What is revenue management for the hospitality industry?
Revenue management refers to the strategic distribution and pricing tactics you use to sell your property’s perishable inventory to the right guests at the right time, to boost revenue growth. Other products such as your amenities and food and beverage offerings will also come into the picture.
Revenue management revolves around measurement of what customers from different segments are willing to pay, and this can only be done by measuring and monitoring the supply and demand of your hotel rooms.
Every traveller has a maximum value they can offer your hotel; revenue management is about capturing as much of this value as you possibly can. Preferably you’ll do this by convincing the guest to book direct, purchase extensions, up-sells or extras, and become a return visitor.
The best strategies are based on the understanding that hotel pricing is fluid, and can change from one day to the next. This is why you should never be afraid to increase your rates. Customers actually expect increases over time – most businesses where consumers spend money are varying their prices based on demand and shifts in costs.
Effective hotel revenue management strategies can also help hoteliers:
- Better manage resources
- Protect against rostering too many staff during slow periods
- Ensure adequate numbers of staff are working during the busiest times
With all this in mind, revenue management can drive the entire business plan when implemented effectively. Your hotel distribution strategy is also a vital part of your revenue management plan. Make sure you are on the internet distribution channels that promote your destination online. They have strong marketing power and can put your hotel in front of many customers you can’t contact directly.