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In the highly competitive hospitality industry, standing out and maximizing revenue can be challenging. Whether you manage a boutique hotel or a large chain, implementing innovative strategies to increase bookings and enhance guest experiences is crucial. Here are five effective ways to improve your hotel’s revenue, ensuring you stay ahead of the competition.
Implement Revenue Management Strategy
Revenue Management strategy is a highly effective tool to improve your revenue. Through this strategy, you can adjust your room prices according to demand, forecasts, and other factors.
Let’s delve deeper.
What Is Revenue Management?
The best way to define revenue management in the hotel industry is as follows: “the science of determining the ideal price for each of your rooms, based on demand and other factors, with the aim of optimizing your revenue.”
Often, this strategy is used by large hotel chains, but it can also be applied to smaller hotels. Data collected over time on demand, your competitors, geographical location, and many other parameters enable you to make data-driven decisions.
The concept of revenue management was initially used in the airline industry, but it is a concept that can be applied to any industry.
Before implementing a revenue management strategy, it’s important to be able to forecast demand and market conditions. This can include historical data of the establishment as well as external data.
How To Analyze Data And Understand Trends
Data analysis is essential in revenue management strategy. Therefore, you must start by selecting the right data for examination. This can include your own data, such as sales and bookings at your establishment, as well as data from external sources, such as competitor prices and events affecting demand in your area.
Once you’ve gathered the data, you need to analyze it and identify trends. This may involve examining various scenarios, such as increasing booking rates for the week of a local attraction’s celebration or reducing bookings due to weather conditions.
Additionally, market trends are crucial.
A popular tourism year in your area won’t impact your strategy the same way as a year with fewer visitors. For example, an eco-tourism trend will affect your goals if your accommodation isn’t prepared to implement sustainable practices in its daily operations.
Your goal should be to analyze the data and address it as part of your revenue management strategy. This will help you predict future trends and adjust your pricing and other actions to increase your income.
Adjusting Your Prices
Revenue management strategy inevitably involves frequent and rapid price changes. This can be done through various methods, such as adjusting your prices based on a factor, creating packages and special offers, using dynamic pricing, or even implementing a margin strategy.
If the collected data shows low demand, it may be necessary to offer more affordable prices or special offers to attract more customers. Conversely, if demand is high, it may be advisable to increase your prices to boost your revenue.
The more you analyze the data, the more you’ll be able to automate and reduce errors. Therefore, the deviation of your prices from the average should be small to maintain a consistent and sustainable pricing.
Marketing Actions To Increase Demand
In addition to adjusting your prices, you can also use marketing to increase demand for your accommodation. While hoteliers tend to wait for customers to contact them, either through their website or their advertisements, there are many other marketing actions you can take to attract new customers or retain existing ones.
Some marketing actions you can use include:
- Using social media to promote your accommodation and communicate with customers
- Partnering your accommodation with other local businesses or attractions to offer packages and special programs
- Creating offers for groups, such as families or companies
- Sending newsletters with news and special offers to your registered customers
- Advertising brochures or ads in local magazines or newspapers
- Offering complimentary services, such as free breakfast or welcome drinks, to create positive experiences for your customers
- Implementing a loyalty program to reward your frequent customers
Optimize Your Online Distribution
Another significant marketing action is optimizing your presence online.
Let’s understand better what this means:
What Is Online Distribution?
Online distribution involves presenting your accommodation on various electronic platforms, such as booking websites, social networks, or professional websites.
Online Travel Agencies (OTAs) play a significant role in online distribution as they allow you to appear in search results for someone looking to rent accommodation in a city or area where they may not know you.
Some of the most popular OTAs include Booking.com, Expedia, and Airbnb.
Proper distribution helps you reach a broader market and increase your bookings. Selling on these platforms is significantly simplified with the implementation of a channel manager. His role is to update your inventory and prices in real-time across all selected platforms.
How To Optimize Your Distribution
There are various elements you can consider optimizing your distribution:
- Continuous Data Updates: It’s essential to keep your information (prices, rooms, photos) updated on all platforms and to do so regularly.
- Quality Photos: Good photos are crucial to attracting customers. Ensure that your photos are of high quality and accurately represent your accommodation.
- Positive Reviews: Reviews are essential for customers when choosing accommodation. Strive to maintain good reviews on platforms and promptly address any issues a customer may encounter.
- Offers and Discounts: Offering deals or discounts on platforms is a good tactic to increase the popularity of your accommodation. This can attract more customers and increase your bookings.
- Utilize OTA Tools: Most OTAs offer detailed analytics and tools to help property owners improve their distribution. Take advantage of these tools to enhance the visibility and performance of your accommodation.
- Utilize OTA Tools: Most OTAs offer detailed analytics and tools to help property owners improve their distribution. Take advantage of these tools to enhance the visibility and performance of your accommodation.
Remember, even a small improvement in your distribution can have a significant impact on your bookings.
Leverage Overbooking And Upselling Practices
Two of the main practices to optimize the performance of your accommodation are overbooking and upselling.
What Are Overbooking And Upselling Practices?
