Hotel Revenue Management: Small Changes Add Up

No doubt about it, the Internet has done much to level the marketing playing field between the giant chains and the independents in the hotel industry. But even if we could totally automate our property management system to integrate seamlessly with all our global distribution channels, does that mean we can just “set and forget” our hotel revenue management?

Absolutely not. The human element is still a critical part of ensuring each category of rooms in your inventory is at the right price point to maximize RevPAR, or revenue per available room. It’s crucial to monitor how much each of these online distribution and marketing channels are costing in terms of dollars and hours to ensure you aren’t wasting both on unproductive efforts.

Determining Channel Productivity

Here’s how to break out the data to determine when a channel is productive or not:

  • Track how much time you’re spending maintaining each channel.
  • Track which channel leads to actual bookings, and factor in the length of stay and room types booked. You may find the type of customer you attract through Twitter differs from one who booked due to a Facebook or email newsletter promotion.
  • Compare the ADR, or average daily rate, to the actual revenue each room type produces.

Eying the Competition

Your hotel doesn’t exist in a vacuum. You’ve got competition, plus savvy customers who keep discovering more hotel room deals online. To avoid getting left in their dust, you should be where your competition and your customers are online. This can be a challenge because new web sites, private networks, flash sales via email newsletters, mobile apps, Twitter hashtag deals, and Facebook tools pop up all the time.

Good hotel revenue management means keeping an eye on the competition by subscribing to their email newsletters, tracking their Twitter feeds, and even “liking” their Facebook page so you can know when a promotion occurs that might impact your bookings.

Garbage In, Garbage Out

All kinds of software tools can compile and analyze incoming data from all your distribution channels. It seems logical that the more data you have, the better, right? Not always.

Knowing how to organize the most important data points will keep you from going cross-eyed from trying to make a decision while that data is still fresh and relevant. For example, while it’s helpful to know how many bookings occurred through your Facebook flash deal, it’s even more helpful to know exactly when the majority of those bookings took place. If your target customer isn’t logging on to Facebook until after dinner, chances are that flash deal you posted in the morning will be too far down on the news feed for that customer to see.

Online travel agents, however, may start logging in first thing in the morning, so sending out a carefully timed email special at that time will more likely draw their attention.

Looking Forward—and Sideways—for Hotel Revenue Management

Relying solely on historical data to forecast future demand can sometimes backfire if you aren’t also paying attention to what’s happening in the travel industry as a whole. Let’s say you’ve set your room prices for the next month based on good, solid, historical data. It’s a rate designed to attract more customers during a traditionally low season for your hotel. That’s all well and good, but what happens if a major airline runs a special fare for flights to your region? Suddenly, hotel rooms are a hot commodity, and you’re sold out before you’ve had a chance to adjust room rates to the sudden demand. You’ve lost out on an opportunity by not taking into account current and future data points.

That’s why the key to successful hotel revenue management involves more than automated tools. By understanding the human element and analyzing your data, the competition’s deals, your customers’ preferences, and industry news, these small changes will add up to more bookings and increased revenue. For more information, contact and let us help

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