New Projections: US Room Rates Forecast Lowered by Smith Travel

The Smith Travel Research has released a finding the hotel revenue management industry has long been waiting for: its room rate forecast for the later part of 2009 and 2010. As the title implies, Smith Travel has significantly lowered its room rate forecast in the United States. This will definitely affect the hotels’ bottom line and their succeeding yield management strategies. As if that’s not enough bad news, the research agency also expects moderate declines persist through 2010.

Currently, it is projecting that the average daily rate will lower to 9.7 percent in 2009 and the revenue per available room will lower by 17.1 percent from last year. Just last April, the agency had projected RevPAR decline of 9.8 percent as well as a rate decline of 3.6 percent. Occupancy will also decline by 8.4 percent and will now amount to 55.4 percent, just slightly down from its earlier projection last April (56.5 percent).For 2010, the same declines in all three metrics are expected to continue. Smith Travel projects that the room rate will drop 3.4 percent, the occupancy by .3 percent and RevPAR by around 3.7 percent.

According to Mark, Lomanno, Smith Travel’s president the key to the hospitality industry’s recovery is rebound in group travel. Group business is an important segment that every hotel revenue manager should look into. It will have to return to 90 to 95 percent of its levels before the economic crisis. Reaching this figure will be very beneficial to hotel revenue management strategy because of transient demand. In addition, it will provide hoteliers with price leverage.

Overall, the hospitality industry is not going to recover anytime soon. And it will take a lot longer to reach the 2006-2007 levels. Even the demand at the first part of 2008 may be difficult to achieve. As Lomanno further added, “on an inflation-adjusted basis, it’s probably going to be longer than six years before the rates get back to 2007 levels.”

Online GDS Distribution vs. Traditional Booking Channels

The hotel distribution channels that are used today, specifically travel agents and contact centers, can be very expensive to maintain. And when you take the current economic situation into consideration, it becomes even more attractive. However, maintaining these hotel distribution channels is still important because certain customers will look for these services.

What hotel revenue managers can do is to supplement these channels to increase hotel sales and boost profitability. Using online hotel bookings can result to better distribution, lower operational costs, and higher improved efficiency. It has been estimated that the cost of sales through online and offline medium vary greatly. For instance, Hilton reported that they save an estimated $25 for the bookings they get online as compared to traditional hotel distribution channels.

Other hotel groups experienced the same phenomenon. Hyatt says it costs $3 as against the $9 they shell out in operating a call center. The 6 Continents as well as the Marriot Group reported $5 per booking if they use online GDS distribution systems. So what can you do to take advantage of travel portals and online distribution systems? Well, there are many techniques that can help you in this.

Link to Popular Travel Communities

Make sure that your hotel is included in popular listings of must-go-to hotels. Travelers trust the opinion and feedback they receive from reputable online communities. It is critical to ensure that your brand is established in these sites to increase hotel sales and reach profit optimization.

Aim to Rank Higher

Nowadays, it is very difficult to land at the top 10 results in the search engine results page if you target generic keywords. Since this is the case, make sure that the keywords you use are as specific as possible. If you are located in Florida Keys, then include this in the keyword. Optimize the name of the street if it is popular among travelers as well to boost profitability.

Google City Tours: How Will It Impact Hotels

Technology giant Google has recently released their latest lab project called the “City Tours”. Their foray into the travel industry was launched relatively silently compared to their other ventures. Nevertheless, being Google, this development will inevitably have a very big impact on hospitality revenue management and the industry as a whole. There are many implications related to this application.

It is crucial not to forget that Google is a powerhouse in anything internet-related. If it so desires, it can release any travel application with various functionalities. And if it makes the decision to create a travel portal, it may very well kill its competition. The company could have developed a hotel comparison software, a search engine for airline flights around the world, or even a review aggregation tool. Instead, Google decided to concentrate on local attractions using the Google Maps API.

