In the era of rapid technological advancements, the margin of error is shrinking. Competition becomes stiff and products and service methodologies are getting obsolete in no time. The Hospitality industry is no exception to this super interesting yet challenging phase. In this post, we bring you some of the top hotel revenue management strategies to grow your hotel business.
This post dwells on effective strategies to help hotel businesses maximise revenue.
We have included in this article some of the best revenue management tips and hotel yield management strategiesto maximise revenue in the Hospitality industry.
Managing revenue effectively is definitely one of the key management issues in the hotel industry. It is today and has always been.
While a lot of Information systems of Hospitality make definitive attempts to ensure a better revenue management system but without effective strategies, even they are just some binary codes available to you and your competitors alike.
Devising effective revenue Management Strategies for the hotel industry is thus key to success in this highly competitive and rapidly growing industry.
So, without any further ado, lets quickly move on to the strategies.
1. Optimising website for Mobile customers
A lot of weight is being given to mobile-friendliness these days. Every company seems to be sweating out to become more mobile-friendly.
And now we put it right at the top in hotel revenue management strategies.Yes, it’s that important.
So, are we off-topic? Definitely not.
Going mobile with complete dedication should be a top priority for all hotel business. That is where you are going to get your maximum customer from.
Expect most of the revenue from your hospitality business to come through this mode.
Thus a mobile optimisation strategy would be the backbone of any revenue management strategy now and in the coming years.
Plus, your brand gets a big thumbs up globally if you are optimised for mobile devices.
There are several research on why your business website must be optimised for mobile.
Key takeaways are:
- Over half of Millenials plan their travel online
- Mobile bookings are growing at a faster rate
As is clear, due to this, bookings on mobiles are growing at a huge pace.
So, focusing on mobile has to be on your list as far as your top revenue management strategy is concerned.
It must be on the top somewhere.
Another image, courtesy Pinterest, might help to further fortify this assertion that a focus on a bigger and better mobile presence is crucial for growth in the travel industry.
Have a look.
So, if you have not yet optimised your mobile site, it’s important to give it immediate attention.
Using mobile technology is also one of the key hotel industry trends in 2020s and will stay so in the coming years.
2. Integrating Various Distribution Channels and a focus on Direct bookings
In order to maximise revenue for your hotel business, it is important to keep things simple.
Would it not be easy to have all distribution channels integrated into one place.
Will definitely save a lot of costs and will add to the convenience.
It is thus an important part of revenue management strategies for hotel business growth.
And, this is connected to the mobile optimisation that we have discussed in the previous point.
A focus on direct booking while integrating the distribution channels can take away most of the hassles.
While this used to be a big ask back in the days but technology and mobile-first focus have made this simpler now.
It is an important hotel business strategy to focus on the below mentioned in order to maximise revenue.
- Global Distribution system- We will discuss this further in this post
- Quality Hotel Website for improving direct booking rates
- Using Online and Offline Travel Agencies
- Leveraging Social media for maximum advantages
- Search Engine Optimisation
There must be a key focus on building a great website so as to promote direct booking.
This takes away a lot of hassles of revenue management if most of the customers are managed and taken care of directly.
Most of the large hotel chains are already implementing this strategy.
Having a great website and mobile-first strategy is definitely one of the top marketing strategies in the hospitality industry.
There are a lot of hotel revenue management companies which would set this up for you with ease.
3. Using effective Revenue Management Tools for the Hotel Industry
A lot of revenue management strategies have been mentioned in this article.
Xotel has also mentioned through various articles about other revenue management strategies like Market Segmentation, Price positioning, Stay Controls, Displacement Calculations etc.
There are a lot of Hotel Revenue Management tools which might cut the task short while retaining the quality and level of service.
These are of the likes of:
- Hotel KPI Dashboard
- Various Forecasting Tools
- Hotel Arrival-departure tracking tools
- Hotel Booking curve
- Yield calculators
- Summary reports
- Budget vs expense calculator
- Price Matrix
- Rate fence tool
and many more.