The practice of overbooking consists of accepting more bookings than your accommodation can offer. This can help you fill your accommodation even during periods of low demand. However, it is important to be careful, as this can lead to customer dissatisfaction and negative reviews.
On the contrary, upselling practices suggest offering customers bonuses and upgrades to increase the cost of their stay.
Undoubtedly, using these practices can help improve the performance of your accommodation and increase your sales. However, it is important to use them carefully and not to overdo it, always aiming at satisfying your customers and maintaining your reputation.
The Art Of Overbooking Practice
Overbooking cannot be applied to all accommodation. You must either have different types of rooms in your accommodation or at least some equivalent accommodation nearby, so you can transfer a customer who has made a reservation and shows up while the accommodation is full.
It is necessary to have a backup plan in case of this situation and to be prepared to compensate the customer for any inconvenience caused.
In other words, even if the hotelier has overbooked his rooms, the problem arises when a customer wants to check-in while the accommodation is fully occupied. Plan B would be either to offer him another type of room in the same accommodation, or another room in a different hotel.
The Art Of Upselling Practice
Beyond overbooking, another practice that is popular among hoteliers is upselling. This means trying to sell your customers a more expensive room or service. For example, you can offer your customers the option to upgrade to a room with a view or to add an extra feature to their room, such as a balcony or a Jacuzzi. This way, you can increase the average booking value and boost your revenue.
However, you must be careful not to overwhelm your customers with upsells. Instead of pressuring them to buy something, present the option as a suggestion and let them decide. This will create a more positive experience for your customers and might make them return to your hotel in the future.
Also, you can use the opportunity to promote some of your services, such as a spa or restaurant, that may be less popular. This will help increase sales in these areas and improve the overall staying experience of your customers.
Finally, if a customer is not available for an upsell, you can offer them a discount or some special deal to give them a sense of value. This can make the customer feel satisfied and might give them a reason to consider your hotel again in the future.
Improve The Offers And Packages Provided By Your Hotel
Another way to increase your revenue is to improve the offers and packages that your hotel provides.
What Is An Offer And A Package In The Hotel Industry?
An offer is an opportunity for the customer in relation to a regular price, under specific conditions, and usually due to a lack of occupancy in the hotel.
These offers can be, for example, a discount on an overnight stay or a discount for those paying in cash, a price reduction for longer stays, or even the addition of items to a reservation such as a bottle of wine or an upgrade.
On the other hand, a package is a set of services in addition to the stay, which the accommodation or a third party can offer. These services are offered at a special price for a guest. This price is more profitable than if the customer paid for each item separately.
Offer Clear And Simple Descriptions For Your Customers
Whether it’s offers or packages, it is important to provide clear and simple descriptions for your customers.
This will help customers easily understand exactly what is offered and what they will receive with their booking.
Also, a clear description will help increase sales and prevent potential disappointments or misunderstandings with customers.
Make Sure Your Offers Are Compatible With Your Customers
Your clientele has specific characteristics; it may be local or international, from a specific generation, or might have specific purchasing power and preferences. Therefore, it is important to ensure that your offers are compatible with your customers.
For example, an offer for couples will be more effective in an adults-only hotel, while an offer for the younger generation will be more effective in a tourist city.
Also, make sure your offers are accessible to your customers and will not discourage them from booking.
A good way to facilitate this process is to offer various packages for different categories of your customers.
This will allow customers to choose the package that best fits their needs and financial capabilities.
Learn How To Manage Your KPIs To Improve Your Offers
KPIs (Key Performance Indicators) are important measurable data that can help you evaluate the performance of your offers and improve them.
What Is A KPI?
KPI stands for Key Performance Indicator. It allows us to measure the efficiency of an action or an organization.
It should be quantitative and measured frequently to assess the impact of an action.
The benefits are also called ROI (Return on Investment).
Hotel management requires measuring many KPIs to estimate real and future revenues.
The Key Performance Indicators (KPIs) Of A Hotelier
The 8 key performance indicators of a hotelier are:
- Occupancy rate
- ADR: Average Daily Rate
- REVPAR: Revenue Per Available Room
- REVPAC: Revenue Per Available Customer
- GOPPAR, which is probably the most difficult indicator to obtain. It is the net profit per room.
- Customer acquisition cost, a metric that represents the cost invested for each “acquired” customer.
- ROI (Return on Investment) is the analysis of the profitability of an investment. It is the percentage of revenue you receive from your initial investment.
- The hotel retention rate is defined as the percentage of customers who remain loyal from one period to another.
KPIs are an important tool for hoteliers and help them make significant decisions to improve their performance. Through continuous monitoring and evaluation of KPIs, hoteliers can identify problems and take action to improve them.
Eager to stay ahead in the dynamic world of hospitality and keep your business flourishing?
Connect with me on LinkedIn to learn more about KPIs and other key strategies for hotel revenue growth and marketing.
Afroditi Arampatzi
Marketeer
Hi, I’m Afroditi!
An experienced marketer with a passion for driving impactful projects and delivering strategic solutions.
With over 15 years of hands-on experience in project management, I specialize in advertising, data analysis, strategic planning, and team leadership.
