How revenue management strategies and technology will be vital to your hotel’s recovery.
There’s no doubt we are experiencing one of the greatest challenges of our professional (and, in many cases, personal) lives. This pandemic has rattled our world—especially travel and hospitality. Now it’s time for the hotel industry to pull itself up by its bootstraps and show the world what we are made of. We are innovative, we are adaptable, and we fulfill the most amazing experiences to our guests around the globe.
So, what does that mean for day-to-day hotel business? We know every department will be consumed with creating a new norm to ensure safety and quality for guests, but what does this look like for revenue management specifically?
There’s been some hearsay going around lately. Some may say “historical data is now useless” or “forecasts are inaccurate.” Some may even say “revenue isn’t coming in, so you don’t need revenue management right now” or “there’s no demand to revenue manage.” Well, I’m here to set the record straight and 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 recovery around 18+ months, how do you maximize Q4 and 2021? Do you rely solely on your gut for that time? 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?
Revenue management will be vital for your property’s recovery, and during times of uncertainty, you should still:
Optimize Price
Whether 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.
Make Informed Decisions with Confidence
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, LOS 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.
Operate Efficiently
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 lower head count, so it’s important to ensure the team has the tools and intelligent automation needed to efficiently manage your revenue strategy while enabling time to support other areas of your business.
Evaluate Group Opportunities
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. We are entering a unique time for group business, and with limited outlets, F&B 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.
Maintain Competitive Advantage
The leading revenue management practices and technology developed by 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 may be 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.
While there are many unknowns about the future, hotels are navigating this path in amazing fashion. We are an innovative industry, and I’m excited to see what’s ahead. Don’t lose sight of the long game—being shortsighted in your plans will cost you a great deal. And as they say with raising children, the days are long, but the years are short. We will get to the other side of this. Stay strong, #hospitalitystrong.
For additional resources and guidance from IDeaS’ industry experts, please visit our COVID-19 hotel industry hub.
- The Importance of Revenue Management in Times of Uncertainty - May 13, 2020