So, check them out if you want to research further on the revenue management strategies for the hotel industry.
In order to implement these effectively, you might need thesupport of technology.
There are a lot of useful hotel revenue management software solutions available on the world wide web that might be of great help.
You can safely have a look, try out a few of these and settle for the best options.
4. Monitoring Market rates and Competitor rates
This is one of the most important revenues management strategies to ensure the continued success of your hotel business.
Siteminder in one of its article on Pricing strategy and revenue management strategy for the Hotel industry has stressed on keeping a real-time monitor to track prices.
Prices of the market, the industry in general and of key competitors.
And, we can’t agree more. If you want to read more on how pricing strategy should be incorporated in the revenue management strategies to grow your hotel business, read the full article here.
Monitoring key data helps in managing revenues well and helps in proper forecasting.
This again is quite easy to implement in the current technology era.
While the data is readily available but analysis it effectively to incorporate in revenue management still needs some doing.
Why is this important? It helps in Yield management which is pretty much a part of revenue management.
Knowing how your competition is doing and managing rates dynamically helps you adjust in real-time to ensure that your customer doesn’t get deflected to a competitor.
Thus, it helps in adding profitability to your hotel business.
There are a lot of free and premium tools available which can easily help you monitor hundreds of booking sites and competitor websites.
5. Demand Forecasting for your Hotel Business and mapping
Demand forecasting is a key yield management strategy for hotels. Yield management is a subset of revenue management that deals predominantly with profits and expenses.
The below image by Business Jargons explains the various ways Demand Forecasting can be done for your hotel business.These are a crucial part of effective revenue management strategy for all hospitality businesses. These are:
- Consumer Surveys
- Opinions Polls
- Trend Projections
- Barometric Methods
- Econometric Methods
The task is daunting for hotel businesses due to the dynamic nature and seasonality of hotel businesses across the globe.
However, there are a lot of demand forecasting tools, which would automate most of your task.
Various revenue management companies have dedicated software for the hotel industry.
This should make the task easier in the current era when AI is a top hospitality technology area exploring possibilities to reshape the industry.
6. Rate Fences and Benchmarking- A Key Hotel Revenue Management Strategy
This again is a part of the pricing strategy and promotion.
This is an inevitable part of the revenue management strategy in the hotel industry. It’s a normal practice of fences on rates in the hotel industry based on multiple parameters.
While a lot of hotels already use and know the importance of Rate Fences for revenue management, it is still underutilised.
There are a lot of hotel revenue management companies which specialises in these. A quick Google search would open for you a lot of such company options.
Same is the case with benchmarking.
The concept is extremely popular in business books but extremely underutilised in hotel revenue management strategies.
Here you go. Some of the useful revenue management strategies to help your hotel business grow at a faster rate.
The growth of technology in the hotel industry and elsewhere has ensured that we have sufficient options to automate most of these tasks we have discussed.
So, please explore the tools carefully, most of which would give a cushion of the free trial.
However, we must not forget that automation and technology are only as good as we are. Thus automation should be used as an aid only while devising the effective revenue management strategies for your hotel business.
What are the strategies to increase revenue in hotel? ›
- Offer Early Check-In and Late Checkout.
- Promote your food and beverage options throughout the stay.
- Offer room upgrades pre-arrival.
- Partner with local businesses to offer excursions and experiences.
- Take advantage of other upsell opportunities.
- Analyze the market. It is essential to understand your market before implementing a revenue management strategy. ...
- Segment your customer base. ...
- Choose the best pricing strategy. ...
- Focus on customer retention. ...
- Focus on mobile optimization. ...
- Leverage available revenue management tools.
Revenue management refers to the strategic distribution and pricing tactics you use to sell your property's perishable inventory to the right guests at the right time, to boost revenue growth. Other products such as your amenities and food and beverage offerings will also come into the picture.What are the trends in hospitality revenue management strategies? ›
New and emerging technology is always going to be one of the most critical revenue management trends to keep pace with. At present, some of the biggest technology trends include the use of hotel management software, the rise of specialist revenue management software, as well as other tools, like upselling software.What are the 9 essential strategies for increasing revenue? ›
- Set defined goals. Make quantifiable goals for how much you want to increase your sales and revenue. ...
