Hotels can take immense benefit from the Revenue Management concept and Conversion Rate Optimization (CRO) in today’s hotel industry. Why revenue management is important? Revenue management is important because it optimizes pricing strategy for hotels, availability, and distribution channels to maximize revenue and profits. On the other hand, CRO focuses on improving the conversion rates of website visitors, leading to increased bookings and revenue. By combining it, hotels can enhance their performance, make data-driven decisions, and deliver a superior guest experience. In this article, we will explore the top benefits that hotels can derive from these concepts. And how these strategies can be integrated to drive success in the hospitality sector.
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The Revenue Management Concept
What is revenue management in hotel? Pricing and revenue management includes an in-depth and systematic evaluation of demand based on historical data and forecasts. It isn’t just about changing prices, opening and closing room availability, and placing limits. This concept involves using mathematical models and algorithms to massive amounts of gathered data. Pricing, packages, offers, and marketing campaigns are under the control of revenue managers. They offer data to support decisions in sales, marketing, and tech. Keep reading for the best revenue management companies in India and how they can help your hotel.
The hospitality sector in India saw a rapid recovery post the third wave of COVID-19 in January 2022.
Image credit – Hotel Momentum India (HMI)
Key Statistics
1. The Indian hotel sector saw a growth of 39.1% YoY in Q1, 2022.
2. The total number of hotel signings in Q1, 2022 stood at 56 hotels with 3739 keys.
3. The hotel signings saw an increase of 81.2% as compared to Q1, 2021.
4. Mumbai emerged as the RevPAR growth leader in Q1, 2022 with 71.5% over Q1, 2021.
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CRO
Optimizing website conversion rates (CRO) is another data-driven strategy. It is a multi-factorial, math-based, data-intensive process that crosses the line between being a science and an art, much like revenue management and pricing. Many revenue managers are still unable to see its potential or the benefits of adopting it.
Why is CRO important?
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Key Statistics
1. The average website conversion rate is 2.35% across all sectors.
2. The best-performing websites have a conversion rate of 11%.
3. The conversion rate on desktops is 4.14%. Conversions through tablets account for 3.36% and phones for 1.53%.
4. 94% of the web traffic is generated through organic results.
5. 69% of marketers consider lead conversion as their top priority.
6. 68% of small firms haven’t yet adopted CRO strategies.
How does CRO Relate to the Revenue Management Concept?
Revenue managers who are driven by data should value CRO because it is all about accurate metrics and ROIs. On the other hand, this isn’t always the case when talking about marketing concepts.
For instance, the brand is vital and everyone agrees to it. But how to know and calculate the marketing spending impacts on brand recognition and NetADR (Average Daily Rate)? It is hard to determine for small and medium-sized hotels. As a result, not all marketing ideas are suitable for the revenue management concept. This is where CRO and its KPIs will help. Thinking about revenue management outsourcing? Click below for the best hotel RMS or revenue strategy software.
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CRO in the Revenue Management Concept Has 2 Unique Parts
Strategies of revenue management.
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CRO is made up of two distinct yet related elements. Both parts should receive a lot of attention because they are both crucial. While you are at it, think about why you need hotel revenue management software or a hotel revenue management system.
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1. Website speed and key features
There are some key features in the first part that need to be fixed. The basis for further conversion optimization progress is provided by key parts like website speed and a crystal-clear CTA: The Book Button. These are the initial set of problems that need to be removed and are obstacles to direct bookings. The inability to address these issues will result in visitors leaving. Website developers and UX/UI designers optimize across this phase using ideas from the marketing team. But, it is not enough always.
2. Target and segment guests
The second category of features converts visitors and motivates them to complete the booking. Cognitive biases and behavioral marketing are used to help with decision-making. Website performance, access, usage, etc. should be prioritized in order to lay the basis for Website Conversion Optimization. Personalization is the key to success in this case. In order to convert the ideal guest, the right offer must be made at the right moment with the right benefits. Does this sound familiar to you?
In fact, the best guest segment and target are essential to both advanced CRO and the revenue management concept. Many guest groups have various behavioral patterns and motives, needing various personalized booking journeys and conversion factors. Because they give their guests a customized experience across the booking funnel, successful websites convert more guests. They conduct audience research and deliver what they are looking for. The best revenue management company in India will help you with your CRO.
