The 7 Foundations of Revenue Management for Your Property
Revenue management requires keeping up-to-date with market conditions.
Hence, good results are a consequence of continuous analysis and a hotel´s competitive position within an articulated and complex system.
To be competitive within the hospitality sector, the use and management of specific techniques and procedures are mandatory. Your main task will be to try to apply revenue management techniques to the optimization of hotel reservations, so as to maximize room occupancy and manage supply and demand. These strategies will optimize inventory and price availability to maximize revenue growth.
That is why it is highly recommend that part of the job be automated. To work from a 360º perspective and be able to identify the basis of Revenue, it is necessary to have a clear set of key foundations:
Forecasting. Working with predictions in regard to demand allows hotels to capture money in advance and eliminate the uncertainties that arise from demand. Understanding your market segments, your competitors and the needs of the consumer will minimize the risks of forecasting.
Dynamic Reevaluation. Market demand and competitiveness forces a constant re-evaluation of the approaches taken in relation to product and price. Therefore, it will be paramount to devise new strategies connected with the selected market segment, and maintain the balance between perception and satisfaction. Revenue management requires constant analysis, evaluation and improvement to maximize results.
Data Collection. Although it is important to work with historical data and analyze what has happened in the past, it is not enough. Frequent market changes, the transversality of the tourism sector and constant supply shifts lead us to the interpretation in almost real time of data turned into information. The combination of using historical data, conducting analysis of the current situation, and forecasting are key for effective revenue management.
Market Segmentation. Identifying your target audience or market segment is necessary for adapting to the existing hotel supply. Additionally, in order to speak the “same language” as your client, you need to work on the perceptions and needs of market segmentation. If a traveler has a positive tourist experience the possibility of him returning is higher, thus saving you future acquisition costs.
Optimization. In revenue management it is necessary to understand what your resources are and to make the most of those resources. The basis for offering the right room at the right price lies in accurately analyzing the market and in understanding customer demand.
Customer Satisfaction. Quantifying customer satisfaction and perception is a highly valuable parameter for Hotel Revenue Managers. Travel social networks allow you to measure and compare customer satisfaction. In turn, hotels have the obligation to analyze customer reviews and opinions as well as obtain ratings that allows the hotel to identify and improve its knowledge about its market segments.
Balancing Pricing. Good revenue management involves implementing a balanced pricing strategy to reach the right audience. Dynamic pricing is knowing how to interpret and synthesize information, as well as adapt the appropriate price to the channel and market segment.
The decisions and approaches adopted through Revenue Management have a large impact on your hotel´s productive structure. To develop strategies that maximize the effectiveness of your hotel´s resources, it is important to have a clear vision of your market and product, use the right tools, and rely on accurate advice. All income is worthy of analysis and it is the task of the Revenue Manager to optimize product availability and price to maximize hotel profits.