- Target repeat customers. ...
- Target former customers. ...
- Grow your geographic reach. ...
- Refine your pricing plan. ...
- Add products or services. ...
- Bundle products or services. ...
- Upsell products and services.
selling more to existing customers. offering sale promotions to boost the volume of sales. developing new product or service lines. selling in new markets.What are the 4 C's of revenue management? ›
The strategic levers of yield management can be summarized as four Cs: namely, calendar, clock, capacity, and cost.What are the 4 methods of improving revenue? ›
What Are The '4 Methods to Increase Revenue'? If you want your business to bring in more money, there are only 4 Methods to Increase Revenue: increasing the number of customers, increasing average transaction size, increasing the frequency of transactions per customer, and raising your prices.What are 7 core principles of revenue management? ›
In revenue management, the major functional components for its application are: (1) market segmentation, (2) inventory pooling, (3) demand forecasting and supply forecasting, (4) overbooking's control, (5) revenue mix controls, (6) exception processing and (7) performance measurement.What are the 5 steps of revenue management strategy? ›
The stages in this process are Data Collection, Segmentation, Forecasting, Optimization, Dynamic Re Evaluation.
What are three sources of hotel revenue? ›
Typically, revenue in the hospitality industry is generated through hotel room rentals, meeting space occupancy, and the sale of food or beverages.What is the best example of revenue management? ›
The most common example of how Revenue Management is executed is in the businesses of Hotel Management and the Airline Industry. The primary source of revenue for hotels is found in their room rates. The revenue generated from the bookings is a simple multiplication of price and volume booked.What are the five core factors of revenue management? ›
- Revenue Management Pricing. The most obvious factor in revenue management is the price. ...
- Inventory Revenue Management Systems. ...
- Revenue Marketing Strategies and Opportunities. ...
- Sales Channels and Revenue Pricing.
Porter called the generic strategies "Cost Leadership" (no frills), "Differentiation" (creating uniquely desirable products and services) and "Focus" (offering a specialized service in a niche market). He then subdivided the Focus strategy into two parts: "Cost Focus" and "Differentiation Focus."What is the the importance of revenue management strategy in hospitality industry? ›
Revenue management is highly important to hoteliers because it allows them to maximize revenues and yields, using smart tech and big data. The main aim is to foresee market demand and react to changes in the market efficiently. Without a doubt, these are challenging times for the hospitality industry.What are the 4 growth strategies? ›
These are Product, Placement, Promotion and Price.What are revenue growth strategies? ›
Revenue Growth Strategy
Specific revenue growth tactics may include: Investing in sales training programs to boost close rates. Leveraging technology to improve sales forecasting reports. Using lower-cost marketing strategies to lower customer acquisition costs. Continuing to train customer service reps.
To increase revenue for your small business, you should focus on your customers, boost your marketing and sales efforts, review your pricing strategies and expand your market. No matter your budget, there are a number of strategies that small business owners can use to increase profits and improve the bottom lines.What are 5 revenue examples? ›
- Rent revenue.
- Dividend revenue.
- Interest revenue.
- Contra revenue (sales return and sales discount)
Common revenue models include subscription, licensing and markup. The revenue model helps businesses determine their revenue generation strategies such as: which revenue source to prioritize, understanding target customers, and how to price their products.
What is the primary strategy of revenue management? ›
Revenue Management is the application of analytics that predicts consumer behaviour at the micro-market level to optimise product availability and price to maximise revenue growth. The primary aim of a revenue management strategy is selling the right product to the right customer at the right time for the right price.What is step 6 of the revenue cycle? ›
The seven steps of revenue cycle include preregistration, registration, charge capture, claim submission, remittance processing, insurance follow-up and patient collections.What are 7 ways to generate revenue streams? ›
- Asset sale. The most widely understood Revenue Stream derives from selling ownership rights to a physical product. ...
- Usage fee. ...
