As things are slowly becoming back to normal for the hospitality industry, more hotels are reopening and are discovering new ways to generate the revenue they lost during the past year.
As we discuss this, some people may ask what hotel revenue management is. Hotel revenue management is simply making sure that you are selling the right hotel room with the right price to the right guests.
There are different methods that hotel revenue managers can use for revenue management. The first one is optimizing revenue.
Revenue optimization means combining factors such as price, demand, and marketing strategies so a company can maximize the growth of revenue.
When it comes to optimizing your hotel to maximize revenue, hoteliers should not just focus on selling rooms. They should take into account other aspects of the hotel such as event spaces, food and beverage, ballrooms, and room upgrades. Another thing that revenue managers should take into consideration for optimizing revenue is guest expansion and how to upsell ad-hoc services to the current guest during the post-booking phase.
It is very important for hoteliers to take all of these aspects into consideration rather than rely on hotel rooms, like predicting what the customer demand is and increasing margins by boosting sales. Learning about hotel revenue management might help your property increase profits. There are several hotel revenue management courses available for hoteliers you could take into consideration.
With extensive research, we have found various ways and tips that would help hoteliers to maximize their revenue as things go back to normal post-pandemic. If you are a Revenue Manager of a hotel, you should take these useful tips below into consideration. Here are five tips for optimizing your hotel to maximize revenue.
1. Know and understand who your guests are
When it comes to hotel revenue management, it is important to know and understand who your guests are. The reason why it is important is because it will help hoteliers figure out how the hotel should be presented as well as customize packages and messages based on their knowledge of the guests.
One tool that hoteliers can use to know and understand their guests is to create a hotel guest persona.
A hotel guest persona is a theoretical outline hoteliers use that includes information such as actual clients they can possibly use and products/services they sell. Hotels use guest personas to accommodate different groups of guests.
When it comes to creating a hotel guest persona, hoteliers need to collect data about their current and prospective guests. This data should contain information about the guests such as who they are, their way of traveling, money they are spending for their stay, and how they are booking the hotel room.
Hoteliers can use Google Analytics, social media analytics, CRM data analysis, and human insights to collect data on guests.
Having a hotel guest persona is an important asset to a hotel in terms of optimizing and maximizing its revenue, it helps segment guests into different groups and focuses more on their preferences and interests.
2. Put more focus on guest experience
The guest experience is very important for a hotel’s success when it comes to maximizing revenue. 86% of guests want to pay more for an excellent guest experience at any hotel they stay at.
There are two steps for hoteliers to take into consideration when it comes to creating a good guest experience. The first step is to use the knowledge that you have of your guests and use it to deliver personalized guest experiences.
The second step is to collect and analyze feedback from previous guests. Another idea is to make it easily accessible for current guests to leave reviews on the hotel. Having a better understanding of how your guest’s experience has been, will give you the possibility to improve it and take action if the guest was not happy. This will definitely improve your general online reputation.
Another way in which a hotel can put more emphasis on the guest experience is to offer unique guest experiences that other hotels may not provide. This would draw more customers to the hotel and more revenue. Some examples of hotel brands that go above and beyond to provide great experiences include EVEN Hotel, Hilton, Marriott, and Walt Disney World Resort.
3. Come up with the best pricing strategy
When it comes to revenue management, adopting the right pricing strategy is crucial for a hotel’s success. Hotels have to carefully select the pricing strategy that works best for the company. There are several pricing strategies that hoteliers can choose from to maximize their revenue. Some examples of these well-known pricing strategies include:
- Occupancy-based pricing: Selling hotel rooms based on supply and demand.
- Cancellation policy-based pricing: The cancellation-based pricing is different in the sense that it has to do with charging a lower rate in the event that the cancellation is nonrefundable. Hotels can also charge higher rates based on the flexibility of cancellation.
- Upselling-based pricing: Offering guests the possibility of upgrading their hotel rooms. Hoteliers can encourage their guests to spend more money if they offer these room upgrades.
- Loyal customer-based pricing: Offering discount codes for guests or loyalty programs. These two things will encourage guests to come back to the hotel and pay money for their stay. In return, it is a way for hotels to generate revenue from these existing customers.
4. Place incentives and rewards for direct bookings
When it comes to booking a hotel room, direct bookings should be the main focus for hoteliers because it is an easy way to increase revenue for the hotel. because the hotel does not have to pay an OTA commission.
One of the ways in which a hotelier can focus on direct bookings is to provide incentives. A few examples of incentives that they can offer include free items, upgrades for rooms, and loyalty points.
Another way is to reward its guests for booking directly through the website such as giving discounts for direct bookings and giving its loyal customers something extra for booking directly through the hotel’s website.
In order for a direct booking to be successful for a hotel, the hotelier should make the website easily accessible for guests to book directly.
A hotelier should also install a booking engine for its homepage of the website. This booking engine would make it easier for guests to book right from the homepage.
5. Concentrate on value rather than price alone
Hoteliers should concentrate more on the value and make sure they do not lose sight of their value proposition because they could be at risk of financial instability if they have less cash flow.
When hotels partake in price wars instead of focusing on value, it is affecting their businesses, delaying the growth of the hotel.
To summarize, it is important to know what optimizing and maximizing revenue mean for a hotel’s success. Revenue is an important aspect of a hotel. A hotel cannot function and thrive without generating revenue from its guests. Therefore, we have provided different ways for hoteliers to maximize their revenue during their path to success. The five tips that we provided each play a significant role in hotel revenue management, helping revenue managers in the long run.