Hotel revenue management and pricing are not everyone’s piece of cake! But this cake can be the perfect one if one avoids common mistakes.
Hotel managers know that being successful is all about a good relationship with guests while driving a profitable revenue stream. It sure does not happen on its own overnight, so you must keep a close eye on the hotel’s internal and external environs. The secret to being a successful hotel manager lies in getting back to base and evaluating the pricing and revenue management strategy. They analyze the milestones they’ve set for room occupancy as well. It is a way of efficient revenue management in the hotel industry!
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The manager must pay close attention to the ongoing matrix of competitor offers because the two go hand-in-hand. The manager needs to be near the trends, the latest tech, and hotel revenue management software. It is used to devise dynamic ways to position and sell the hotel in the market.
Managers know that creating the best methods and using revenue management tools to increase the ROI and revenue is not as easy as it may sound. And when the market is as competitive as it is today, it gets even more complex.
The future of revenue management for the hospitality industry.
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A study by Cornell University’s Sheryl E. Kimes states that the strategic changes in Revenue Management (RM) have evolved slower than predicted over the past few years. The study lists economic challenges, pressure from owners, and OTAs as the greatest challenges to RM in hotels.
8 Common Mistakes of Revenue Management and Pricing
Common mistakes and challenges of the revenue management concept.
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What is revenue management in hotels? Innovative hotel revenue management is all about how efficiently you locate new revenue opportunities and optimize inventory or rate distribution. It also matters how well you analyze competitor pricing strategy and local market demand.
It relies on how a person understands the importance of the hotel’s business intelligence and makes decisions about revenue management and pricing. The slight miscalculations can backfire on you and sabotage all your efforts to maximize the revenue for your hotel. Not only that, it can make the situation far worse. Looking for the best revenue management company in India? Keep reading.
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That’s why hotel managers should be careful to avoid making the basic mistakes listed below in creating their hotel revenue management and pricing strategies at all costs.
1. Lack of Inventory Distribution Plan
When revenue is recognised through primary and secondary hotel inventory
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When you don’t have a solid and well-structured inventory distribution plan across OTAs, GDSs, and hotel websites, it results in inefficient revenue management and pricing strategies. Inefficient inventory management can lead to many issues such as over-booking, double-booking, and under-booking.
These issues further lead to other major problems such as guest dissatisfaction, loss of revenue, and business opportunities which can adversely affect your hotel’s reputation. When you don’t monitor the sales channels’ performance, it doesn’t work for good hotel revenue analysis and management.
You must know which sales channels work for you and which don’t, in terms of giving you more revenue. And it would help if you also understood that you must have the right strategy to drive more direct bookings through your hotel website. You can use many inventory planning methods as well.
However, keep in mind to strike the right balance with your OTA partners at the very same time. Further, you cannot ignore the significant presence of offline travel agents and work with the leading GDSs. Therefore, it is crucial for you as a manager to have the best inventory distribution plan and hotel revenue management systems, both online and offline, to increase your RevPAR.
2. Focus on your Online Reputation
Revenue management is based on online reputation.
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Guest services should be your top priority if you are aiming to improve your hotel’s revenue. But why is that so? It’s because if you increase the reputation score even by 1%, you will stand in a position to boost ADR for hotel by almost 7%. So, yes, that’s the math. Increasing the reputation score will also help you to increase your occupancy by 1.4%.
When you provide best-in-class services, it makes your guests happy. They gradually become your loyal customers, and they give you repeat business. So, that’s the trick here. They will write positive feedback about your property on social media platforms and review sites like Google. It will benefit you heavily and improve your online reputation as well as your ratings. You will be in a position to increase your room price with an enhanced online reputation or rating. Your hotel requires expertise and tools for online reputation management. Your search for the top-rated hospitality revenue management services to help you with your online reputation is over. Click below to know more.
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3. Work on the Wrong Metrics. Stop Assuming!
Data analytics and business intelligence help in effective revenue management.
You should be in a position to analyze local market demand. Otherwise, you cannot come up with an occupancy forecast and room pricing. Further, if you wish to beat your rival, you must know their pricing. You must know the importance of business intelligence in hotel revenue management and pricing if you want to succeed in all of these with ease.
Knowing and analyzing the critical metrics on such aspects can be helpful to increase ADR while improving occupancy at the same time. What is hotel ADR? Higher ADR is the key to a hotel’s profits. However, too much focus on ARR or occupancy might not be helpful in the long run.
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4. Lack of Occupancy-based Dynamic Pricing
A major mistake committed by hotel owners is the failure to change room rates. Having a fixed rate will weaken your hotel’s position. But adopting occupancy-based dynamic pricing can help you to reach your full revenue potential. For different occupancy levels, set pre-defined rates. It can generate more demand during off-seasons, when demand is on the higher side, and earn more revenue.
5. Lack of an Intelligent Cloud-based PMS
The benefits of revenue management are manifold when using a smart Cloud-based PMS.
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The most severe mistake hotel owners must avoid in today’s highly competitive business environment is not adopting an intelligent cloud-based PMS. In the absence of an innovative cloud-based PMS, you cannot have a robust inventory distribution plan.
You will find it hard to manage guest reviews and improve your reputation and rating. And you won’t have KPIs at your disposal to make data-driven decisions, nor can you apply occupancy-based dynamic pricing. A cloud PMS comes with an integrated hotel revenue management system. Without it, creating relational rates and implementing multiple rates will become problematic.