- Subscription fees. ...
- Lending/Renting/Leasing. ...
- Licensing. ...
- Brokerage fees. ...
To optimize revenue, your business should focus on optimizing pricing, marketing campaigns, and sales effectiveness. This means, meeting customer demand with value-driven pricing, improving marketing and sales automation to convert as many qualified leads as possible, and selling to your highest-value leads.What is the hotel's biggest source of revenue? ›
When it comes to bringing in revenue, hotels typically rely on four primary sources: rooms, meetings and events, food and beverage, and ancillary services. In hospitality, typically, the performance of each pillar will determine a property's financial success.What is the most profitable part of a hotel? ›
- Hotel Directories. Hotel directories are easily one of the top most valuable hotel amenities a hotel can provide for guests. ...
- Guest Room Accessories. ...
- Conference Room Products. ...
- Banquet Supplies. ...
- Pool Menus.
In today's industry, solvency, operating and profitability ratios are the most commonly used financial analytics that hoteliers utilize to gauge current and projected business performance.What is the most important role of a revenue manager? ›
A revenue manager is tasked with keeping up with market trends, analysing data and using the available information to anticipate demand and then adjust strategies accordingly. Ultimately, the core objective for any revenue manager is to maximise the amount of money generated by selling products or services.What is an example of revenue management sales strategy? ›
Price per segment is another common strategy for revenue management purposes and involves selling the same rooms at different prices to different customer segments. For example, this might mean selling rooms at a lower rate to business customers, because they are likely to use corporate facilities.How to increase hotel revenue in high season? ›
- Build a road map. ...
- Segment your target market. ...
- Sell the experience over the transaction. ...
- Maximize online reach with a Channel Manager. ...
- Build your direct channel with a booking engine.
How can hotels increase sales and marketing? ›
- Stop giving away free upgrades. ...
- Offer paid room upgrades pre-arrival. ...
- Streamline your upselling efforts with a smart hotel technology. ...
- Offer personalised deals and packages. ...
- Benefit from guest segmentation. ...
- Capitalise on food and beverage deals.
- 1- Search engine optimization. ...
- 2- Content. ...
- 3- Effective Hotel marketing campaigns. ...
- 4- Local online marketing. ...
- 5- Form brand alliances. ...
- Allow for a quick check-in and check-out. ...
- Use apps.
- The hotel industry thrives on location. ...
- Keep an eye on those reviews. ...
- Generate great leads. ...
- Give customers an innovative experience. ...
- Keep your guests safe. ...
- Communicate, communicate, communicate. ...
- Give managers flexibility. ...
- Be observant.
Revenue management is highly important to hoteliers because it allows them to maximize revenues and yields, using smart tech and big data. The main aim is to foresee market demand and react to changes in the market efficiently. Without a doubt, these are challenging times for the hospitality industry.What makes a hotel profitable? ›
Owning a hotel can be profitable if you have the right combination of location, price point, quality of the physical asset, marketing strategy, dedicated employees, and supportive investors and management partners. However, a hotel isn't profitable by default, so you can expect a lot of hard work to generate profit.What is used to Maximise room revenue at hotel? ›
Upselling is a smart and efficient way to encourage guests to spend more. This way of driving ancillary revenue can be applied online as well as offline. Online you can use upselling tools which encourage customers to increase their spending by offering room upgrades for example.What is 4p marketing strategy in hotel? ›
The 4Ps in tourism are “product,” “price,” “place,” and “promotion.” They are intangible factors for enthusiasts, planners, and adventurers and are categorically streamlined as follows.How can hotels gain competitive advantage? ›
Simply put, a hotel (or any company really) has a competitive advantage when it is able to generate excess returns over an extended period of time. Excess returns mean returns that are in excess of the cost of capital required to build and operate the hotel.What is marketing strategy in hospitality industry? ›
Marketing for hospitality and tourism is the network of strategies and connections used to promote products and services in the travel industry. Marketing draws attention to destinations, hotels, transport services, and local activities while focusing on customer services and memorable experiences.