Hotel Revenue Management Strategy – How to Grow Your Hotel and Increase its Revenue
Are you looking for the best revenue management strategies to increase hotel revenue and grow your hotel in the industry?
A strong revenue management strategy is crucial for hoteliers trying to expand their business since it helps to optimise operational efficiency.
However, several smaller strategies might help facilitate growth in the hospitality industry that falls under the larger revenue management framework.
In this article, we’ll discuss some of the most dynamic revenue management strategies to increase hotel revenues.
But first, let’s understand what a revenue management system is.
What Is a Revenue Management System?
A revenue management system software is a tool that enables you to perform critical revenue management operations more efficiently. It collects and analyses data from your hotel and the industry to help you make better decisions.
A robust hotel revenue management system will typically assess the state of the market and demand in real-time using data and its algorithms. It does so to determine ideal hotel room rates. As a result, the most critical hotel revenue management decisions can be made from a single, centralised interface.
Regardless of the size of a hotel, a revenue management system is essential in the hospitality industry. This is because a revenue management platform enables complex computations to be executed quickly. It also enables real-time market data monitoring, which is practically impossible to do manually.
You can easily and quickly update your pricing across several distribution networks using a revenue management system. This enables you to not have to log in to each one separately. As a result, key performance metrics such as revenue per available room can be increased, resulting in higher profits for the hotel.
Small and mid-sized hotels are even more in need of revenue management systems because they have limited rooms and must maximise revenue per room.
Since revenue management is almost impossible to handle manually, it is an excellent tool for bigger hotels. Moreover, executing revenue management calculations manually could result in more miscalculations and poor decision making.
What are the Revenue Management Strategies in the Hotel Industry?
Hotel revenue management is also relevant in other business sectors too. But, it is especially important in the hospitality sector due to perishable inventory, fixed rates, and fluctuating demands. Revenue management is vital because it eliminates the guesswork from major price decisions.
The following is a list of some hotel revenue management strategies that you can implement to help your hotel grow and increase revenue:
Understand your market and the demands of your industry
It is essential to have a thorough understanding of your market to create an effective revenue management strategy. You must determine where industry demand comes from and the many local elements that may influence seasonal demand. You must also be mindful of your client’s requirements, desires, and expectations.
Additionally, you must analyse the market competition and make smart pricing, promotional, and advertising decisions with this competitiveness in mind. Remember that the competition may not always be apparent, and it may not always be in the same region as your hotel.
Price optimisation and segmentation
To sell the right hotel room to the right customer at the right price, you must categorise your client base appropriately. A technique to do this is to segment your clients into different ‘types,’ analyse their behavioural patterns and hotel reservation preferences, and then optimise the price for each category.
One of the primary benefits is that price fluctuations can be reduced once rates have been optimised for a specific group. This strategy, in turn, can help you build customer loyalty among people who value the rate constancy you offer.
Strategies for forecasting
One of the ways to increase hotel revenue with revenue management is forecasting. It enables you to forecast future demands and profits, allowing you to make necessary changes accordingly. For high-quality forecasting in the hotel industry, accurate statistics involving vacancy, hotel room prices, and sales, are required.
Most forecasting techniques rely largely on historical statistics to identify industry trends. For instance, if you’ve noticed an increase in revenue in the previous two December, it’s logical to predict that it might happen again next year.
On the other hand, forecasting necessitates an awareness of existing reservations, competitors’ progress, community events, and hospitality industry trends in general.
Employ Search Engine Optimization (SEO)
In the hotel industry, search engines are one of the most effective ways to attract potential clients. Because of this feature, search engine optimization is a crucial aspect of a successful revenue management strategy. Hoteliers can boost their hotel website’s visibility on search engine results pages by implementing SEO.
As a consequence, you can increase your odds of obtaining bookings from visitors looking for a hotel in your region rather than specifically for your hotel. To accomplish this, it is best to implement a strong online marketing plan and ensure that the design of your website is SEO-friendly.
Pick an appropriate pricing strategy
Several pricing strategies are available, but no single method has proven effective and successful. Instead, hoteliers should consider the appropriate solution for their hotel based on the following factors:
- The services they provide
- The type of guests they are striving to attract
- The strategies their competitors are adopting
When your hotel has more to offer than its competitors, a pricing strategy, in which tariffs are determined based on other hotels’ rates, puts your hotel in direct competition and is advantageous. However, in low-demand seasons, a discount scheme might well be better, as a low-paying guest is preferable to an empty room.
A value-added strategy is another alternative in which rates are increased, but additional benefits are offered through extras and freebies.
Incentives for making direct reservations
While it is necessary to cater to all distribution channels and meet clients where they are, it is also smart to boost direct reservations.
The main reason for this is that direct reservations do not require a commission fee paid to third parties, making them a suitable option for increasing sales. One approach is to provide special incentives for clients who make reservations directly through your hotel’s website, such as reward points or gifts.
Emphasis on smartphone optimisation
If you, as a hotel or property owner, aren’t using smartphone optimisation, you are losing to your competitors.
Ensure that your hotel’s website is mobile-friendly, which means that it loads faster, that the pages display properly on smartphones, and that all features are completely functional.
Furthermore, you must verify that your reservation processes are optimised so that clients can reserve rooms from their smartphone devices without switching to a PC.
Connect with a revenue consultant
Finally, one of the best strategies to increase hotel revenue is by hiring the services of a revenue consultant. A revenue consultant can provide expertise, skills, and experience to your hotel, which can certainly be advantageous on many occasions. You’ll also save money on training fees because of their established expertise.
Collaborate with a Revenue Manager to Grow your Hotel and Increase Its Revenue
AxisRooms has launched a one-of-a-kind solution wherein our Revenue Consultants will share their experience and expertise to help you boost your hotel’s profitability.
Our revenue consultants will:
- Manage your online reservation channels to sell more hotel rooms at favourable pricing.
- Understand and review your hotel or resort.
- Evaluate the presence of your hotel on online travel agencies and metasearch engines.
- Create visible sell rates.
- Utilise competition analysis to manage prices effectively.
- Develop pricing strategies based on data research.
- Revise sales targets based on current market conditions.
You can easily improve your hotel’s online presence and boost occupancy and sales with our revenue management as a service. Give us a call today or anytime to learn more details about our personalised revenue manager.