The only real criterion for the successful operation of a hotel is the income it generates. You may have thought that the more guests there are, the more successful the hotel must be, but this is not true. Revenue is the only clear indicator of what is happening in your hotel, so if after a while you conclude that the situation is not what you would like it to be, it is necessary to integrate new and more efficient revenue management strategies. However, one of the biggest obstacles to improving a hotel’s business is not recognizing clear signs that show something needs to change in order to achieve better results. That is why in today’s text we want to share with you a few clear signs that your hotel business needs a better revenue management strategy.
- First of all, what is revenue management?
- 1. You are not completely familiar with the market
- 2. Your distribution channels are not optimized
- 3. You don’t use the optimal software
- 4. You do not achieve the desired number of reservations through direct booking
- 5. You notice that your pricing strategy is not the best possible
First of all, what is revenue management?
If we want to generally define revenue management, we can explain it as predicting customer behavior by selling them a product or service at the optimal price every day. When it comes to the hotel business, the best revenue management means that you have the ability to sell each client the best room for him every day, at the best time, in the best way. This leads to satisfied customers, and in the long run to higher profits and lower costs. Or in other words: mutual satisfaction, of both you and your clients.
Each hotel has certain fixed costs to cover, regardless of the number of clients it has. The goal is to ensure a constant inflow of revenue so that fixed costs are paid off and then all the additional revenue allows for further business development and higher profits.
Signs your hotel business needs a better revenue management strategy
1. You are not completely familiar with the market
No matter what area you operate in, it is essential that you are thoroughly familiar with your market. When it comes to the hotel industry, it is important to gather information about current events in the market, to find out more about your competitors and certain benefits they offer to their customers. In case you do not know anything about current trends in the hotel and related industries, it is a sign that you need a better revenue management strategy that will include learning about the market and acting in accordance with new knowledge.
2. Your distribution channels are not optimized
The thing to keep in mind is that we live in a world of social media where all information is sought and found online. This means that most people today want that when they come to your hotel’s website or website of your distribution partners, they want to instantly create the best possible image of your hotel.
This leads to the conclusion that you need to ensure that all distribution channels clearly show your offer and allow potential guests to gather all the information they need to make the decision to book. Pay attention to the text you use to reach potential customers, the quality of the photos you present to the rooms, and other details that play an important role. It’s always a good idea to ask guests what they think is a flaw on your website and what additional information would be helpful to them when they were in the process of finding the right hotel.
3. You don’t use the optimal software
In the world of developed technology that we live in, the hotel industry is forced to constantly adapt to new trends. In case you avoid doing this, you will surely notice that the lack of optimal strategies has an adverse effect on your revenue. If you do not use software that improves the user experience of your customers, and does not help you make more profit, we advise you to change it as soon as possible.
Book4Time is the leading cloud spa and wellness software for hotels and resorts. Using this software will make it easier for guests to book your hotel, and will provide you, as a business owner, with a better marketing and revenue strategy and help your hotel business to develop progressively.
4. You do not achieve the desired number of reservations through direct booking
Each time a guest makes a booking through your distribution partners you have to pay a certain amount of fees, which ultimately reduces your revenue compared to cases where guests make a direct booking. If you notice that the number of direct bookings is constantly declining, keep in mind that you need a better revenue management strategy to help you achieve different results.
5. You notice that your pricing strategy is not the best possible
Revenue management strategy is directly related to pricing strategy. New prices need to be designed and integrated in the best way if you want to reach more customers and generate more revenue. If you notice that your prices are not appropriate, you need to do something about your revenue marketing strategy to change this whole situation in your favor.
Depending on your starting point, both of these strategies will be different. For example, if you are competitive with other hotels in terms of the number of clients, price can be a great tool to stand out. On the other hand, if you have really low demand, discounts can be a great way to attract more people. Start with revenue management, and within it, further create the best approach to prices for your hotel.
Conclusion: A hotel business is only successful as its revenue progresses. You may have a bunch of clients, but if your income isn’t high, this just won’t be enough to improve. Revenue management strategy is the strategy that ensures that you sell the right rooms, to the right client at the right time and in the best possible way. The lack of a real revenue management strategy has a negative effect on your profit. That’s why we’ve shared with you some of the clear signs that you need to optimize your revenue management. After doing this, you will notice that your hotel business is constantly progressing and developing to the extent that you find desirable.