What is total revenue management in hospitality? Total Revenue Management refers to managing each income stream for maximum profits. It helps hotels achieve their goal of increasing revenue and profits in a competitive market by integrating many revenue sources.
The sources include F&B, banquet and conference facilities, spa, retail, activities, and more with room revenue management.
In today’s digital world, our hotel revenue leaders can make well-informed decisions through advanced hotel tech and Revenue Management Systems. Even when there is low occupancy, hotels are looking into other sources of income.
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As a result, we observe a major shift in strategies that include total revenue management. The evolution of total revenue management has led to the changes below.
1. The creation of pricing strategies that maximise the hotel’s total revenue performance.
2. Upselling is a strategy that will enhance ADR while allowing you to resell the lower room category. Offer cheaper spa services during off-peak hours to enhance revenue and draw more customers.
Key Statistics
1. The total ancillary revenue worldwide in the hotel sector is between $80 billion and $130 billion in 2021. Upselling is one of the most effective ways to boost the ancillary revenue at your hotel.
2. More than 80% of business travelers are interested in purchasing late checkout (87%) or early check-in (85%), or have this value included in the nightly rate.
3. Services that travelers would like to secure at the time of booking include high-speed Wi-Fi (41%), parking (41%), early-check- in (40%), and pre-paid breakfast (37%).
Benefits of Total Revenue Management
Why is total revenue important? Hotels can improve performance, increase profits, cut costs, and better align areas with one another with the use of a total revenue management approach. Here is a list of all the benefits.
[Suggested Read: 8 Challenges for Implementing a Revenue Management Strategy]
1. Improved Revenue: When managing revenue, F&B and ancillary revenue almost never get priority. Hotels must ensure that strategic decisions have an impact on all areas of revenue in the hotel by setting up a total revenue management strategy.
2. Cost Savings: Profit margins for a variety of revenue vary. A total revenue management strategy can be used by hotels to control their hiring, purchasing, and fixed expenses.
3. Collaborative Workforce: The total revenue management method unites all departments in the pursuit of one goal: improved profits. The entire workforce is motivated to meet their goals by reducing this aim down into smaller, attainable goals that are relevant to each sector.
4. Optimize your Resources: Perishable items include hotel rooms, banquet halls, restaurant seats, and spa treatment rooms. Hotels profit from optimizing these spaces when there is a coordinated effort to fill these seats during off-peak seasons.
5. Higher Efficiency: The effects are instantly apparent in the bottom line as revenues rise and costs fall.
6. Greater Group Operations: Management exhibits superior results by using total revenue management across the portfolio, supporting their attempts to boost visibility of the brand.
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Tips to Implement Total Revenue Management
Setting up total hotel revenue management concepts does not always require quite a bit of work. Here are five simple steps to guide you through the implementation.
1. Adopt a mind set of total revenue management when making decisions, planning, holding meetings, and reviewing performance.
2. All hotel stakeholders should get training and education about the value of total revenue management, its goals, and potential outcomes.
3. Implement revenue strategies across all relevant departments.
4. Create a system and strategies to help you make decisions that will increase the hotel’s overall revenue and profits.
5. For the purpose of monitoring, reporting, and predicting income at the divisional and property levels, invest in and/or put into use RMS systems, tools, and metrics.
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Total Revenue Management KPIs
What is total revenue and how to calculate it? Adopting metrics for success that can be measured in numbers is a crucial part of total revenue management. These are some crucial KPIs to monitor for an overall hotel revenue performance.
[Suggested Read: 12 Revenue Management KPIs for Hotels That You Must Use]
1. Rooms
TRevPAR stands for Total Revenue Per Available Room.
GOPPAR means Gross Operating Profit Per Available Room.
CAC stands for Cost of Customer Acquisition.
CLV means Customer Lifetime Value.
2. F&B
RevPASH stands for Revenue Per Available Seat Hour.
ProPASH means Profit Per Available Seat Hour.
Revenue by Residential vs. Non-residential.
3. Conference & Meeting Rooms
RevPAF/M stands for Revenue Per Available Square Foot/Meter.
RevPA means Revenue Per Attendee.
Density of Attendee.
Performance of the Inquiry Conversion.
4. Spa
RevPATH means Revenue Per Available Treatment Hour.
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Total Revenue Management for all Types of Hotels
All hotels, whether small or large, standalone or part of a chain, focused on leisure or on business, can adopt total revenue management. Do you have to specify the market segment you serve? What desires does your client have?
Analyze your source and booking data and pay attention to the customer’s feedback. Customized offerings that bias between business and leisure travellers’ needs will help boost revenue and improve customer satisfaction.
Strategies for total revenue management can also be used to meet needs or find solutions to issues. Aren’t your spa therapists overbooked during certain hours of the day to the point where they have to decline bookings during those times?
Provide a unique “down-time discount” during the quiet times.
The Future of Total Revenue Management
We have already discussed net revenue management in the previous blogs. But the benefits of adopting a total revenue management plan can be significant, resulting in increased revenues for all the services and goods offered by your hotel.
In the end, it all comes down to knowing your customers, segmenting your market, and putting reasons to implement total revenue management at the forefront of your decision-making process.
Are you looking for the best hotel revenue management company in India? Want to boost your profits? Do you want to become a total revenue management hotel?
Contact Revnomix Solutions, the best Revenue Management Company that empowers hotels to make rational decisions by processing data, making informed decisions and growing their business with the use of data science and advanced tech.
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Unlocking Success with Total Revenue Management
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Explore How Total Revenue Management can boost profitability for hotels, resorts, and accommodations. Learn the fundamentals and strategies for effective revenue management. Start optimizing your business today!
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Revnomix Solutions
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