Effectively Implementing Revenue Management For Hotels
To remain competitive today, it is important for hotels to implement a strategy for revenue management. This applies to properties of all sizes, whether chain or independent. For any hotel property to derive a specific price point, on a given day, for any individual customer, the collection and analysis of an immense amount of data is required. These tasks are most efficiently realized through the utilization of hotel revenue management software. For hoteliers to sell hotel rooms at the optimal price, asking and answering a few key questions is a necessity.
1. Who is staying at my hotel? (Segmenting Markets)
Determiningprecisely who is staying at your hotel and when is a vital first step in the process of revenue management. Guests should be categorized by business or leisure, whether they are group customers or individual, etc. It is entirely up to the hotelier how many distinct market segments should be tracked for their property. However, each segment must be unique in a way that makes them distinctive from the rest.
2. What did they pay? (History)
To maximize the room rates across the span of an entire year it is indispensable to track past rate histories. Historical rate results, for the last year at minimum, must be considered as part of the equation. Patterns will be revealed which can be useful in planning for the future. Average daily rates and number of rooms sold for each date, and by market segment is invaluable data for establishing a rate strategy going forward.
3. How far in advance did they book? (Booking Pace)
Looking into the future is also an essential element to a revenue manager. This is the amount of reservations that have been booked for any specific future date. This, combined with past historical rate data, gives an indication if demand for your property’s rooms is up or down. From this vantage point decisions can be made regarding whether sales initiatives should be implemented if demand is down, or room allocation should be put into action if demand is stronger.
Future rate forecasting is at the core of any truly effective hotel revenue management program. The goal is to achieve the proper balance to entice future guests to book as early as possible. As any given time approaches, rates can easily be adjusted according to supply and demand. In the last part of this series we will see how other factors, such as, monitoring the competition and the management of sales channels, complete the revenue management equation.
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