When most independent property owners think of revenue management, it typically boils down to raising and lowering rates. But revenue management encompasses a bit more than just rates as many define it as:
Selling the right product/room to the right guest at the right time at the right price through the right channel.
We’ll break down some tactics and ideas into three main categories to get you thinking about what needs to go into your revenue management strategy.
Rates + incentives
- BAR/value: To maximize your revenue, you have to understand your property’s value and Best Available Rate (BAR) and base your pricing adjustments off that rate.
- Competition: While thinking of your value, you’ll also want to take into account your competition’s pricing and your market to remain competitive.
- Historical data: You know what weekends/seasons are generally sold out and what you can probably price a bit higher. Use your historical data to help understand the demand to forecast times when you could raise rates and alternatively when you need to lower them.
- Dynamic pricing: With dynamic pricing, you can set rules to automatically adjust your rates based on occupancy and demand.
- Other rates: Offer special rates for groups or if you know many of your guests are local, you could offer staycation rates/local discounts to guests in the area as a way to increase guest loyalty.
- Exclusive offers or short discounts: Many revenue managers and hoteliers have seen success with running 24-hour or 48-hour sales on rates to fill need periods and your pricing should be flexible to accommodate these sales. Another option is to utilize your email marketing lists and send targeted campaigns with offers and discounts otherwise not available on your website or the OTAs to encourage new reservations.
Booking engine + website
- Book direct campaigns: Getting direct bookings is the most cost-effective way to grow your business and you can remind guests to book direct via email communications, as they check out, through social media, or using pop-ups on your site promoting a best rate guarantee or discount.
- Upsell opportunities: Include options in your booking engine for guests to add packages or enhance their booking with POS items. This easily adds a few more dollars to their reservation and provides more value in their stay.
- Search Engine Optimization: If you want more guests to book direct, then you’ll need to invest in online marketing and Search Engine Optimization (SEO) to get them to your website!
- Personas: You know who your typical guest is so make sure your website and offerings are tailored for them. If you can highlight your property’s amenities or value, you can more often than not get them to pay a bit more because they have a better understanding of what you’re offering and why it’s a right fit for them.
OTAs + third parties
- Channel management: Most of today’s PMSs allow you to seamlessly connect with other online channels and OTAs and these channels should not be ignored or vilified. OTAs can help you reach new guests and get new bookings. Just make sure the channel integrates with your PMS, is affordable, has good exposure or a large customer base, and fits your target market.
- Meta search sites: Meta search sites, like TripAdvisor, are starting to get into the booking game as well though their pricing is more diverse than just a straight commission.
- Directories: Having a strong presence on directories and review sites not only assists your SEO efforts but can provide grounds for increasing your rates! A study by the Cornell University School of Hotel Administration found that “if a hotel increases its review scores by one point on a five-point scale, the hotel can increase its price by 11.2% and still maintain the same occupancy or market share.”