The Google City Tours is good news for everyone in the hotel industry from the hotel revenue manager to the yield management staff. On the part of Google itself, their strategy is a good move. It is related to their thrust to provide tools and features that will supplement their current application. For example, the Google Local Search as well as their business database from partners will help travelers get suggested itineraries anywhere in the world.

Using the interface is very easy as well. Though the features are currently limited, its potential is immense. Every hotel revenue management teams from the US to Asia should know how to utilize this application as soon as possible. Tourism will be influenced greatly by the colossal amount of data that points to this index. Once it is integrated into mobile devices, hotels and other hospitality organizations that are included here will experience increase RevPAR, an increase in hotel sales, and optimal profits.

Maintaining Rate Integrity to Increase Hotel Profitability

In the twenty years that revenue management was put into practice within the hotel industry, most of the philosophies and techniques that had been learned were from a strong economy. This presents a very challenging problem in today’s environment because hotel revenue managers are ill-equipped to deal with it. There is very little historical data that will show how yield management coped up during the tough times. Because of this, many hotel revenue management staff are still feeling their way and are committing trial-and-errors.

One notable mistake is that many companies engaged in the hospitality industry are dropping hotel rates in order to increase demand. This trend can be observed everywhere from the United States to Asia. Fortunately, there is still a significant number of hotel revenue management teams that has the current crisis in perspective. Even during the worst of times, many hoteliers strived to maintain rate integrity as not to compromise their future positions.

It should be noted that dropping prices is never an appropriate response. For one, it will take a lot of effort on the part of the hotel revenue management team to bring the price up again and increase hotel profitability. And for another, it will hurt the brand value so the hospitality establishment might not experience the full benefits of recovery once it happens.

Occupancy challenges can be solved with creativity, innovation, and appropriate yield management measures. It was widely agreed upon, in the Revenue Management Roundtable in Singapore, that strong emphasis should be given to the investment in tools, technology, and people. This is the best way to cope with the downturn. Going back to basics is important. If you get this right, then the hotel is operating on solid foundation. In no time, the establishment can experience more bookings, increased RevPAR, and profit optimization.

Hotel Revenue Management Success: 5 Web Analytic Signs You Should Watch Out For

Sign 1: You Don’t Know How to Use Analytics to Meet Business Objectives

It is highly likely that you bought the web analytics tool believing that you’ll get important information. And these data might already be in your hands. The problem lies in deciphering the charts, graphs, and percentages so it will make sense to your business objective. If you’re dealing with this situation right now, don’t panic because you’re not alone. Many yield management teams have a hard time determining how analytics can be aligned with business objectives.

One tip to stop the confusion includes establishing the figures that needs to be analyzed before looking at the database. For example, if the objective is to generate leads, then measuring the number of leads is the right measurement for this objective.

Sign 2: No One Understands What the Dashboard Means

You might have the most attractive dashboard around, but if no one understands what it means, then it is useless. A lot of hotel revenue managers cram every minute detail into the dashboard in their effort to boost hotel sales. In some cases, these make it impossible to read.

The solution to this would be to go back to the beginning. Redefine what the organization’s goals really are and then assign a key performance indicator for each. If you want to increase RevPAR, for example, then displaying the occupancy rate and the average room rate is important.

Sign 3: The Hotel Revenue Management Team Needs to Be Reminded of the Key Performance Indicators

Right now, it is true that the analytics jargon is not yet that popular. And it is understandable if your hospitality revenue management team needs some guidance. However, if this has been going on for more than a year already, then it is time for some guidelines. Continue stating the hotel’s objectives, framing campaigns, and getting information about the key performance indicators. It might be a good idea to start with one person at a time. The sooner this strategy begins the better.

Sign 4: The General Manager of the Hotel Asks about the Site’s Number of “Hits”

Asking about “hits” is a sign that the hotelier does not understand the importance of analytics. Beyond the number of traffic the hotel website receives, the more important thing is the conversion rate. In trying to achieve profit optimization, quality is far more important than quantity.

Would It Be A Good Idea to Use Twitter in the Hotel Industry?

