Every business must set its goal for growth and success. But for one to achieve the desired business results, a set of robust revenue management strategy is necessary to help optimise and facilitate the growth of the company. Several business owners in the hotel industry may have been following different plans to acquire more bookings, improve revenues, and diminish costs. But while they’re busy providing luxury in multi-service and accommodation, some may still miss out certain vitals that can cost them even more.
Thence, it is essential for a business to understand and acknowledge its needs for the objective that is not just concerning the business growth but also the power to win against competitors. Determining the business needs can be accomplished by means of revenue management solution. In this article, you will find a shortlist of the most efficient revenue management strategies that help your hotel business to attain its ultimate goal.
Concept of Revenue Management
Revenue management is a process that helps optimise the industry’s financial returns through maximisation of revenue. Although the procedure works with different types of industries, revenue management in hotel industry is much more significant, considering that this capital includes perishable inventory, fixed costs, and varying levels of customer’s demands. In simplified words, the best way to define the revenue management process is through a gradual strategy of selling the right hotel room to the right customer (at the right time, for the right price, through the right channel, but with the best cost-efficiency).
Understand your market.
To implement an efficient hotel revenue management system, it is crucial to have a clear understanding of your market including their preferences, demands, and expectations. But more than that, you also need to discover the real competition within the market ‒ as competitions are not always visible ‒ so you can come up with strategic plans about proper pricing, advertising, and promotion.
Consider segmentation and price optimisation.
Once you have identified your market’s needs and demands, it will be easier to conduct market segmentation among customers in order to come up with successful price optimisation. Segmentation is a process of dividing your potential customers into groups according to different types and characteristics.
Provide incentives for direct bookings.
While it is imperative to address consumer demands without hurting the profits, it is also sensible to boost your direct bookings. The primary benefit of this strategy is for you to lessen the need for third-party booking sites which often require payment as commission. Some of the most common strategies to maximise direct bookings is by giving away incentives in the form of vouchers or complimentary gifts for customers who make direct bookings or you can also implement a loyalty program where guests can accumulate points every time they make a reservation in order to increase the number of regular or repeat guests.
Monitor supply and demand.
Implementing revenue management strategies may also include the monitoring of supply and demand, which affects price optimisation as records of supply and demand differs over time. When the demand exceeds or recedes the supply, hotels would usually tend to modify the room rates, which is also known as yield management. Considering yield management in hotel industries can also help make decisions towards pricing optimisation based on understanding, anticipating, and influencing consumer behaviour so the business can maximise its profits from a fixed and limited resource.
Hire a freelance revenue manager.
If you are going to hire a revenue manager internally, that means you are also employing him or her for full-time with full payment. But a freelancer will only require a payment for the certain work that they actually do. In that case, less of their time will be wasted and less of your revenues will be spent. Plus, you will also save money on costs of training as freelancers may already have their established expertise.