Hotel RMS Ultimate Buyer’s Guide
Key Considerations for Commercial Success

Turned Down For What?

The make-or-break revenue opportunities hotels miss out on when they use price to say “yes” to everyone

Blog Soundbites:

  • Today’s hotels are facing unprecedented levels of market competition
  • Adjusting rate alone won’t recoup revenue potential or significantly gain market share
  • Advanced technology uses automated inventory controls to dramatically increase profitability

Today’s market environments have reached merciless levels of hotel competition. New and re-branded hotels are popping up on virtually every corner. Industry consolidation catapulted distribution giants like Expedia and into online Goliaths. Airbnb and other sharing economy wunderkinds have progressed well beyond some kind of side hustle, posing a legitimate threat for stealing market share – especially over high compression time periods.

Getting hit from every angle makes it extremely tempting for hotels to say “yes” to every guest looking to book, and adjusting rate to do so might become a quick strategy for trying to recoup revenue in markets burgeoning with competition. After all, in the midst of all this savage competition, why on earth would a hotel want to turn down a customer willing to pay a premium one-night rate?

Well, for starters,turning down that premium one-night rate often ends up increasing their profitability. Click to Tweet | IDeaS Twitter At face value, that may sound counter-intuitive, but there’s far more to revenue strategy than selling the highest priced room in the market. While ideal room rates are no doubt an important part of strategic revenue management, using rate as the only consideration for accepting a reservation leaves a hotel at a very unprofitable disadvantage. Click to Tweet | IDeaS Twitter

Take city center environments, as an example, where hotels face off with stiff competition and fair market price perceptions. If a hotel’s strategy over high demand periods is only increasing room rates, they would eventually price their rooms at a level no longer competitive in the market. Rather than selling out their hotel, they’ve just out-priced themselves to their customer base and need to either lower their price point back down to a market-appropriate rate or risk leaving rooms unsold. And as the old saying goes:An empty room is worth nothing. Click to Tweet | IDeaS Twitter

Relying only on price also works against building shoulder night occupancy – one of the greatest opportunities hotels have in making significant revenue gains. A profitable benefit of today’s advanced revenue technology is its automated and flexible inventory controls (such as the game-changing LRV exclusively developed by IDeaS President Dr. Ravi Mehrotra). Rather than relying on the guesswork of manual controls like CTAs or blanket MinLOS rules for each day, innovative revenue solutions automatically deploy a hotel’s ideal mix of pricing and inventory management to increase their shoulder night occupancy and overall profitability.

There’s a reason why the hospitality industry is attributed as being hospitable—and progressive hotels find innovative and unique ways to blow the expectations of today’s guests out of the water. But every hotel also finds themselves in competitive scenarios where they need to not only turn down a prospective guest, but determine the best factors that help them do so. The most successful hotels look beyond escalating one-night rates and manual controls, establishing an automated and comprehensive revenue strategy that includes their hotel’s ideal mix of price and inventory. A one-night stay was turned down for what? For better profits.

For even more insight into the importance inventory plays in your revenue strategy, check out this recent article from Blake Madril, revenue technology strategist, in Tnooz: “The one thing killing your revenue strategy”

Anna Marie Miller
Latest posts by Anna Marie Miller (see all)

Editorial Contributor at IDeaS Revenue Solutions

A hospitality industry veteran, Anna Marie Miller has held management roles in sales & revenue, marketing and meetings & events for hotel brands IHG and Hilton.

She holds a Bachelor of Science in Hospitality & Tourism from UW-Stout, and a Master of Arts in Strategic Communication Management from Concordia-St. Paul.

She's an enthusiastic advocate of dark coffee, dark beer & light humor.

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