During the past several months, Twitter has gained a lot of momentum and attracted everyone from techies to celebrities. Popular figures such as Oprah, Demi Moore, and successful internet marketers all use this tool to enhance their relationships with fans/subscribers. Sysomos Inc., a leading social media research institute, decided to conduct a study on how this social marketing giant became successful. Its data contains the trends about Twitter’s growth and how it is being used by millions around the world.

• 72.5 percent of Twitter users opened their accounts in the first five months of this year


• 85.3 percent of users update their accounts less than one time a day


• 21 percent never posted a single Tweet


• 5 percent of users account for 75 percent of the site’s activity


• 93.6 percent have less than 100 users following them


• 92.4 percent of users follow less than a hundred people


• New York has the most number of users


• 50 percent of all updates are posted using mobile, web-based, and other tools outside Twitter.com


• More women use Twitter than men

So what do all these figures have to do with hotel revenue management? It is crucial to note that Twitter experienced astronomical growth in a very short timeframe using one technique: viral marketing. Understanding the concept of viral marketing is important for the effective online and offline promotions of hotels. It is a great way to increase RevPAR and maximize hotel profits.

In today’s environment, it has become more challenging to attract a decent market share in the hotel industry. There are many important lessons that the Twitter example can give in yield management. First is not to underestimate word-of-mouth on the internet. And second, to build a core group of loyal clients or users that can sustain its operations.

Hotels can also use Twitter as a tool to promote their services on the internet. This will increase bookings and improve hotel profitability when done properly. Establishing a connection with the top users can be helpful in accomplishing this goal.

Finding the Right Online Marketing Channel to Increase Hotel Profitability

If you have $1 million dollar to invest in one online hotel marketing channel, which one should you choose? This is a very challenging question that every hotel revenue manager should know the answer to. It is a given that using a variety of tools is very helpful. But among these tools, there will always be one that stands out. Once you find the right tool for your site, it will generate a dramatically higher number of visitors.

With so many different hotel online marketing solutions available in the market though, it is easy to get confused. Fortunately, the tips below will give you a guideline on what hotel revenue management tool you should concentrate on. The right yield management solution lies in the individual strengths of the hotel, its capabilities, and its goals. So here are the hotel internet marketing channels available today:

• Display advertising – essentially means putting advertisements on third-party websites to generate traffic and create brand awareness. Some ad formals include overlays, banners, and interactive ads.
• Email marketing – the system of collecting email address (leads) and then sending their newsletters through emails.
• Pay per click advertising (PPC) – bidding for a placement in popular search engines on your niche. It gives instant visibility based on the keywords chosen
• Online public relations – this strategy mainly uses media online outlets to earn brand recognition and increase hotel sales.
• Search engine optimization (SEO) – SEO should always be part of a hotel online distribution strategy. Majority of users uses search engines to look for products, information, services, and ideas. If you’re not listed at the first page of the results page, then your hotel is missing out on an opportunity to increase RevPAR and boost hotel sales.
• Social Media Marketing – characterized by the method of using social media platforms to improve visibility through word-of-mouth and relationships.

As you can see, there are many ways to market your hotel online. The right strategy for your hotel depends on the company goals in revenue management (whether the focus is educating readers, increasing raw traffic, or boosting hotel sales). The budget and available resources within the company are important factors as well.

If the hotel has strong development resources then Search engine optimization and using viral content might be the best idea. On the other hand, if the hotel has strong creative resources then email marketing (copywriters) and banner advertising (graphic designers) is the best option. And if the company has strong social resources then obviously social marketing is the solution to hotel profitability.

High-End Hotels Should Focus on "Best Customers"

Luxury brands that have established a name for themselves are now finding themselves in a bind. The bad economy has taken its toll on everyone. In fact, even highly successful establishments that had successfully invested in image marketing are forced to rethink their strategies and come up with new approaches. Does this mean that they need to lower their prices? It may be an option but this is not necessarily a good idea.

