5 Hotel Revenue Management Strategies You Must Implement to Grow Your Business

You and your team may constantly brainstorm on various hotel revenue management strategies to come up with ideas – to increase your revenue, get more bookings and cut your costs.

But most often than not, the strategies may not yield the results you desire. That makes you often wonder where exactly you might be going wrong. Well, you could have overlooked quite a few vital checkpoints.

In this article, we’ll talk about these checkpoints on which you can build your hotel revenue management strategies.

But before that, let’s first understand the basics of revenue management.

What is hotel revenue management?

Simply put, revenue management is selling the right hotel room, for the right price, to the right customer, at the right time, through the right channel.

The hotel industry relies on the concept of revenue management to optimize the hotel’s financial outcomes by maximizing revenue.

Typically, it requires businesses to make effective use of performance data and analytics – to predict demand, create a dynamic pricing model and maximize revenues.

The importance of revenue management in the hospitality industry

The concept of revenue management has more significance in the hospitality industry.

Why?

Hotel revenue management takes the guesswork out of key pricing decisions. It’s all the more important in the hospitality industry because hotels deal with a fixed cost, perishable inventory, and varied levels of demand.

5 Important Hotel Revenue Management Strategies

1. Promoting direct booking by offering incentives.

Although bookings through external partners (OTAs) are valuable, getting direct bookings are more profitable. Find ways to boost direct bookings; offer value-added incentives. That may include, discounts on food and beverage, reduced reservation price, or discounts on future stays.

Direct bookings are great to create customer loyalty. Create a loyalty program and increase the likelihood of your guests recommending your hotel.

Through these efforts, you need to divert your guests from comparing you to your competitors, where your competitor may have an advantage.

2. Forecasting needs to be accurate.

Forecasting remains an important aspect of revenue management. It allows you to stay prepared by anticipating future demand and revenue.

A successful forecasting strategy is the one that relies heavily on historical data to identify trends. For instance, if your last 5 years data shows an increase in business in the month of December, it is clever to assume that this year too it’s not going to be any different.

Along with forecasting, data mapping is equally important. While forecasting gives you an idea about the projected costs and needs, as well as expected revenues, mapping gives you the knowledge of where your demand originates.

Mapping gives you the information to spot trends – whether your business is growing or declining from customer demographics. Mapping also divulges information about customer preferences and how they spend as per the age group. This information is vital for your marketing and sales initiatives.

3. Implementing the right pricing strategy.

The right pricing strategy is the one that is based on what you have to offer, who are your customers and what strategies your competitors are employing to attract them. You aim is to create a strategy that is successful in offering a competitive price to your customers.

A competitive pricing strategy puts your business in direct competition. That is extremely a good move, especially when you have a lot more to offer than your competitors.

However, during a slow season, a discount strategy might work the best. It’s always better to have a low-paying customer than an empty room.

4. Increasing your efficiency through automation.

Technology is all around us and it is influencing us to do our jobs better. Hotel management software can be used to automate time-consuming tasks that typically do not require human intervention.

Automation can effectively streamline your operations and increase your productivity, freeing your time to focus on other important aspects of the hotel business.

5. Staying updated with the latest industry trends.

It’s important to keep pace with the current trends and apply them. Never lose sight of the changing customer behavior patterns.

Be present where your customers are. Monitor what your guests are saying on popular social media channels. Respond to all online activities that concern your hotel. Knowing your customer’s perspective can help you take crucial steps to implement strategies that can increase your revenue.

If you want these strategies for revenue management to work for you, have a good look at your operations first. That’s a good place to start. These strategies if implemented correctly can increase efficiency and revenues.

Karan Iyer is an end-to-end digital marketer and blogger who inherently understands the hotel industry with his hospitality background.