Like most hotel departments, revenue management changed dramatically in light of last year’s unprecedented challenges. Established processes were flipped upside down as demand dried up and historical data lost its power to predict future business.
Now that most countries can finally ease restrictions, it’s time to look ahead, make the most of recovery and set yourself up for future success.
Trying to re-establish old habits and ways of doing things won’t be enough. The only way to guarantee sustained growth and success is by moving with the times and adapting your revenue management practices. That includes broadening revenue management’s scope, fostering collaboration with other commercial departments and taking tech adoption to new levels.
Let’s look at how you can do this at your hotel.
Navigating the need for broader data sets
In terms of data, many hoteliers feel like the clocks have been reset. Historical data was of limited use in 2020. Even in the near future you won’t be able to rely on it as much as you did in the past.
This can feel like you’re running a new hotel in an unfamiliar market, since you have little information to base pricing and distribution decisions on. Does that mean you should ignore data and base all choices on gut feeling and experience? Absolutely not.
Instead, leverage a combination of historical, current and future-facing information and expand your data’s perspective.
In the past, you may have simply looked at on-the-books data, historical performance, and a small compset – that’s a selection of direct competitors to your own hotel. Today, examine the market as a whole. Update your compset to include alternative accommodation providers, for instance vacation rentals and Airbnbs. Leverage indications of future demand like search volume and flight searches. This will give you a more well-rounded image of demand shifts in your market and a better chance to dynamically adapt your rates and win business. Use live data as much as possible to get the best results in these volatile times.
Dealing with uncertainty and varying degrees of recovery
Restrictions, travel corridors and countries’ green lists seem to change every week. This leads to demand shifts every time new rules become effective and makes the recovery phase highly unpredictable.
On top of this uncertainty, we don’t know exactly how leisure, corporate and event markets will develop in the long run.
Experts have made various predictions that often seem to go in very different directions:
- Microsoft co-founder Bill Gates predicted that over 50% of business travel would ‘go away’
- Carsten Spohr, chief executive of Lufthansa, insists that business travel will return quickly
- In a Forbes article, industry experts share how hybrid events are the future
- Others worry about the death of the in-person event industry as many gatherings go fully virtual
- The American Express Global Travel Trends Report proves that there’s pent-up demand: 76% of respondents are keen on travelling in 2021. But which markets will benefit from this desire to travel?
Now, the question remains: what should you adjust for? We’ll stay away from making hard and fast predictions for the international hospitality industry. Instead, it’s important to acknowledge that every hotel and market is unique and will experience the recovery phase differently. The key is looking at your internal and market data to detect trends and make appropriate decisions for your property.
Total revenue management is on the rise
The concept of total revenue management has been around for a while. But the drastic Covid-induced demand drops finally forced hoteliers to think about it more seriously and get creative.
Suddenly, many new concepts and offers began popping up in departments other than rooms, like F&B, spa, and recreation. This development is likely here to stay as it allows you to maximize revenue per available guest (RevPAG) and boost profitability (gross operating profit per available room – GOPPAR). As you can see, this also brings new metrics that will keep gaining importance in measuring a hotel’s success, and you can learn more about the new generation of data in our Metrics that Matter report.
Looking for a straightforward way to boost these new KPIs? Implement an upselling and cross-selling program at your hotel. On top of driving revenue, this accommodates your guests’ desire to customize their stay with add-ons. Take things to the next level with attribute-based selling. It creates extra value for travellers and lets them pick which features and benefits they want to pay for.
Leveraging technology to stay ahead
Adapting to all the changes mentioned above can seem like an overwhelming task. The only way to do so without losing your head is to leverage today’s latest hotel tech innovations. Today, they offer many new ways to make your work easier and more effective.
In the past (and often present), many hoteliers were sceptical of technology and didn’t trust automation. Many systems didn’t integrate either, resulting in communication and data silos. Breaking up these silos is a key step to moving forward successfully, especially in times of uncertain business.
Cloud-based, integrated tech stacks are the best way to do that. Implement tools that will get your systems and departments to talk to each other and share data. For example, connect your property management system (PMS) to your revenue management system (RMS) to enable automated, live rate updates.
Integrated and automated payments are another great addition to your operation. This cuts down manual work for your team, reduces the risk of human error and streamlines payments for guests. It could even help you drive extra revenue. If you make payments easier throughout the hotel, travellers will be more inclined to opt for an extra service. In short, add a powerful payment system to your backend, so your team can concentrate better on serving your guests.
With revenue management evolving so much due to Covid-19, it can feel challenging to address all changes at once. Don’t worry though. If you understand how important it is to re-evaluate and adapt your approach right now, you’re already on the right track.
It’s simply a matter of where you want to start. Pick the area that would make the biggest positive impact on your property and begin there. Then move on to the next one. As you make your step-by-step updates, you’ll begin seeing the impact on your top line. And what better motivation is there to keep you going?
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