A lot of hotel revenue managers have found out that exploring strategies like the packaged goods approach can yield rewards. The so-called symbolic clients or those households with incomes ranging from $250,000 to $500,000 have become fewer. Because of this, the very definition of luxury is evolving. Though genuine luxury will still be noted for its inherent value, guests are now looking for great experiences including those that produce unforgettable memories, give unique experiences, or are sensually orchestrated. Taking advantage of these changing trends can increase hotel sales.

Boosting profitability also means getting out the comfort zone. Some luxury hotels are now experimenting with time-out travel such as relaxing vacations, eco-travel, and exotic travel. All these will aid in helping hotels thrive, increase RevPAR, and increase hotel profitability even during bad times. Luxury clients are usually educated consumers. They know when to put a premium of things even if it cost little or nothing. For example, luxury buyers are happy when they get dry firewood, can enjoy a hot bath, eat fresh food, or receive something in elegant packaging.

Smart hotel revenue management teams are now trying to focus on their best consumers in order to surprise and delight the. The “best customer” is defined as one who is more loyal, spends more, and refers friends to the hotel. In addition, customers who forgive readily when some errors are committed are the most preferred customers. And most of all, they are value-sensitive and not just price-sensitive.
Luxury brands need to identify who their “best customers” are and cater to their needs and wants especially during bad economic times. It will help them boost hotel sales and enhance overall profitability of the hotel.

Information: Key to Successful Social Networking in the Hospitality Industry

In an increasingly interconnected world, social networking has become an integral part of hotel revenue management or any type of business organization in the service industry for that matter. Companies have struggled to discover how to take advantage of this opportunity. New research has shown though, that the to being successful on social networking is information acquisition. It will help boost hotel profitability.

This finding was recently published at the Information Technology & Tourism Journal. The reasons why people join social networking are because of the Social-Psychological and Hedonic benefits it provides. Their attitude towards online social communities such as VirtualTourist.com and Tripadvisor.com is heavily influenced by this.

Why Information Acquisition is Important

It is easy to assume that the reasons people join hotel social networking sites is because of the sense of belonging it provides. However, studies show that this reason only comes second to information acquisition. Consumers primarily search the internet for updated information, deals, and travel news. Meanwhile, hedonic benefits such as entertainment and amusement come third. Hotel channel management needs to focus on the three factors.

The survey, which these findings are based on, was divided into five categories including: benefits of online community activities, attitude towards the travel community, level of participation in these travel social networking sites, frequently used sources, and demographic profiling. Majority of the respondents were students and professionals in their 20’s and 30’s.

In essence, the research findings just proved what most hotel revenue managers knew all along. As according to the author, “tourism is one of the highest involvement industries” and because of this people “want to get as much knowledge as they can do reduce risk”. If you’re an hotelier, you can be sure that your company will benefit with increase RevPAR and hotel sales when you provide the necessary information.

In addition, providing relevant information that is up-to-date will help the travel community overall, attract web visitors, and increase your chances of converting these searchers into actual guests.

Hotel Industry Expectations for the Second Half of 2009

According to the PKF Hospitality Research, RevPAR which is an important indicator of the hotel industry’s health, will bottom out in the third quarter of 2009. After months of decline, it is expected that the industry will finally rebound. This news is bound to give hotel revenue managers around the world a sense of relief. The escalating trend of declining hotel revenue began in the third quarter of 2008 so it really does come full cycle if this trend reverses itself in a one-year timeframe.

The President of PKF Hospitality Research Mark Woodworth said that while their finding is welcome news, 2009 will still post the “weakest year on record for the domestic lodging industry”. In addition, revenue per available room for 2010 will still be disappointing even if it is not as bad as this year. Taking into consideration the employment level and the demand for lodging, it becomes clear that RevPAR can decline by 17.5% overall for 2009. In 2010, decline in RevPAR will not be as bad but it is still at 3.5%.

