Let’s be blunt. COVID-19 is a global disaster, and this pandemic has brought the hotel industry to its knees—full stop. But the time has come to rise from the ashes and show the world what you are made of. You are innovative, agile, and your hotel fulfills the most amazing experiences for guests around the globe. In this article, you can find tips to be smart and strategic with your hotel’s revenue.
Don’t Forget About Revenue Management
In order to survive—and thrive—in the year(s) to come, hotels must leverage the right balance of smart people, technology, and processes to adapt quickly and intelligently with data-driven insights and automated decisions.
So, what does that mean for your hotel business? Well, if you are fortunate enough to be open for business at the moment, every department is likely consumed with ensuring safety and quality for guests and protecting cash flow at all costs—but what does this look like for revenue management specifically?
There’s been some hearsay going around lately. Utterances like “historical data are now useless” or “forecasts are inaccurate” are not uncommon. Some may even say “revenue isn’t coming in, so you don’t need revenue management right now” or “there’s no demand to manage”.
Well, a wiser person would say, “That’s incredibly shortsighted”.
In a time of crisis, it’s easy to only consider the short term, but if predictive analytics models are forecasting a far-off full recovery, how do you maximize 2021 in the meantime? Do you rely solely on your gut? What about future dates when seasonality returns, compression comes back, group restrictions lift, and you have unconstrained demand again? If someone gave you the choice to invest your life savings based on their gut, would you jump all in or would you take a route that gave you analytical insights to support the best data-driven decision?
5 Do’s and Don’ts To Be Smart With Your Hotel’s Revenue
Okay, now that you’ve likely reached your limit for rhetorical question tolerance, here are 5 tangible do’s and don’ts to ensure you’re being smart and strategic with your hotel’s revenue.
1. Do Continue To Optimize Rate
Whether the demand is high or low, an automated revenue management system (RMS) enables hotels to price competitively and confidently under any circumstance. While RevPAR indices and ADR will take time to recover, the best opportunity to generate revenue efficiently is to ensure you capture the right business at the right price. Empower your revenue manager and marketing team to focus on strategic initiatives to drive demand and optimize both pricing and availability. Leverage value adds, get creative with your lower-cost marketing channels, and capitalize on your reputation to capture existing demand in your market. Now is an opportune time to revisit what makes your hotel stand out among your competitors.
2. Don’t Make Any Decisions Without Data
Revenue management technology provides hotels with confidence in innovation, data, predictive analytics, group management, online reputation data, remote accessibility, and support to deliver the most optimal decisions. And yes, history is a small piece of the optimization cycle, and still relevant for understanding pricing patterns, demand patterns, length of stay and booking behavior.
More importantly, a sophisticated RMS evaluates future pace, price sensitivity, external data points, unconstrained demand, and even prices by room type and/or market segment, ensuring you drive the most profitable business to your property to help you recover faster.
3. Do More with Less
No more manual rate updates. No more time-consuming evaluations of competitor data and setting inventory and rate controls. No more spreadsheets. Use free time to create revenue strategies and make decisions that drive revenue in the long term.
Your recovery plan may include a lower headcount, so it’s important to ensure the team has the tools and intelligent automation needed to do more with less, efficiently managing your revenue strategy while enabling time to support other areas of your business.
4. Don’t Rule Out Group Business Entirely
The group pricing capabilities of an advanced RMS go well beyond the limited functionalities of other revenue tools, and they give sales managers the insights they need to capture the most profitable group business. This is certainly a unique time for group business, and with limited outlets, food and beverage options, and a fraction of the occupancy per square foot available to sell, it’s more important than ever to ensure you are taking the right pieces of business at the right time.
5. Don’t Follow, But Lead
The leading revenue management practices and technology developed by companies such as IDeaS allow you to have a clearer market picture to give you confidence in your selected revenue strategy. In the current state with limited demand, your competitive set maybe your entire market, so it’s important to ensure you add value, price strategically, and invest in areas that will generate demand and profit to your property.
Revenue management will be vital for your recovery, and during times of uncertainty, you should still optimize price, make informed decisions with confidence, operate efficiently, evaluate group opportunities, and maintain a competitive advantage. Because if you don’t, the hotel down the street will.
Free Guide: The Ultimate RM Buyer’s Guide
While there are many unknowns about the future, hotels are navigating this path in an amazing fashion. You are in an innovative industry, and brighter days are ahead. Don’t lose sight of the long game—being shortsighted in your plans will cost you a great deal. We will get to the other side of this, together. Stay strong.