Why can every Hotelier gain from revenue management?
Do you often wonder why your property revenue falls below the current market growth even though you felt you did everything you could to achieve those desired figures?
Have you ever heard of revenue management but never had the courage to invest in it?
Revenue management provides the opportunity to sell the proper room type to the appropriate market segment at the highest possible price at the right time while reducing distribution costs.
Considering the results, its rather called profit management because rapid revenue growth can be achieved while reducing sales costs to a minimum.
Why is it suitable to use revenue management tools for every type of property?
- If you consider your product you have to deal with the same amount of room every day which means that your capacity is given fixed despite the changes in demand. Besides time, this demand depends on the location and type of your property as the market realizes differences in every touristic region as a result of the seasonality and the wide range of the regional events. When building your pricing strategy, you need to consider all these differences as important factors that influence the expected demand of your rooms. Don’t forget to take into account not only the factors that have a positive impact on your demand, like regional events and holidays but also those factors that have a negative impact, like planned maintenance or natural disaster that occurs regularly each year in the same period.
- On the other hand, as a result of the perishable nature of the product you are losing revenue on every unsold room since obviously your product can’t be stored as it highly depends on time as a factor. Putting it another way your unsold product can’t be sold tomorrow for yesterday.
- Unfortunately, Hoteliers have to deal with fixed costs that proportions are much higher than the variable costs unlike in other sectors. It drives revenue management to include this sectorial uniqueness into the logic of your pricing strategy. Furthermore, you need to calculate a minimum payment that covers both your fixed and variable costs per room.
- Another important tool of revenue management is to create an optimized segmentation strategy by which you can reach your optimal market mix which can lead you to your highest achievable revenue. With proper segmentation statistics revenue management makes distinctions between the guests of your property in order to build a clear picture for your sales, pricing and marketing decisions.
- We have great news! Due to the fact that your rooms can be sold in advance by analysing your booking data and the changes of your competitors availability and prices we can constantly react to changes in demand of your property with dynamic pricing. All you need for effective dynamic pricing is a proper property management system that is suitable for creating sales statistics and a channel manager that helps to optimize your distribution strategy and manage your pricing in real time with real availability. In addition to this for building a successful dynamic pricing strategy you will not regret to ask for support from a revenue management specialist. Your efficiency can be increased by a rate shopper which is able to monitor all your competitors and provides information of their online availability and pricing. Needless to say for advanced revenue managers a revenue management system could be advantageous as well.
Are you ready to take the next step for boosting your revenue? Discover Everguest’s revenue management services here!
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