These factors point to the conclusion that effective yield management should still be practiced by the revenue management team. Also, the hotel revenue management strategies such as increasing online presence, using hotel software, and training the service staff should be continued and further strengthened to give hotels a competitive edge.

Mr. Woodworth further added that “If you are wondering when we’ll start to see actual growth in RevPAR, then you’ll have to wait until 2011” though the “operating environment is going to get a little less painful”. The decline for lodgings in the United States peaked during the first quarter of 2009 at 8 percent. According to the Hotel Horizons, demand will continue to regress but at a diminishing rate.

For the remainder of 2009, the projected quarterly decline is 4.7 percent on the average. Overall, hotel revenue will decrease by 16 percent this year because of the decline in RevPAR. Beyond the year 2009, there will be an average annual increase of 3.2 percent in the next four years according to the same study.

Coping Strategies for Revenue Managers during a Recession

During a soft economy, hotel revenue managers struggle to increase hotel sales. Because hotel revenue was strong during the past few years, they are used to managing demand, not generating them. Out of panic or perhaps desperation, some are slashing rates too low. For the whole industry, this can be a bad signal because everyone will suffer. The already low hotel revenue might dip even further. Responsible discounting should be practiced by all players in the hospitality industry.

Beyond that, there are certain revenue management strategies you can implement to keep your brand strong and your profitability high.

Watch Your Competitors – it may be tempting to cut your price drastically to attract a large market share and boost profitability. But this strategy simply won’t work. You’ll just get one-off customers instead of loyal ones. Instead, you should research on the competitors’ hotel rates and look at market data. Here, you can decide how much you can lower your rates and which market you should lower it to.

Look at the Needs of the Clients – instead of looking at what your hotel can offer, start looking at what the clients actually need. Determine the requirements of your target market and strive to meet it. In addition, it is also important to be visible so look at specific mediums your customers frequent.

Improve Your Hotel Rate Distribution Strategy – distributing your service using online distribution channels is a method worth a look. At the same time, be aware that your hotel has various types of clients. If the 80/20 rule holds true, effort should be concentrated on the 20 percent market that gives 80 percent of your income.

Reduce Commoditization – it all comes down to what you can offer the customers. Revenue management is not about competing with the lowest price possible; it is competing based on giving value to clients. Ultimately, most customers will choose a hotel they think will give then the best value for money based on the location, facilities, and service of the hotel.

Tips for Effective Hotel Channel Management

With the recessionary economy today, travel decisions have changed dramatically. For hotel revenue managers to maximize profits, they need to understand where their customers are coming from. One of the biggest hotel booking channel is the coordination with meeting and travel planners. Understanding how this segment operates is important to maintain consistent profits and boost hotel profitability.

Golf, spas, and clubs are taking second place. Travel and meeting planners are pressured to come up with value for money proposals that are in-tune with the business environment. Expectations of the hotel facilities go back to the basics. Among the things that are necessary include reasonably price food and beverage, internet access, cable TV, desk, chairs, and comfortable bedding.

In addition, a lot of planners need to minimize travel expenses. Thus, most of the sites they choose for meetings need to be close to airports, the office, or the area should have affordable rental cars and other transportation. As you can see, yield management today is more focused on providing the most basic amenities with excellence. And as always, the hotel service of the establishment itself is of foremost consideration. The reasons why all these changes were made include:

Practicality – the practicality the hotel provides is a crucial consideration for planners. It is important to give an impression that the establishment offers value for money. And that everything that is needed by the guest is already provided by the hotel.

Reliability – before closing in and increasing hotel bookings, smooth transactions are required. No one wants to deal with an unreliable hotel with changing policies. Being reliable also help those in the hospitality industry build relationship and increase hotel sales in the future.

Building on these Relationships – once relationships have been established, it should be maintained. Hotels will be giving up their advantage if they don’t strengthen these types of relationships especially if it involves a profitable hotel distribution channel. Joining social networks, getting recommendations, and receiving good feedback will all inspire others to try the hotel.

