Hotel Revenue Management: How to Increase Your Bottom Line
Hotel Revenue Management: How to Increase Your Bottom Line
Completing a hotel profitability study represents one of the first steps in increasing the revenue of your hotel. Once you have all the data you need, you can make much bigger strides in forecasting. Leverage your technology and data to move forward with your plans for better hotel revenue management.
How Can You Refine Hotel Inventory Management To Boost Revenue?
Competition runs high in the hotel industry. It only becomes more fierce as Airbnb and other platforms allow people to turn their personal properties into rentable spaces. Add the fact that many people shun hotels during viral outbreaks and you have a recipe for economic hardships for hotels of all sizes. So, what can companies do to improve inventory management and boost revenue?
- Capitalize on Mobile Tech: Hoteliers need to invest in cloud-based mobile platforms that allow for real-time management from anywhere. Making booking easier through the use of apps or websites designed for mobile devices can also make a world of difference when it comes to convenience for customers.
- Make Data-Driven Decisions: In business, it is tempting to make decisions based on gut feelings and sometimes they work out. Even so, a much better approach involves reviewing data and using it to make informed decisions. Key performance indexes offer a good starting point.
- Use Integrated Systems: It is absolutely crucial to invest in a cloud PMS with an open-API architecture: The PMS is the heart of your hotel’s technology stack, and as such should be the core of connectivity. Open-APIs remove data silos, allowing information to flow freely between platforms and guest touchpoints. Removing these data silos generates increased efficiency and productivity in back-of-the-house operations, while also creating a unified and seamless guest journey.
- Maximize Direct Bookings: Hotels retain 93.2% of revenue for direct bookings, compared to 82.7% from third-party websites. Encouraging direct bookings helps hotels fine-tune budgeting by reducing expenses. It can also help with branding as many customers do not pay close attention to the brand when shopping by price or ratings on third-party websites.
- Create Consistent Value: One of the most important tips for successful hotel management is to consistently offer value to customers. When hotels create products that have value, they naturally attract the right guests. To add to this, guests become much more willing to pay higher prices.
How Can Business Owners Improve Hotel Revenue Management?
Inventory management ties in closely with budgeting and revenue management, but there are some key differences. For instance, a mobile PMS can send automated, targeted offers for room upgrades, amenities, loyalty offers, and monetized early check-in/late check-out, directly to a guest’s mobile device. This means a hotel can continue to enhance a guest’s revenue potential, even during supposed “low periods” of depressed occupancy. Even so, to maximize the benefits, hoteliers should focus on improving both aspects of the business. Use the tips below as a starting point.
- Invest in a Mobile PMS: A mobile PMS is the heart of a hotel’s tech stack 一 and the heart of its revenue strategy. This is because a PMS creates the foundation of a unified guest profile (including rate, stay and purchase history) that can be used to inform more targeted marketing campaigns, and more meaningful interactions with staff and technology touchpoints. The accuracy of hotel industry forecasting comes down to how good the data the hotelier uses is. Right now, at least 34% of hoteliers have yet to harness the full power of predictive data. A mobile PMS allows hotel managers to innovate ahead of the market while improving efficiency.
- Consider Investing in an CRM: A CRM can build on this profile by adding a customer’s loyalty status, preferences, travel intent, and survey results. This will allow for even more nuanced marketing campaigns, as well as better analytics for predicting future revenue and campaign effectiveness.
- …Or an RMS: By accessing a PMS’s inventory, stay and folio data, an RMS can perfect a hotel’s rates, restrictions and overbooking strategies. This can significantly enhance the accuracy of its demand forecasts, heighten the reaction time for pricing and rate updates, and optimize the hotel’s distribution and revenue.
- Choose Partners Wisely: Even the largest hotel chains need partners to help them attract more guests. However, not all platforms are worth partnering with. Companies need to make decisions based on commission and the platforms that best overlap with their target markets.
- Build Brand Reputation: Every brand has a reputation, even if it only attracts a small niche. Do not allow your sub-sector to define what your brand should be. Create something unique that customers feel proud to be associated with. Then, create marketing material and find public relations opportunities that feed this goal. Building an authentic and positive reputation is crucial for your hotel’s bottom line. In fact, for every 1% increase in a hotel’s reputation, RevPAR can increase by as much as 0.96%.
- Rely on Digital Marketing: Online marketing made it much easier for companies to build a brand, grow awareness and reach the people most likely to contribute to the wealth and health of the business. From search engine optimization to PPC ads, the opportunities are endless. You also benefit from better cost-effectiveness compared to more traditional forms of marketing.
If you would like to learn more, check out our new free ebook entitled, Budgeting During a Crisis: What is the Mission Critical Guest Experience?Here, StayNTouch partnered with OpenKey and TrustYou to explore the essential contactless solutions that hotels should include in their budget assessments in the post-COVID new normal. Get your free copy today!