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5 Myths About CRO in the Revenue Management Concept
CRO mistakes that your hotel should not make.
Image credit – The Marcom Avenue
Let’s look at the most common myths about CRO in the revenue management concept that we will bust for you.
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1. CRO is only web design
Your website is bound to become more enticing to users by having a strong website design and excellent user experience. However, it won’t increase your conversions on its own. CRO is the methodical process of identifying which online interactions result in direct bookings so that you may highlight those. And minimize or do away with those that fail.
2. Advanced SEO is also CRO
SEO (Search Engine Optimization) aids in creating traffic. However, not all traffic is of equal quality or converts at the same rate. Increasing direct bookings from existing traffic is the goal of CRO. Without spending money on SEO, you can work on CRO to enhance sales. Even if these areas often overlap. A fast website upload speed is good for both SEO and CRO, as more satisfied website users make more bookings.
3. CRO is a universal strategy
‘Best practices’ alone won’t increase your conversion rates. It’s possible that what works for your rivals or other industries won’t work for you. CRO is dynamic. In reality, it involves constant testing and knowledge of what helps your firm. Each hotel should have a unique CRO approach.
4. CRO is not about the guest; it is all about the hotel website
Any changes made to a website are made in the dark without knowing who your guests are and what they are looking for. Your choices and guest experiences are used by CRO to promote online direct bookings.
5. A revenue manager does not perform CRO
The final point, which sums up all the above, is that most revenue managers think it is the job of the e-commerce manager, digital marketing manager, website developer, SEO expert, or UX/UI designer, not their own! Many revenue managers think that someone else should be in charge of boosting the conversion rate because they are confused about CRO.
It’s crucial to realize that CRO is actually a skill set that combines analytics, design, user experience, interface, copywriting, marketing, and e-commerce. In fact, some refer to it as conversion marketing. What are the revenue management benefits? A key difference between hospitality and other forms of eCommerce is that the revenue management process is a pillar of the analysis. And it should serve as the basis for all marketing efforts. Are you looking for technical expertise? Are you searching for the top revenue management companies for hotels? Read till the end.
[Must Read: Ultimate Guide: Revenue Management System Vs Revenue Manager]
How to Combine the Revenue Management Concept and CRO?
Benefits of CRO.
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The core of both RM and CRO is personalization. So, CRO and revenue management tools can be integrated.
Data offered by a revenue manager is beneficial for CRO. Because they have a good know-how of consumer behavior patterns. With the use of this data, CRO tools can target the ideal customer with the most tempting offer within the ideal booking window. A simple example would be to give a discount for early booking to family travellers who can be converted with a value deal but not to business travelers who are less price sensitive.
The direct channel is always the ideal channel for the revenue management concept because its related costs are the lowest. The best visitors are direct visitors because they have a higher net ADR. With close interaction, a hotel has the chance to turn them into loyal, repeat clients and try to upsell to them. CRO tools can improve direct sales methods and even fix the mistakes of revenue managers.
[Must Read: How Machine Learning Affects Revenue Management and Pricing]
When is the Right Time to Focus on CRO in the Revenue Management Concept?
For hotels to be profitable, conversion rates are essential. The most effective channel and this crucial marketing work must be within the revenue managers’ control because OTAs’ commission rates range from 15 to 25 percent. OTA sales fluctuate at times of crisis, such as the recent COVID-19 or financial crises.
Many guests had problems with cancellations when using OTAs, which enhanced their faith in making direct bookings on hotels’ websites. It offers the much-needed flexibility that is required. It is reasonable to assume that the “booking direct” trend will continue to spread and that website efficiency will need to be given more thought.
Apply CRO in your revenue management concept right away. With the right CRO tools, hotels can change the channel mix and total cost of revenue while also increasing online sales. Are you looking for the best revenue management systems for hotels? Do you want to increase direct bookings? Are you unable to optimize the pricing and inventory of your hotel? Want to try free revenue management software? Contact Revnomix, the top revenue management company in India to outsource hotel management. We offer the best revenue management services, data analytics, lead conversions, and more.
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How Hotels Benefit from the Revenue Management Concept & CRO
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Apply CRO in your revenue management concept to increase profits. Contact Revnomix Solutions for the best revenue management services, data analytics & more.
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Revnomix Solutions
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