Effective revenue management can set the foundation for a profitable, well-run hotel. Without implementing revenue management disciplines, the operations of your hotel business can lack direction.
However, managing revenue effectively is a challenge, with an industry landscape that involves so many distribution channels – wholesalers, travel agents, online travel agents, and meta search just to name a few.
This is why technology like channel managers and market intelligence tools are crucial. The power in SiteMinder’s Prophet solution, for example, is that it breaks market intelligence down into consumable and meaningful insights that matter, and takes away all the white noise that can come with big data.
With more than 20 years’ experience in distribution and revenue management, Eva Lopis, now revenue manager at Gatrooms, shares her best advice for using market insights to optimise pricing strategies in today’s increasingly competitive environment…
A good revenue manager needs to use market insight to be able to adapt to trends and drive revenue, using external factors to influence daily decisions. My top four tips for hotels would be:
1. Look at overall market demand
Look at overall room availability in your town or city, and whether there are any important events coming up that will increase demand. In addition, it is important to look at your Market Penetration Index with providers like STR Global or Fairmas.
2. Eye the competition
It is necessary to compare your availability with the availability of your direct competitors. Finding out their rates is very important; if only a few rooms are available, you will be able to increase your own rates and subsequently increase your average daily rate.
3. Be smart about who you’re selling to
You have to consider the rooms you sell, and to whom. Look for the provider with lower intermediation costs, a lower no-show index, and the most suitable cancellation policy.
Ideally you would like to sell the last rooms directly on your own channels, so you save in intermediation costs.
4. Use technology to action pricing strategies in real-time
Obviously, everything needs to be accompanied by agile pricing management, and reacting very quickly to the market’s changes.
To do so, you need a good channel manager that allows you to manage rates and availability, closing channels or rates plans in order to optimise your room sales.