Boost Profitability By Competing

Over the years, people hoteliers have come up with many different versions of revenue management. Whether it is referred to as yield management or any other term, it is undeniable that it can mean different things to different people. No matter what it’s called though, everyone agrees that it can work wonders if it is implemented property.

At its core, hotel revenue management can be described as the process of managing the business flow of the property. This “flow” should be tailor-fit to the individual needs of the hotel, its goals, and its target market. The primary goal should be to take advantage of occupancy demand whenever it’s available.

Certain hotels may leave profit optimization to the local management while some dedicate an entire team for this endeavor. The choice of who is put in charge with this important responsibility will have a significant impact on the hotel’s bottom line. There are several critical elements of revenue management. Right now, we will focus on knowing your competition.

Importance of Knowing Your Competition

Revenue management is both an art and a science. Gut feel alone isn’t enough to make it work. Serious work needs to be invested on it. Aside from knowing your internal cost, it is also crucial to find out the situation in the competitive business environment.

There is a popular saying “stay close to your friends, but even closer to your enemies”. Though you shouldn’t think of your competition as the enemy, the same concept holds true. Hotel revenue managers need to know the ins and outs of their own hotel. But they also need to find out what makes their competition stand out in order to boost hotel revenue.

Look into industry sources and compare your hotel to others in terms of hotel average rate, occupancy rate, and RevPAR. Doing this will determine how you can position the property you’re managing in the marketplace.

Right now, many hotels particularly independent properties are still placing themselves in a box. They don’t look further than their immediate surroundings. Well, this is one of the biggest mistakes they can make. After all, it is difficult to set competitive rates that will increase RevPAR and improve yield management if you don’t know what others are offering.