The hospitality industry is a complex machine under which various types of businesses are set up to accommodate travelers. Each category of business (hotel chains, vacation homes, boutique hotels etc) is akin to a unique ecosystem, though all types of them define the industry, they have to organize, behave and succeed on their own as they are different from each other.
Like in any business, managing revenue becomes the primary focus for any hotel owner. Which is rightly so? But why do many hotels or vacation homes don't turn profits year-on-year?
The crux is this, one needs to define what 'revenue management' is. There are many components which need to perform in sync with each other for a hotel to make profits. So, it is imperative to define what aspects or parameters constitute at the top level to determine a hotel's revenue management success. Here is our tuppence:
Do not commit the biggest mistake
Like most functions in managing your hotel, you need a strong, robust software application to 'manage' your revenue. Google search 'Hotel Revenue Management' and you shall find a ton of cloud based applications ready to sell you their services, which allow you to tweak your base pricing, run promotions, forecast demand and generate reports. This is all good and necessary too. But before those factors affect your bottom line, there is something else.
It is between you three
At the end of the day there are only three main factors which matter. It is you (the hotel), your consumer (travelers), and your service (travelers’ experience) which determine how much revenue you make. All three aspects need to be addressed, updated, and refurbished often to appeal to travelers.
What I mean is, the experience you deliver to travelers right from how they discover you online (to book), check your ratings on social media (to review), book a room (on OTAs or your website), and check in and stay (your service), all these affect your revenue bottom line.
You need to invest and tweak these factors first before you jump into your revenue management software. Because, if people are unable to discover your online, you don't get bookings. If they read bad reviews about your hotel, they won't book. If their booking experience (online or offline) is bad, you will lose the booking. And finally, if you do not serve them well when they stay at your hotel, they won't come back and they will surely spread the word. If we want people to pay money for your service, then the service experience has to be top notch.
You need both Batman and Robin
Once the aforementioned factors are attended to, and then come the grit and sinew of robust revenue management (RM) software. To leverage your RM application, you need the right set of data and sometimes, lots of data. So, if Batman is akin to your RM software, then Robin is your data set. Without one, the other just makes no sense, isn't it?
Modern day revenue management applications, especially the ones supported by automation has enormous computing power and are backed up with smart algorithms to crunch every byte of data to help you interpret your past performance.
Bring all of your past data into your RM application and crunch them to generate versatile reports, plainly to understand your revenue patterns and forecast demand. There are a few RM applications which help you analyze your competitors and their pricing strategies too. So data defines your future.
Choose the right partner
Now that we know that data is important to forecast demand and reap revenues, you got to choose the right application which should help you manage your hotel revenue without fuss. Choose the application based on:
● how easy it is to use (not too technically complex)
● how easily the application integrates other aspects such as channel management, marketing, booking engine etc, as there is no point in using tens of applications to manage each aspect of your business (the network effect)
● and choose the right partner who can enable pricing automation (even when you are asleep) to make maximum revenue out of demand surges
- Anil Kumar Prasanna, CEO, AxisRooms