How Fit Is Your Revenue Management Strategy?

As odd as it may sound, healthy weight management and healthy revenue management share many similarities. They both produce spectacular results when a proven strategy is followed with dedication. And conversely, they both quickly fall apart if the balance gets out of whack.

Let’s break this down deeper: Perhaps you’re one of those lucky people who can eat whatever they want and not gain a single pound, stone or kilo. As the years go by, however, things start to change: metabolisms, activity levels, eating habits. The next thing you know, you’re letting out another belt notch and realize you’re no longer at your fighting weight.

Hotel revenue management may experience this same phenomenon. What worked at one point in time may have been fruitful, yet over time, things changed: rising costs, more competition, and an increased need for strategic focus. You may find yourself no longer getting the results you did so easily in the past.

In either situation, you find yourself ready for a change…but what is the best approach?

There are many ways to reclaim your ideal weight, ranging from the easiest to the fastest to the healthiest, and they basically fall into three categories:

  • Diet only – Controlling the number of calories consumed with no special focus on what you’re eating and with no additional activity beyond your normal daily routine. This superficially works for the short term—especially if you cut way back– but may come at an unhealthy cost and lack lasting benefits.
  • Exercise only – Adding additional calorie-burning activities to your daily regime with no special focus on controlling the amount of calories you consume. This works when you’re burning more calories than what you consume but if it’s the other way around the math will always win.
  • Diet and exercise together – This combo provides a dual-purpose framework that provides the most significant results. Working together, a healthy diet with moderate exercise can deliver steady results without deprivation. The occasional over-indulgence won’t ruin lasting results.

These diet and exercise approaches are uncannily similar to hotel revenue management approaches with pricing and inventory controls, with some approaches more successful at driving your ideal level of revenue fitness than others:

  • Pricing only (The fad diet) – Pricing products in isolation without full appreciation that all business is not the same, nor using sophisticated inventory control methods to ensure you’re accepting the right business mix or lengths of stay at the right time. Accepting business on a first come-first serve basis, without full consideration of total value, may not drive ideal revenue.
  • Inventory control only (The no-fat diet) – Managing rate availability using a broad brush approach, somewhat like cutting out specific food groups, may be ignoring vital nutrients that boost revenue. Managing rate availability and stay patterns is a core pillar of revenue management but pricing is still just as important.
  • Automated pricing and inventory control together (A lifestyle, not a diet) – Lets you experience the dual benefits of setting the best prices based on the available demand at the appropriate time prior to arrival, and maximizes your allocation of inventory in each category to the guests with the highest willingness to pay. A truly optimal revenue strategy that brings you ideal results.

Whether you’re trying to achieve your ideal weight or your ideal revenue strategy, the bottom line is the same: Not all calories are the same. Depending on your fitness goals, your strategy should choose a diet that incorporates the best ratio of building blocks – proteins, complex carbs, and healthy fats – that benefit you the most. You could certainly eat a day’s worth of “junk” calories, but will it get you the results you need? You cannot eat all you want – and it’s important to set guidelines that make sense and are adaptable for multiple scenarios.

And just as all calories are not the same, all revenue is not the same. A successful hotel revenue management strategy should seek balance in setting optimal prices with achieving the best business mix across all lengths of stay to drive maximum revenue opportunities. For healthy revenue performance, it is critical to use dynamic pricing strategies that fill your hotel with the most valuable, protein-packed business – leaving the empty calories to your competition. When the time comes to weigh in, will your STR report show your anticipated results?

Identifying the healthiest revenue management solution is all about striking the right strategic balance. No need to go it alone; arm yourself with the best tool and organization to support you on your journey.

Don’t wait for your New Year’s resolution – start now!

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