Hotel Revenue Optimization

Hotel revenue managers have relied heavily on technology to improve hotel booking performance. Because of this, the hospitality industry as a whole has become more adept at forecasting demand, tracking guest bookings, and adjusting prices accordingly. To further generate hotel sales, revenue managers are looking into other solutions to stratify their price structures to get more control over how inventory is distributed and priced.

Resorts, hotels, and other types of accommodations have traditionally offered differentiated prices based on the season, day of the week, lengths of stay, room type (standard, deluxe, suite), and even company affiliation. The front desk always has had to explain why the rates are different and justify this to the guest. Today’s competitive environment is forcing managers to become more innovative in instituting these differentials or “fences” depending on the unique situation presented by the market condition and existing inventory.

For instance, the non-refundable/advance purchase option which was first introduced in the 1990’s is making a com-back. In essence, guests can get the lower-tiered rate if they reserve in advance. Business travelers typically do not take advantage of this option because they require flexibility. In addition, they are also less price-sensitive so charging them the higher-tiered rate will make no difference.

However, while the differentiated pricing strategy provides a creative way for hotel managers to boost hotel profitability, it is also a challenge for the front desk to explain these changes to the guests. Without proper training, guest who paid the higher rate may ultimately feel taken advantage of. Some might even resort to complaining or cajoling. Aside from the advance purchase options, the front desk also needs to know why certain rooms are more expensive than others. These include:

• Suites vs. rooms, and standard vs. deluxe, view vs. no-view
• Length of stay, day of week restriction
• Special rates extended to guests with specific membership
• Negotiated volume discount
• Special group rate subject to restricted availability
• Resort fee]
• Additional guest fee

It is unfortunate that a lot of revenue managers fail to see how training the front desk staff will ultimately lead to higher profitability. Without proper training, the staff might get cajoled by a sweet-talking tourist or get anxious when an angry corporate executive demands the same rate as last time. The hotel revenue manager should make it a point to train the front desk to specifically answer all types of questions to maximize profitability.