Relationship Marketing Online Can Improve Hotel Sales

If there’s one thing certain in today’s economy, it’s the fact that hotels will not thrive if they cut-off their marketing budget. In this instance, it is important not to completely eliminate advertising and promotions; it is to make every cent count. Revenue management will play a big role in this instance. Making do with less is the key to optimizing hotel sales and boosting profitability. Delivering effective and customized messages through all major hotel sales distribution fronts including print, web, and through partnerships will establish an emotional connection with consumers.

It is a recognized fact that conducting a personalized campaign such as creating customized landing pages, demographic profiling, and joining online communities will enable hotels to connect with customers emotionally. This will deliver unforgettable experiences that can form continuous relationships and long-term profitability with the hotel.

Creating Relationships Online

Because of the relatively impersonal nature of online marketing, most hotel revenue managers mistakenly believe that just setting up advertising campaigns such as pay-per-click (PPC) and banner advertising is enough to generate online hotel sales. This cannot be farther from the truth. With the emergence of social networking sites, consumers are seeking personalized service from the hotel.

In addition, prospects, now more than ever, have access to information and reviews that were previously unavailable. Instead of looking at this as a threat, those involved in the hospitality industry can look at this as an opportunity. If they provide good experiences to their existing guests, these customers can provide good feedback on their service.

Positive reviews have the potential to significantly increase hotel online bookings and ultimately, improve hotel profitability. Existing customers can reach others through user-generated content sites and blogs. Meanwhile, hotels can further enhance relationships through email marketing, networking, and community participation.

Studies also reveal that search engine optimization and marketing also rank high in terms of generating internet revenue. Combining all these better business ideas will inevitably improve hotel revenue.

Hotel Profits to Increase - Goldman Sachs

While everything in the hotel industry seem kind of grim these days, an analyst at Goldman Sachs thinks otherwise. Steven Kent said that investors should be buying hotels shares already because it presents a huge opportunity in terms of future earnings. As expected though, market sentiment to his perspective was lukewarm. He further added that the “economy is not too hot” that’s why expense control remain present. On the other hand, it also is “not too cold” that’s why travel purposes are loosening up.

So what does this announcement mean for hotel revenue managers? Well, as supply contracts, it will group to a halt over the short term. In the next few years, room rates can drastically increase because of shortage and asset values will start to go up. Another factor Kent points out is the revenue per available room. Though everyone certainly wants to increase RevPAR, it is also a good indication that this key measure didn’t turn negative until the second part of 2008 even as other industries suffered.

Hotel Revenue Management Techniques for Today

While waiting for the market to get better, there are many yield management strategies that can be implemented to increase hotel profitability. This is because while the future holds a lot of potential, today’s market conditions are still undeniably challenging. Maximizing RevPAR entails getting a pricing software, inventory software, and hotel revenue management software that can predict market behavior accurately. That way, the hotel revenue management can know when to increase their prices and when to give discounts to customers.

RevPAR Guru offers the kind of technology necessary to survive and even thrive in the best or worst economic conditions. With its seamless integration of various features, it can accurately keep tract of hotel inventory and predict how much should be charged during particular seasons to boost hotel profitability.

Increasing Brand Loyalty through Your Online Presence

There is no doubt that the information age is upon us. Hotels that previously relied on their brand names and popularity are now finding themselves competing with previously unknown properties. This is because the web has made the world a smaller place and hotel revenue managers need to accept that fact. A lot of less-popular establishments are being discovered online because of their service, affordability, and even location. The only way to survive is to compete head-to-head not only with direct competitors but by making your hotel stand out amidst the internet clutter.

Today, the first generation (the brochure sites) and the second generation websites (online bookings, etc) have become outdated. The third generation websites, the latest in the field, is all about being interactive with the consumers. A lot of travel portals today let consumers post their positive or negative review about any particular institution they wish. Web 2.0, or even Web 3.0 as it is referred to today, not only gives consumers the benefit of convenience, it also gives them the benefit of choices.

