Revenue Management is one of the hot topics of the moment when it comes to improving the profitability of a tourist accommodation. Literally translated as revenue management, Revenue Management aims to maximize and optimize a hotel's business volume. One of the most common questions among the managers of accommodation facilities is indeed this: "How to improve the business of my hotel?". Responding correctly means being a good Revenue Manager.

For further information on this subject, we would like to report an interesting interview with Rachel Grier, published a few weeks ago on eHotelier, in which the IDeas - A SAS COMPANY CEO for Asia Pacifica, who has been helping the hospitality industry for over twenty years. worldwide to optimize revenue performance, it unveils some of the best practices that every accommodation should take as an example to successfully build its revenue management.

Why is Revenue Management so important today for independent hotels?

Revenue Management provides independent hoteliers with all the information needed to make the most of indicators such as RevPAR (Revenue Per Available Room) that provide a realistic and complete cost picture and other information to identify the less productive segments of the company. so that the sales and marketing manager can take the right corrective actions.

Today, Revenue Management systems are used by the most important hotel brands in the world. We can say, however, that it is the smaller accommodation facilities that need these technologies more than the larger hotels, because every minimum price decision has a big impact on small volumes typical of small hotels. Smaller, independent hotels usually have less resources than large hotel chains and often do not have a dedicated Revenue Manager. As a result, the revenue strategy is left to the general manager, to the sales and marketing manager or to the reservation manager, who are already full of other commitments and responsibilities. This management leads to compromise the trend of total revenues of the structure with overpriced or sold rooms at a price lower than the real market opportunities.

In addition to supporting revenue growth, a Revenue Management system can help independent accommodation establishments to find the right balance between the various elements of the business and better manage bookings. In fact, many small hotels fall into the trap of concentrating only on booking peaks, often accepting price compromise, downward, unnecessary and detrimental to their revenue.

What do small accommodation facilities have to know about revenue management? What are the trends for 2017?

In many Asia Pacific destinations, says Rachel Grier, the outlook for 2017 is very positive, with an increase in demand that should satisfy any new offer in the market. This scenario opens the door to small independent structures that will optimize their performance and increase profitability. In these markets the key to success is not only to increase the growth rate of your hotel but also and above all to place the rooms on nights when there is usually no peak booking, through the management of the duration of your stay guests and the inventory control and, therefore, of the rooms still available.

Making sure that the "fully booked" becomes "all-occupied" is another aspect that hotels must incorporate into their management strategy for 2017. Understanding the dynamics of overbooking and the behavior of travelers on canceling their reservations , is the first step in this process in which small hotels are usually less skilled than their larger rivals. For small hotels that operate in markets where competition is fierce and there is an oversupply, being able to make the right price and understand the impact of competitors' price strategy on demand, is more important than ever in this period.

What are the good practices of Revenue Management that small hoteliers need to know?

Many small, independent hotels work hard on good practices that allow their guests to enjoy a good travel experience and may even encourage them to leave a good review of the hotel once they return home. We can call these practices front office best practices. Unfortunately, however, this does not significantly impact - or measurably - on hotel finances and revenue. Therefore, we need to implement a series of best practices also for this thorny concept which is the Revenue Mana
gement. For example, it is necessary to start collecting and analyzing data on employment, the rate of cancellation, the price (own and competitors), the nationality and origin of the guests. In short, a true 360 ​​° market analysis, of the segments and of the applied price policies that can help independent Hotels to provide solutions and accommodations in line with the real demand and its relative peaks. The heart of Revenue Management is the data. It is therefore essential to know everything that orbits around the marketing and distribution of their rooms, and to know as much as possible the same strategies of competitors, so that the proposal that will be created (once analyzed data) is highly competitive compared to the standard market. In times when the demand is low, how much can Revenue Management help small independent hotels?

Unfortunately, some small hoteliers are still convinced that a hotel with all the rooms booked is a successful hotel, even in times when the demand it's very low. To try to place all the rooms the tendency is to lower the prices considerably, counting to offset with extra revenues such as those related to Food & Beverage or SPA or other ancillary expenses, in order to top up the revenue. However, guests who pay significantly lower rates for a room are not used to spending extra services such as SPAs or decent dinners and this practice risks having extensive long-term repercussions on our accommodation facilities. Price reduction can have a significant negative impact on guests' perception of brand quality, on the value of services offered and on future price expectations. For an independent hotel that is not included in any distribution chain, it is essential, in periods when the demand is lower, to maintain a price appropriate to its structure that is also in line with that of the market in which it operates, and it is equally fundamental that the price strategy always responds adequately to the constant and sudden evolution of the demand. How can Revenue Management help revenues from extra services? Independent hoteliers should know the basic principles of Revenue Management, which can be applied to different areas in the management of their structure.

Consider, for example, a wellness center: a good revenue management strategy helps to understand which schedules are most crowded, a guide to choosing the right promotions to sell services at less frequented times or, furthermore, helps to limit discounts and promotions during busy times. Revenue management practices can be applied to restaurants, parking lots, internet rates and all hotel activities, in order to improve performance and, therefore, increase turnover. The opportunity should be taken to review the revenue management processes and related analyzes to improve collaboration between operational departments and to allow the marketing area to carry out more effective and targeted campaigns and sales programs. What can you expect from a hotel that adopts Revenue Management? Over the years, revenue management has always been a topic widely discussed in the hotel industry, but to date there are still many hoteliers who are unfamiliar with these technologies. adoption of Revenue Management will really be able to bear fruit and repay itself? And how can this system actually help generate profits? When applied to its full potential, the Revenue Management methodology can have a positive impact on the efficiency and improvement of the operational performance of an entire accommodation structure. The experience of IDeas, which has been operating in the sector for 25 years, tells us that hotels that adopt an advanced revenue management system, experience an increase in annual revenues varying between 3% and 8%. In addition to increasing revenues for independent hotels, the advanced forecasting tools within a Revenue Management system, are able to provide businesses with powerful insights on the trend in demand and thus support the overall financial performance of a hotel.


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