In Part 1 of this series, we took an overall look at yield management strategies for setting the right room rate for your small or independent hotel and talked about the first segment of the four basic parts of the yield management cycle: forecasting demand.
Now we’re in the home stretch! Let’s take a look at the fourth and spoke of the yield management cycle: monitor demand.
An Ongoing Process
There’s a reason it’s called a “cycle;” yield management is an ongoing activity, not something you do once and relegate to a forgotten file folder in your memory bank. And like a bicycle, you need to keep “pedaling” to get anywhere with it!
Think of monitoring the current or just-ended cycle as part of forecasting for the next one.
No matter the chosen length of your cycle, sit down at the end of it for a review session. Where were you at the beginning of the cycle? What was the goal? Are the results anywhere near what you expected? Were the results better, on target, or nowhere near what you’d hoped?
Let’s say your goal was to sell those pesky last four of the ten available rooms that typically sit empty on lower-demand, mid-week nights. After putting out the word via your marketing channels and setting the controls in your chosen automated reservation system, you booked an average of two additional rooms on those nights.
Congratulations! You’re definitely doing something right if you reached 50% of your goal. Now is the time to take a closer look to see exactly where your efforts succeeded and where they fell short. There is always room for improvement in your tactics, but don’t let it get to you if your forecasting is never 100% accurate.
Accuracy Can Be Overrated – Sometimes
Let’s face it—it’s easy to predict when your small or independent hotel is going to be full; it’s much tougher to come up with ways to attract additional customers on low-demand nights (and to figure out why it works some times and not others). Improvement should always be your goal; shooting for 100% accuracy 100% of the time is a recipe for frustration.
You get as much out of the yield management cycle as you put into it, but there is a point where the law of diminishing returns kicks in. It’s possible to spend too much of your valuable time on tweaking room prices for the sake of that last little “nth” of a percentage point of improvement, when your time might be better spent on those intangibles that make your small or independent hotel the unique treasure it already is.
- Customers appreciate customer service.
You can drop the rate on those last two empty rooms by $5, but if you’re paying too much attention to numbers and not enough to customer service, a significant number of customers will pay the extra few dollars for better service at a competitor’s hotel down the road.
- Customers appreciate pricing consistency.
Customers, especially repeat customers, don’t like to see room prices going up and down like a yo-yo; they’ll constantly wonder if they’re actually getting a deal. Find a price point that gets the customer you’re looking for through the doors as consistently as is realistic. Then work on the things that keep them coming back – customer service and amenities.
Contact us today to find out how we can help you apply yield management strategies to your small or independent hotel!