Profit and Net Revenue per Available Room at your hotel while offering competitive yet attractive rates to your guests.
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