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Hotel revenue management is a challenging task - and there may be common barriers holding you back from maximising earnings.
Ask any business owner what the primary marker of a successful operation is, and they will likely share the same answer — profit. In the case of hospitality, hoteliers aren’t only focused on achieving the ideal guest experience; they’re also continually searching for ways to increase and manage hotel revenue. After all, operating a successful hotel is no easy task. From staffing to daily operations, revenue optimisation to guest service and the pressure to remain ahead of industry technologies and trends, hoteliers have their work cut out for them
The Importance of Prioritising Hotel Revenue Management
Are occupancy rates high and consistent? Where does RevPAR stand? Are guests booking direct and coming back? Are rates optimised? Are you missing out on group booking opportunities? These are just a few of the questions running through a hotelier’s mind as they piece together their hotel's revenue management strategies.
In many cases, there may be a few key factors to blame if a hotel has yet to tap into its true revenue potential. Taking proactive measures and focusing on these five areas of improvement can elevate guest service, improve operations, and ultimately result in increased hotel revenue.
Common Barriers Limiting Hotel Revenue Growth
1. Direct Booking Sales Strategy
A love-hate war has been waged for years now between hotels and OTAs. While OTAs have had an undeniably significant impact on global travel, hotel properties that are too reliant on these platforms and third parties will lose out on revenue in the way of high commissions. These hotels suffer from increasingly high guest acquisition costs, unable to capitalise on increased hotel revenue potential associated with direct bookings.
How to Solve ItWhy do so many guests utilise third-party booking sites rather than going directly through a hotel? The answer is rather simple - it comes down to simplicity. By investing in modern booking technology for transient and group businesses, hotels are better equipped to encourage direct bookings. With the range of booking platforms available today, hotels have no excuse not to implement an online booking engine that encourages conversions for all segments. Properties should list all relevant hotel details and available venue spaces, including real-time availability, while also offering incentives for those guests and group planners who book directly. Studies show that over 75% of people prefer to book a hotel room online. In 2017, Skift reported that “no one wants to use RFPs for small meetings today; they are universally hated” and noted that RFPs for small meetings under 100 people were definitively on their way out. If you make it easy for lookers to book directly from your website, you have a higher chance of additional hotel revenue from OTAs. |
2. Pricing Optimisation
Beyond attracting and confirming leads, if your hotel revenue management process in place is manual, you likely aren’t effectively identifying room rates. If hoteliers are constantly struggling to sell the right room, to the right customer or group, at the right time and the right price, they may be missing out on major revenue potential.
How to Solve ItPricing rooms and venues should never be a matter of guesswork. Technology and data should mitigate any pricing-related uncertainty with built-in hotel revenue management tools and analytics to ensure pricing is set right and parity all year round. Rather than focusing solely on occupancy over profitability, hoteliers need to invest in dedicated revenue management technology and integrated tools, for both transient and group businesses, to optimise pricing strategies. This technology provides enhanced visibility to data, trends, business performance, and competitive insights. |
3. Marketing to Guests
Studies show that it’s 50% easier to sell to existing customers than to new prospects — and yet, hoteliers often miss out on valuable marketing, cross-sell and up-sell opportunities with their guests and groups before, during and after their stay.
How to Solve ItWith the demand for enhanced personalisation reigning supreme across almost every touchpoint of the guest journey, the need for data-driven tailored marketing and communications has never been more important. With this in mind, hoteliers should actively seek out solutions to centralise and automate marketing activities, as well as use actionable insights, analytics, and prompts from reporting data. Efforts need to be personalised to target and attract single travellers, business travellers, and groups. |
4. Gathering and Responding to Guest Feedback
The key to long-term success for any hotel is centered around providing an exceptional guest experience. That means, guest feedback should be treated as an invaluable resource, and an important tool used to identify growth opportunities. In the hospitality industry, an uninformed revenue management strategy is a weak strategy.
How to Solve ItSatisfaction surveys, comments and reviews, social media posts, and other platforms represent a wealth of information to hoteliers. Every lodging operator is responsible for keeping their ear to the ground and using guest feedback to highlight their property’s strengths and identify areas for improvement. Applying guest insights to the service model will allow hoteliers to elevate the guest experience. This means greater hotel revenue potential.
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5. Technology
It is a common issue for hoteliers to be bound by outdated technology, negatively impacting on a property's operational efficiency and financial success. As guest demands evolve and rise to new levels, hoteliers should remove inefficiencies and equip both staff and guests with modern, responsive technology.
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How to Solve It An efficient operational system acts as the lifeblood of your hotel, setting yourself up for success with the right technology. Take a look at your tech stack and identify any areas of weakness. If an existing venue management system or application doesn’t meet the current and future needs of your property — or have the capacity to scale — it’s time for an upgrade. |
Get the Tools You Need for Greater Hotel Revenue Management
In the case of hospitality, investment in technology can make or break a hotels’ efficiency, success, and revenue potential. Within this point, one of the most overlooked areas in hospitality technology is venue management systems. Far too many hotels are relying on manual processes or legacy sales and catering systems that can no longer provide the operational support or intuitive functionality that properties of all sizes need today.
Events and group bookings represent a huge revenue opportunity for hotels, and the time to embrace new sales and catering technology to automate the booking experience for modern planners and hotel sales staff is now.
