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Top Do’s and Don’ts for Hotel Revenue & Distribution Managers

Hotel revenue management may seem like yet another type of management from a lot of myriads of management types in the business landscape, but Revenue Management is the heart of the entire hospitality industry where a revenue manager must orchestrate the bookings and room price in such a manner that it maximizes revenue.

The primary job of a revenue manager (traditionally) all day was to monitor the fluctuating rates and update their own inventory rate according to the market equation to sell the inventory at highest possible rates in the least possible time and at the same time maintaining high occupancy, RevPAR, and ADR. However, as the times have changed and technology has stepped its foot in almost every industry, there are countless Hotel Revenue Management Tools, like Rate Shopper, Channel Manager, Rate Optimizer, Online Reputation Manager, which have reduced the work of revenue managers in half and doubled the efficiency.

Additionally, with progress in technology, there have been some proven Do’s and Don’ts that have emerged for the revenue managers, which can guide them to shape their revenue generation strategy. Let us discuss a few of them here:

Look at the bigger picture – A smart approach for a successful Revenue Managers should be to stop focussing on just the revenue generated from the room sale, but start focussing on revenue generated by a particular guest, i.e. pay more attention to the Guest Life Cycle or Customer Life Cycle, as some may like to call it. As part of guest experience management, a hotel/revenue manager should keep a record of its existing guests including their choices and preferences and present them various services that they might purchase during their next stay. To explain further, depending on the persona or demographic profile of your guest, you could suggest them various other services of your hotel like, spa, club, gym, disco, etc. This practice creates new sources of revenue and increases overall revenue even when low price inventory has been bought.

Healthy Mix and Distribution of Inventory – Amid seeking for maximum bookings, a revenue manager should be aware of the art of creating a fine balance for exposing your rooms for sale on online and offline channels. Neither exhausting the entire inventory through OTAs nor selling all of them directly would be a good approach. Tools come to rescue in this a requirement. A competent Online Channel Distribution Manager can provide you a lot of support here. The revenue manager should keep a tap on the spending patterns of the direct and OTA customers so that you can optimize sales with the right mix of OTA bookings and direct bookings to achieve revenue targets. Modern Channel Managers allow revenue managers the flexibility to turn on and off any OTA channel they feel is not giving desired results or is proving to be very expensive.

Monitoring Competition – For a better revenue generation, it is always suggested to keep an eye on the competitors in the market. A good revenue manager should observe the prices, promotions, strategies, and processes of its competitors that he/she can adopt for their hotel as well if the need be. In a hotel business where prices fluctuate daily, it becomes even compulsory to keep a constant vigilance on daily competitor rate. The good news is you have tools for that; Hotel Rate Shopper. This tool helps you monitor daily room rates of your pre-decided comp-set. It does not end here, such tools help you with a plethora of other jobs like; an intelligence on overall market supply and average market rate for your city, even Airbnb market supply and average market rate, rate and availability reports for your property on different OTAs and Metasearch sites, a comparison of your ranking on OTA vs your decided comp-set and eyeball competition. Advanced tools even support event tracking for your city to enable a prior change in hotel room rates if required. Competitors can safeguard you against the failure of any new business practice in the industry and if it becomes a success, one can follow the suite.

Focus on Hotel Brand Image and Online Reputation – Developing strong costumers loyalties can help a hotel stand out from the competition. Reviews about your hotels matter a lot to build a strong brand image. Customer reviews and rating have a direct correlation with customer booking preference and thus revenue. Even the most competitive pricing can fail to lure the customers if the reviews are not positive. As per a research, only the price is more valued over the positive reviews in online travel booking. However, many consumers expressed that they will not book a room in a hotel in the absence of positive reviews, even if the price is very low.

The industry is realizing that managing Online Reputation Management is not a one-day job and not an easy one to do. Especially with so many social media sites, review sites to track your guest reviews as guests are present everywhere. Brands images are created over years and broken in a moment. A very strong reason so many hotels whether independent or hotel groups are adopting Online Reputation Management Tools. Major hotels are increasingly using it for restaurant reputation management also.

Some of the DONT’S a revenue manager should follow while creating strategies for better revenue generation are as follows.

Impractical Offers – Exclusive offers and packages are new fads and they are no doubt a powerful technique of luring the customers for bookings. However, a revenue manager should be well aware of the potential of the hotel to grab bookings without offers. Often it has been observed that revenue managers keep running useless offers just to follow their competition, shedding a chunk of hotel revenue.

Overbooking – Booking more than available inventory under the fear of cancellations may sometimes prove an intelligent move. However, this process should be highly optimized since any wrong assumption can lead to trouble for customer inflicting serious damage to the Hotel’s brand image.

Reliability on Single/Limited Channel for Selling – A smart revenue manager never relies on one a few booking channel for selling their room inventory and always keeps a profitable mix of OTA channels for grabbing more bookings. Hesitation in accepting the new approaches by Revenue Managers can be a reason for a hotel lagging in revenue generation. RMs should also monitor the performance of each of their channel partners. Set booking targets for all channels, check the volume of booking and Length of Stay (LOS) of bookings, analyze their profitability, etc. However, at the same time keeping the focus on direct bookings as well and walk-ins. This not only decreases hotel dependency on OTAs but also helps save heavy OTA commissions, thereby increasing profits.

Neglecting Social Media- Social media has emerged as the most raw and honest platform for customers to express their reviews, share their experiences and voicing their complaints and even booking. Being ignorant of the power of social media can be a suicidal and hence, a revenue manager should ensure proper engagement of hotel staff and management with the customers on social media.

Playing too safe – Business is about being bold and taking calculated risks. Playing too safe and practicing mundane business practices can keep your bread coming, but for a business to flourish it is very crucial to take risks. By employing latest strategies, taking less walked roads, the results can be extraordinary. A revenue manager should know the art of taking calibrated risks.

With time passing by, many new approaches would be tested, some of them would work and some of them might fail. In this competition-ridden industry, change is the only constant and revenue managers should brace themselves for any kind of turbulence that industry may witness.

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