5 Mistakes That Sabotage Your Hotel Revenue Management Efforts
1. Failing to access your historical data
Any savvy revenue manager knows they need a solid understanding of their hotel’s historical data to succeed. This information is essential in forecasting future trends and making informed decisions about pricing and inventory.
The unfortunate truth, however, is that many managers do not have access to the historical data they need to make informed decisions about pricing and inventory. This can lead to disastrous consequences, such as lost profits or bankruptcy in the worst-case scenarios. Hotel managers can attempt to compile evidence of past performance in these situations, though this can be incredibly time-consuming. If you find yourself in this situation, you should, at the very least, begin to record data from now, so this time next year, you will have access to a year’s worth of data.
2. Ignoring multichannel bookings
Another common challenge is managing multiple booking channels. Hoteliers need to be aware of many online booking platforms and travel websites in today’s digital age. Each one of these channels has different rules and regulations, and it can be challenging to keep track of them all. It’s essential to clearly understand how each channel works and how it can impact your hotel’s revenue.
Managing all of these channels can be daunting, and it can be tempting to concentrate on just the most prominent platforms. However, this would be a mistake, as smaller channels can also provide a significant source of bookings. The diagram below shows the market share of European online booking agents. It would be easy to consider concentrating on just the two biggest platforms, but doing so would ignore almost 20% of all the available online markets.
It’s essential to have a clear overview of all the channels you are using and to monitor their performance regularly. Only then can you ensure you get the most out of each one. It’s essential to take the time to understand each one. By doing so, you’ll be able to develop a clear strategy to best use them all to drive revenue for your hotel.
3. Ignoring online reputation
In addition to the main hotel booking platforms, customers are increasingly open to accessing their favorite hotels via social media channels. This offers hotels a great way to demonstrate the quality of their rooms and the level of engagement they create with their customers, while customers expect to be able to ask direct questions and receive answers.
Does your hotel monitor and interact on social media? Research by Sprout Social shows that over 57% of social media users, which is most of us, are more likely to purchase products or services from brands they follow online. This is a huge opportunity for hoteliers to increase revenue by using social media to connect with potential guests and build relationships. Failing to do so could result in lost revenue and customers choosing to stay elsewhere. If social media does not come easily to you, it is possible to use various software options to batch create posts to be shared across multiple platforms or outsource this function.
4. Not implementing yield management strategies
Yield management is another important aspect of hotel revenue management, but it can also be one of the most difficult to master. Yield management is about maximizing revenue by adjusting the room prices to meet current demands. This requires a deep understanding of customer behavior and trends and a keen eye for pricing.
Do you find it hard to discount your rooms? It can be hard to accept that there are times to sell a room at half price, and this can be one of the greatest hotel revenue management obstacles to accept, but if that is what it takes to fill a room that would otherwise go empty, then it is essential to do so. The key is to understand when those times are and to have the flexibility to change prices quickly. The right technology can give you the insights to make informed pricing decisions and even automate the process, pushing updated pricing to your chosen platforms.
5. Failing to monitor distribution costs
Last but not least, distribution costs can eat into a hotel’s bottom line if they’re not properly managed. Do you actively monitor these costs for variation and opportunities to streamline and optimize? Hotel distribution costs include marketing, online travel agency commissions, and Global Distribution System fees. It’s important to understand where these costs come from and how to keep them under control.
Failing to monitor these costs can quickly eat into your hotel’s profits, so it’s important to have a handle on them at all times. The right Hotel Revenue Management software will give you the insights you need to understand where your distribution costs are coming from and how to keep them under control.
Conclusion
Hoteliers must take a holistic and technology-driven approach to revenue management to succeed. Hotel revenue management technology has a vital role to play in alleviating each of these revenue management mistakes. The right technology and processes can provide efficiency savings and room for negotiation by automating the process of monitoring and analyzing your distribution costs. This leaves you free to focus on other revenue management aspects.
