Revenue management is an important part of running your independent property but what exactly is it? It’s a term that was used in the airline industry to better price seats and maximize profits.
In a nutshell, it’s selling the right product to the right customer at the right time.
Revenue management focuses of RevPAR (Revenue per Available Room) instead of focusing on a high Occupancy Rate and high Average Daily Rate.
Revenue management involves understanding your property’s history of its supply and demand to forecast your year or season. Of course you could have spreadsheets and spreadsheets of historical data to get granular about your occupancy, or you could follow the simple dynamic pricing structure as the past doesn’t always predict the future.
With dynamic pricing:
- When demand is high, prices increase
- When demand is low, prices decrease
You can also work in requiring minimum night stays when demand is high and offering promotions or packages when demand is low to bring in guests and add additional dollars to each reservation.
Some of today’s online reservation softwares allow you to set up yield management rules, essentially dynamic pricing, where you can specific if you want to adjust your rates by a percentage or fixed amount based on your occupancy and how many days out the reservation is.
Yield rule to raise rates.
Yield rule to lower rates.
Beyond yield management rules, there are a few other tactics you can use in your revenue management strategy.
Only list prices within your PMS
Gone are the days of listing your prices on your website as it locks you into that price when you could offer the same inventory at a higher rate. Create your rates within your PMS so they automatically update on your booking engine and OTA channels. That way you can be flexible on pricing and your guests will never know.
Upsell or exclusive offers
This is a win-win for everyone as guests can enhance their experience at your property with a romance package and you can add a few more dollars to your bottom line.
Book direct campaigns
OTAs can be a great ally in generating midweek bookings, filling in need periods, and introducing your brand to new travelers but if you want to reduce some of your commission costs, you can always run a book direct campaign where you remind past guests that you have the best rate on your website.
Want to learn more about revenue management? Sign up for our free webinar, “Benefits of Revenue Management” on July 20, 2017.