Ten Suggestions on Hotel Revenue Management

Ten Suggestions on Hotel Revenue Management

Introduction: In the highly competitive hotel market, identifying and obtaining customers who can bring more value to the hotel will bring profits to the hotel. In revenue management, hotel operators should pay attention to the following ten aspects. Come and have a look with me!

First, get the right data.

Hotel operators who understand the principle of revenue management should know that using data and analyzing it is the best way to determine future marketing and pricing strategies. However, what operators need to examine is whether relevant parties can provide detailed historical data and future reservation data. Historical data should include the number of rooms rented in the past period and the daily income breakdown of each market segment, and ensure that at least the number of room reservations in the next 90 days and the daily income breakdown of each market segment are collected. If data are collected every day, hotel operators can establish a simple reservation forecasting system according to market segmentation and the law of the week, and can compare it with historical data through this system. If this situation continues, hotel operators can quickly adjust their business strategies accordingly when the demand increases.

Second, check whether the prediction results are in line with reality.

Accurate prediction is the key to a successful revenue management strategy, but hotel operators are often too optimistic about their future goals. A simple way to judge whether a predicted result is realistic is to compare the predicted room rental situation with the average daily room rental situation achieved by the hotel so far to see if the results are close. If the forecast is completely divorced from reality, then the business strategy is undoubtedly wrong and the hotel must make adjustments.

Third, analyze the different needs of customers in different market segments.

By knowing the hotel services that each customer in each market segment may use, hotel operators can better decide which customer should stay in the last available room, and provide free or discounted breakfast, free spa services, etc. Which customers to sell to at a specific time, thus stimulating the market demand in the off-season.

For example, customers in some market segments are very sensitive to prices, and hotels may have a positive impact on their demand by lowering prices, so hotels can implement discount promotions for these customers. Other customers may be less sensitive to the price and prefer room upgrade and free service, so the hotel can provide targeted spa and unique small gifts to stimulate their needs.

Fourth, scientifically analyze the impact of discounts on customers.

Hotels often panic when they are not expected to reach their sales targets, so managers will carry out promotional activities and cut prices sharply in the hope of stimulating demand. However, it can often backfire. Relevant research has proved to us more than once that it is difficult for price reduction to have a positive impact on the income growth of each saleable house.

In fact, when the hotel's room reservation drops, the worst countermeasure is to offer short-term discounts. In order to avoid the price war caused by excessive attention to price, hotels must maintain the service level and brand attention. Every guest who comes to the hotel needs to know what makes your hotel different, why your brand is unique, whether they are loyal customers or just stay in your hotel because of the discount.

Therefore, in the face of sales adversity, hotel operators should keep calm, adopt strategic methods and carefully reduce prices. We should consider: What should we do if our competitors adjust their prices accordingly after adjusting their own? As a result, everyone returned to the same starting line, and everyone would suffer.

Five, choose the right business

Not all businesses are quality businesses. If hotel operators sell too many low-priced rooms too early, there will be no room to meet the demand of high-priced rooms, and high-consumption customers will choose other hotels. If we want to optimize the business of high-consumption customers, then the sales team and management should know how to distinguish the advantages and disadvantages of the business and how to adopt the right strategy for the right business at the right time. The organic combination of these three levels is very important.

To ensure that the hotel can attract and retain high-value customers, we must pay attention to all the consumption of customers during their stay in the hotel, not just the room rate they paid. By integrating the data of all trading systems, we can truly understand a customer's consumption preferences and overall value, including all their additional consumption from online booking to checkout, such as catering, spa, gift shop shopping and so on.

6. Understand the risks of replacement business.

Although many hoteliers believe it? A hotel with a high occupancy rate is a successful hotel? This creed, but when the booking rate is weak, what must we pay attention to? Spell the price? All short-term pricing strategies may force the loss of higher-value customers and have a long-term negative impact. A high occupancy rate or a large number of repeat customers does not mean that the hotel is doing well, because it may squeeze business from high-value customers.

Hotels need to decide more wisely how to set prices and what kind of preferential measures to attract customers. Excessive use of discounts to attract customers will actually reduce the income of a certain market segment and drive away high-spending customers. It is necessary to understand the risks of replacement business.

Seven, the correct positioning of competitors.

If you ask different departments or personnel of the hotel, who are the competitors of the hotel? Then you are likely to get a completely different answer. There is no absolute right or wrong answer, so competitors will change with the changes of market segments or customer groups. Owners, hotel management companies and asset appraisal managers will use different competitors to evaluate performance. From the perspective of operation and revenue management, the key is to choose the right competitors according to the evaluation criteria used. Competitors will be different because of different consumption standards such as price range and market segment, and even because of different channels. Be sure to know who the real competitors are and how to compare their performance with the strategy you are evaluating.

Eight, find out the influence of strategy on profit rate.

Although the focus of revenue management is to create the best performance, the issue of profit rate is equally important. We should not only consider the benefits, but also consider the cost of formulating and implementing relevant strategies. For example, if a hotel wants to provide customers with free breakfast, the cost of these breakfasts should be considered when judging whether the subsequent income increase is worthwhile. If the increase in revenue is less than the cost of expenditure, the hotel may need to reconsider other low-cost promotional activities, such as providing free Wi-Fi in rooms and free late check-out service. As mentioned above, different market segments will have different reactions to different promotional activities. The demand of one customer may lead to high income and low profit, and the demand of another customer may lead to low income, but the profit is much higher than the former. This point must be considered clearly.

Nine, measure whether the work done is effective.

When it comes to revenue management, many hoteliers think that a suitable system or software will provide them with comprehensive market analysis and demand forecast, which can solve all the problems of hotels. These systems are indeed crucial for achieving comprehensive revenue management, but good analysis is only the first step. More importantly, you should measure whether the work you do is effective or not.

Hoteliers need to ensure that they have methods to measure the return on investment and the effectiveness of pricing or promotion strategies. Hotels must establish a true and reliable success standard before they can change prices or carry out promotional activities. Many hotels are used to it? Practical and tested? Measures, even if a lot of analysis shows that these measures are usually unfavorable.

X. learn from mistakes.

It is very important to measure the effectiveness of promotion strategy with appropriate methods. However, it is more important to use these results to make better decisions to improve future performance. Excellent revenue managers know that the system needs to be constantly adjusted, optimizing the functions that have been realized, and adjusting the functions that have not been realized to adapt to the changing business environment and customer needs.

Hotel operators must ensure that they have a good foundation for revenue management, including accurate market segmentation prediction, adopt corresponding pricing strategies for different businesses, and have strong analysis functions to avoid repeating the same mistakes.

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