Rather than seeing this as a threat though, smart hotel revenue managers see this change as an opportunity. After all, if they give the right information at the right time at the acceptable price range, more people will find their hotel online and make their internet hotel bookings. In this case, it is crucial to place all relevant data on the hotel’s website. Consumers will not make an extra effort to call your hotel and waste if competing establishments informs the web visitor about everything.

If the right process is done, the result is a significant increase in hotel sales. In addition, the property can achieve profit optimization through increasing RevPAR. In addition, after trying out the hotel’s services, the time comes for the guest to make a decision. Will he go back to the same hotel or not? If he answers yes, then you have gained another loyal customer.

RevPAR Helps With Yield Management

As an important contemporary management practice, yield management helps hotels maximize profits and minimize expenses. Essentially, it guides the hotel to sell hotel rooms to the right customer, at the right price, at the right time. Hotel management should not price hotel rooms at discounted rates if it can be sold at rack rates the next day. Likewise, it is important not to price rooms at peak-season rates during the lean times because it will remain empty otherwise.

RevPAR Guru enables hotel revenue managers to increase hotel sales by letting them know when to price higher or lower and when. This inventory software and hotel revenue management software is the perfect assistant when it comes to generating hotel sales. Developing new strategies that fit with the times is possible with this automated software solution. In order to appreciate how RevPAR Guru works though, it might be a good idea to go back to the core of revenue management.

The creators of this application understand that each individual hotel has its own needs. After all, it has its own historical data about their customer’s stay frequency, length of stay, group statistics, number of meeting, and corporate clients that pay either the rack rate or the discounted rate. By using these data coupled with market information, competitive analysis, and accurate forecast, the future need not be a foggy environment.

Future demand can be predicted accurately. The positive and negative demand can also be integrated into the business model to provide the most effective results possible. This model can be updated real time depending on the trends in the market. For example, if an unexpected local event is scheduled in the near future, hotels in the area can increase their rates to increase RevPAR and improve hotel revenue.

Being aware of these happenings in the travel industry, RevPAR Guru is created with a flexible module that enables hotel revenue managers to make changes when appropriate. This hotel management software can also deal with unexpected cancellation, early check-out, additional demand, no-shows, and a variety of other instances that are subject to human preference. As a result, hotels that use RevPAR Guru as their software can expect additional hotel sales and profit optimization.

Going Back to the Basics of Revenue Management

Successful hoteliers know that focusing on hotel revenue management is the key to success. It is the single most important factor that contributes to bottom-line profits. In most cases, yield management concentrates on deriving the most value from rooms but it can be applied in other areas of the hotel as well. Hotels are a business and therefore, it is critical to boost profits and increase hotel revenue.
There are several core ideas that should be recognized in revenue management. Among these are:

• Replacing cost-based pricing with a competitive-based pricing
• Selling to niche markets rather than mass markets
• Saving the product (in this case inventory) for the most valuable clients
• Focusing on price rather than cost
• Decision-making is based on facts rather than guesswork
• Exploiting opportunities in the product’s value cycle (peak season vs. lean season)
• Evaluation revenue opportunities on a consistent basis

Though revenue management traces its roots back to hotels, it is actually applicable in many types of businesses. For example, airlines are now using this type of strategy in order to maximize their revenue. Previously, they didn’t until they became deregulated. Aside from those in the travel industry, the concepts of revenue management can also be used in other industries.

For example, service businesses like food or salons can give discounts during weak points of the week in order to attract customers. If a particular market wants to avoid the Saturday crowd in a salon, they will be encouraged to go during the day the discount is offered to benefit. They don’t need to deal with a long waiting list and they get a discount to boot.

While this may be an effective strategy, it is not always advised to provide cuts on prices though. Going back to hotel, the industry is probably the first to implement revenue management. Thus, it sets a precedent that other industries can follow.

