A hotel that’s always bustling with guests may not always mean that it’s a profitable one. What deems a hospitality business successful is the revenue they generate. Revenue maximization and management is one of the three main challenges faced by the hospitality industry. SiteMinder’s Global Hotel Business Index 2018 stated that 71% of hotels worldwide are looking for smarter and more efficient ways to do business.
Why is revenue management important?
Revenue management helps the hospitality industry take a data-driven approach to make decisions to ensure that revenue is driven upwards and has consistent growth. Hotels have fixed costs that need to be met regardless of how much revenue is generated from guests. By having a strategy in place, hotel owners can rest assured that all costs will be met and they can dynamically optimize their service and prices.
Revenue Management Strategies
Here are 7 strategies to help grow your hospitality business:
- Understand your market: It is important to have a clear understanding of your market and competition to implement a successful strategy. Having a clear picture of your audience’s needs, wants and expectations will help deliver customer satisfaction consistently
- Customer segmentation: Segmenting your customer base allows you to optimize prices with minimized changes. Understanding how different types of customers behave and segmenting them can in turn help increase customer loyalty from those who are appreciative of the consistent prices being offered
- Inter-department collaboration: It is important to be on the same page with the different hotel departments to address any challenges in the revenue management strategies and ensure the brand standards and messages sent to clients and customers are consistent
- Forecasting: Forecasting based on historic data is an important aspect of revenue management as it allows you to make necessary adjustments by anticipating future demand and revenue
- Competitive pricing: Being strategic in the hotel pricing based on the services you offer, the type of guests you want to attract and competitor strategies is a good approach. Of course, the pricing strategy differs from hotel to hotel but offering value-added options have shown to be beneficial
- Direct booking incentives: Maximising the number of direct bookings made in your hotel is important to keep your revenue in check. Yes, catering to other distribution channels is important, but with direct bookings the commission to be paid to third parties reduce. Offering exclusive incentives, such as loyalty points, or freebies, for customers who book directly through your own website is a good strategy to manage revenue
- Mobile optimization: Mobile is a very important revenue stream. Not having a mobile optimised website interface and booking option already puts your hospitality business at a disadvantage compared to your competitors
How Pazo Helps Hotels In Revenue Maximization
It is important to balance and control costs while working to increase revenues to remain profitable. Here’s how Pazo can help you in revenue maximization when you have a strategy in place:
- Make operations efficient: When hotel operations are carried out in the most efficient way, customer satisfaction comes naturally. It’s not easy to manually keep a tab on every employee and task being carried out in different areas in the hotel, more so if you’re a multi-chain hotel operator.
- Technology has advanced quite a bit and now, working smarter has become easier. Using Pazo you can connect to all your team members instantly, get real-time data on the tasks being carried out across all your locations and raise a ticket and assign a turnaround time to ensure issues are resolved by the designated employees within the stipulated time
- Increase asset life cycle: Save time and resources by digitising your tracking processes. Have tasks assigned to the field workforce through easy and detailed checklists to rest assured that all critical assets are maintained in optimal condition. Having a preventive approach and inspecting equipment on a regular basis can help maintain them better.
- Software up-gradation, repairing equipment, re-installation of equipment, eliminating possible machinery defects, etc. comes under timely inspection. Inspections can save costs spent on managing damages and control. Assigning checklists to departments ensures that these important inspections are not missed out and also allows you to take corrective measures as fast as possible
- Standardise operations & service delivery across locations: A successful hotel consistently delivers excellent service to all its guests. Service quality needs to be consistent, especially when you’re a multi-chain operator. Service quality needs to be maintained at the same level across all the locations, in order to ensure that the guests experience the same pleasant experience, no matter which hotel location of yours they opt for
- Integration with PMS solutions: Integrating PMS solution with work orders and routine operations, retrieving O&M manuals, floor plans and asset information have improved value to organisations of up to 45%
- Integration to iOT devices: Internet of Things is becoming a convenient asset in improving performance, efficiency, time, and cost savings in integrated facilities management services. When utilised the right way, IoT systems can reduce energy bills and provide insightful data to improve operational efficiency and provide a better tenant/employee experience. CBRE’s report has noted that 25 billion connected things will be in use by 2020 up from 4.9 billion in 2015.
- Issue management: Report issues and breakdowns with location and images with real-time insights, ensuring that the department resolves the issue in the shortest time to ensure customer satisfaction.
- Communication: Ensure clear and effective communication between departments at the individual hotel locations and the head office. Coordinate task assignment and completion, surveys, feedback and compliance across all locations you operate to ensure consistency in customer satisfaction and SOPs
- Audits: Audits are key indicators enabling restaurants to measure where they stand. Having timely audits ensure that all aspects of the restaurant are in optimal condition. Five main audits that should be part of every hotel’s SOPs are – health & safety audit, store audit, kitchen audit, service consistency audit and mystery audit
Revenue management is an extremely important concept within the hospitality industry because it allows hotel owners to anticipate demand and optimise availability and pricing, in order to achieve the best possible financial results. Revenue maximization comes as a result of an effort to predict demand and optimise inventory and price availability. When utilised correctly, this will ultimately result in higher revenue.