[Suggested Read: 5 Ways to Boost Hotel Value with Revenue Management Strategies]
6. Misleading Content
Lorelei Londres hotel in Italy powerfully matches the text and the image.
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There is no human-to-human interaction when a person makes a booking using a website or an app. Therefore, it is crucial to review and update accurate data about your property.
Make sure to note it on your online profile if you have restricted access to any facilities, such as the gym or the spa, for any reason. A visitor may only book your hotel for the use of that amenity. You can show value for the guests in terms of offerings by updating accurate content. Because they will be aware of what they are paying for before they make a booking.
7. Over-analysis
Revenue management strategies work when you don’t over analyze.
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Some revenue managers fail to recognize that their primary duty is to generate revenue. They start analyzing every number the system could possibly generate. Moreover, they want to cover all bases before creating the pricing guidelines. Hence, they overlook the most crucial step—the execution of the strategy. The system generates thousands of reports. Learn to use useful reports and ignore useless reports.
8. Changing Tech & Software
Hotel revenue optimization with Strategix co-developed by Revnomix and IDS Next.
You can better know the trends in guest bookings by using historic data. It also adds greatly to keeping the guest database current and maintaining your relationship with them. One of the major errors in revenue management and pricing is switching your PMS every season just to get new software at a lower price. Even though you may feel pleased that you have saved some money, you are really losing a lot of money.
Customer data may not be transferred to the new system when software is changed. Let’s say your regular guest arrives at the property and a new front desk staff member is greeting them. This means that they won’t extend the agreed-upon rate to the client, making them unhappy. Use only reliable tech that does not cost you much and keeps your data secure.
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Are you searching for the top revenue management software for hotels or a revenue management consultant? Read below.
5 Ways to do Hotel Revenue Management and Pricing the Right Way
How to increase hotel revenue? Finding the best revenue management solutions? Or looking for the most sought-after revenue management platform? Since the lockdown restrictions have been lifted, hotel owners have been selling rooms for incredibly low prices in order to maintain a steady stream of guests and survive.
It has been successful thus far because the travelers were essentially moving without any intention of taking a vacation. Importance of revenue management is indispensable. Use the steps below for effective revenue management and hotel marketing strategies to stay one step ahead of your rivals now that vacationers are returning.
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1. Vital Dates
Mark vital dates to boost hotel revenue.
Since there is always a chance that rooms won’t be available over long weekends, travelers are now planning in advance for their vacations. On long weekends, people are taking its benefits and traveling to their favorite and most convenient locations. Keep a list of your extended weekends close at hand at all times. Keep an eye on the demand during those days and adjust the prices and restrictions as required.
2. Data Analysis
Data Analytics is vital for successful revenue management.
It is no secret that the biggest aspect of revenue management and pricing in the hotel industry is data analytics and data science. On top of that, the data analysis steps are crucial. Observing the booking patterns aids the revenue manager in developing future strategies. Future booking trends are one of the most crucial metrics to track in the day and age.
[Suggested Read: 2023 Guide to Usage of Data Analytics in Revenue Management]
3. Dynamic Pricing Strategies
Apply various prices on various days in accordance with your demand. Don’t keep a flat rate for your property for all the days it is available online. A win-win situation exists when you keep prices in line with demand and the customer. On days when demand is high, you can generate extra revenue by upselling the rooms. On days when there is less demand, a guest can take benefit from the low prices.
4. Rival Analysis
To plan the expansion of your business, conduct a competitive analysis of the services and goods offered by your rivals. It’s crucial to pick the proper competitors to analyze and benchmark against. An ideal hotel compset consists of five to ten hotels that you will closely monitor, with five being the minimum. Since the competition has a major impact on dynamic pricing, it is crucial to define a compset.
5. Broad Distribution Network
Top OTAs for boosting hotel revenue.
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It’s time to exert every effort. Make contact with all of your current OTA partners. Check out the deals and marketing campaigns that can help you and sign up for them. Find fresh OTAs that have just gotten on board and collaborate with them. If you can meet the needs of the corporations for banquets, let them know. The wedding season will return to reap the benefits from it.
Conclusion: Lessons Learnt on Hotel Revenue Management and Pricing
One can say that successful revenue management and pricing don’t happen without assessing the internal data matrix. To get smart with revenue management and pricing, try to keep an eye out for any efficiency or the economies of scale earned through the evolving tech. Also, try to maximize the profit of other revenue streams like F&B or Corporate Sales. Keeping a watch on competitor pricing and market demand changes will also help.
Knowing your hotel, your competitors, what makes you unique, and how that translates into pricing are all crucial skills for revenue managers. Today’s tech makes it simple to know these key numbers. And it is up to you to choose a sustainable strategy to meet your hotel’s sales targets. However, having a great strategy won’t help your hotel’s bottom line unless your team uses effective sales tactics to hit those goals. Revenue management and pricing include more than just the strategy, it also involves leading and inspiring a team and deciding the revenue calls for your hotel.
Revnomix optimized revenue for 200,000 rooms daily in 2022.
Finding the right revenue managers who are skilled is an art. Revenue management benefits are immense and it will ensure that your hotel is headed in the right direction for success. Contact Revnomix, the top hotel revenue management company to increase hotel revenue and try the best hotel revenue management software. We managed a total revenue of 389 Cr+ in 2022. In addition, we generated 3000 room nights per day.
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Top Hotel Revenue Management and Pricing Mistakes & Solutions
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Hotels should be careful to avoid making mistakes in creating their revenue management and pricing strategies at all costs. Read more to know the solutions
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Revnomix Solutions
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