Wise hotel revenue managers know that it is not always essential to focus on price. Combining perceived value with a positive real to the stay in the hotel is the key to increase RevPAR, increase sales, and improve profitability. For any other industry that is struggling with their yield management, the example of successful hotels may be the one that should be followed.

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.

Price Integrity for Hotel Revenue Management

Hotel revenue managers have started to understand that consumers are now more informed than ever. Right now, most travelers know about hotel rate parity, rate of day fluctuation, and the availability of rate types. As a result, they achieve more buying power. Property owners are left in the position of increasing their competitiveness using new technologies in order to boost hotel sales. It is important to find out what the real cost of using hotel distributions are including the returns each channel provides to profit optimization.

Given the importance of minimizing costs and the need to improve the yield of each channel, hotel revenue managers should encourage consumers to book using the most affordable and profitable channel possible. But there is a danger to this in rate parity. Remember that the hotel rate parity must not be overlooked so various levels of value in booking is a good option.

Many hoteliers have a lot of things to consider. Revenue management also involves analyzing the consumer’s acceptance of price strategy modifications. Some markets are more sensitive than others. In addition, the overall economic condition also contributes to price sensitivity. Hotel revenue management consultants also say that knowing about the current political and competitive environment is crucial because different consumer segments will react differently. Historical data, primary research, and the existing level of hotel sales all point to the price sensitivity of the consumer.

Price Integrity – Increasing Hotel Sales

No one in the hospitality industry can deny that price is a critical weapon. Outside the hotel industry, the same concept holds true. Price can make or break you. The consumers will only pay premium rates for something they perceive as having premium value. To encourage these types of sales, it is important to create confidence in the brand, hotel services, and overall impression.

In many instances, adaptive pricing strategies need to be implemented. When hotels want to increase occupancy, aggressive pricing can be used. Discount pricing is particularly notable during off-peak periods to boost profitability. There should also be packages that will appeal to various segments of the market. Certain segments need specific services while some need only basic accommodation.
All these factors need to be considered in hotel revenue management. But it is always important to keep in mind that offering the same packages at different rate is never a good idea. It will confuse the consumers and will make them feel cheated if they paid more.

Simple Ways to Increase Hotel Internet Sales Part 1

A decade ago, hotel revenue managers would never have thought that the internet will become the most important hotel distribution channel worldwide. In 2008, 37 to 38 percent of all hotel bookings are believed to have come from the internet. Aside from this, at least another third of hotel sales are influenced by online mediums although the actual reservation is done offline. For example, bookings done through walk-ins, call centers, and travel agencies are influenced, by a large part, by what people see and read online. It is not surprising then that certain hotels were able to cope with the tough times and even increase their hotel internet sales despite the tough times.

Creating and Updating Hotel Websites

Hotel internet marketing revolves around the main hotel website. It should be the first thing that a hotel revenue manager focuses on. In many cases, it is either the first contact or the last contact a company makes with the customer. It is important that the hotel’s website be a top priority especially since the market for hotel online sales is huge. The main objective would be to create an appealing overall image of the amenities.

A lot of hoteliers make the mistake of becoming contented with the same website they had five years ago. Time has changed drastically since then. Now, it is essential to have striking graphic design, internet hotel reservation software, real time information on prices, and booking software among others. If promoted properly, this can be a significant amount of business to the establishment.

Search Engine Optimization

Every person who has tried their hand in online promotions knows the importance of search engines. Majority of web traffic will come from search engines because this is the first tool people look into when trying to find information, product, or services on the internet. By SEO, it doesn’t mean that using popular key phrases on the content is enough.

Instead, a full-fledged campaign that involves link building, search engine submissions, and content optimization should be used. This is the best way to increase internet sales for your hotel. If you decide to hire a SEO specialist or an agency for this campaign, make sure you get those who have actual experience and knowledge about hotel revenue management.

The problem with most SEO companies in the market is that they have the tendency to focus merely on increasing traffic with no regards to its relevancy to the hotel. The result is low conversion rate and a lot of wasted money. Looking for someone with hotel industry knowledge is important.