What are the best practises in hotel revenue management?

Hotel revenue management is all about strategically selling the hotel rooms at an optimum value and making profitable revenues. With revenue management system one can uses analytics to predict consumer behavior and optimize product availability and price to maximize profits. The solution helps improve business and technological challenges faced by business owners in the hotel industry. In this article today we have shared some of the best hotel revenue management practice that helps improve the revenue.

Focus on profit management-

For years the hotel industry has been considering ADR, RevPAR and NRevPAR as the key performance indicator for business. But, today with changing paradigm, the way to measuring KPIs are very different. The Hotel revenue management is slowly shifting towards profit management, focusing more on gross operating profits, and total revenue management per room.  These indicators today work as a crucial benchmark in understanding the entire business performance.  So, with this the business performance is not just measured solely based on a single parameter of occupancy rate but rather based on the value of the room being sold at, taking into consideration all the expenses as well.

Hotel data analysis & predictive advanced analytics-

Revenue management system offers advanced analytic data that helps in business operations and decision making. Like most other industries, hospitality industry too is making the most of the predictive analytics for running business successfully. With historic data and current trends, the hotel industry can smartly plan and strategize occupancy rate or room rates, based on demand and past records. A detailed customer behavior analysis report shall also help the business personalize its offerings to customers across distribution channels. With data pertaining to guests’ online activities, like booking pattern, cancellations and no-shows, booking patterns, one can improvise on their pricing strategies for better development of business and pricing models.

Effective channel management-

Hotel Channel management is an essential part of hotel revenue management. It helps in systematically dealing with all bookings of customers and preventing the risk overbooking. It further helps in generation of high revenue through multiple channels used by guests for booking. It keeps business critical information like availability of rooms, current price per rooms, cancellations etc. updated across all the channels. Further, information like this helps maximize booking capacity and increase revenue for business. A well organized and updated channel management goes a long way in growing business.  

Encourage direct bookings-

One of the best revenue management practices is to encourage and drive direct bookings. Booking reservations that come through direct channel helps increase business revenue. Bookings through OTA makes it a little expensive for hotel owners as they have to pay commission for every booking, they get via OTA channels. Limiting the expenses of OTA commission helps maximize revenue.  As a business owner, you can encourage direct bookings by offering discounts, free meals or spa coupons etc. for customers.

Loyalty programs-

In the hotel industry loyalty programs work wonders in terms of increased business and revenue generation. Loyalty programs for the guest helps retain them and bring them back to you for future bookings. These programs can include offering discounts, service coupons, free meals and much more that can increase customer loyalty towards you.  Hotel guests can earn points through direct bookings and reimburse them for other hotel services or hotel stays in future. Such programs help improve hotel revenue management and increase customer loyalty for business.