A Closer Look at Hospitality Revenue Management and Internet Marketing

There is no double that hotel revenue management and internet marketing is fast coming together. At the Hospitality Sales and Marketing Association International (HSMAI) convention in Anaheim, California, the two topics were extensively discussed. People from both sides of the industry thought of ways to make the two disciplines complement each other to create demand in today’s turbulent economic times and beyond.

According to Eric Pearson, the senior VP of Brand Performance, Americas, Intercontinental Hotels Group, “revenue management and internet marketing professionals are the new rock stars of the hotel industry”. And indeed, it is easily apparent that the potential contribution they can give is significant.

The presentation he presented showed the types of benefits the hospitality industry can experience (ie. increase hotel sales, increase RevPAR, revenue optimization) if the two are used together. The strategy should be backed by concrete analysis and real time data to drive hotel profit growth even further.

Main Points of the Conference

In essence, the conference has several main points, one of which is the increased interdependence between hotel revenue management and internet marketing strategies. E-commerce, hotel pricing strategies, and revenue optimization techniques are all looked into. Right now, it was noted that forecasting the demand and knowing the buying behavior of the customer is the key to maximize hotel profits.

Meanwhile, on the breakout session “Social Media Strategies”, tips about what hoteliers can do to boost profitability were also discussed. Things like the best practices to measure ROI, identifying time and resource allocations, as well as employee policies were looked into. Attendants were advised to take advantage of the various measures available to them including marketing, sales, and other consumer information that’s readily available on social networks.

The lessons that were gleaned from the conference were very beneficial. If used wisely, it can contribute greatly to increase RevPAR and boost hotel profit.

Rate Integrity at Times of Economic Crisis Part 2

It is safe to say that the world has changed. The hotel revenue management strategies that worked a decade ago may no longer work today. But throwing all rate integrity strategies out of the window isn’t right either. It is crucial for hotel revenue managers to be smart in formulating and implementing yield management techniques in today’s business and leisure environment. Discounting across the board might increase hotel occupancy, but it may not necessarily increase hotel RevPAR and boost profitability.

So is avoiding drastic rate discounting a good strategy? It might sound like it but at the end of the day, hotel revenue managers still need to find a way to fill out those rooms. A creative and dynamic solution is required to solve this problem. Rate discounting might just do more harm than good over the long term. Here are some proven strategies to check out:

Rate Parity – though this can be used as a guideline, it is not a law. Revenue management staff knows that hotels need to please distributors in order to succeed. Without hotel rate parity, making a hotel profitable is difficult, if not nearly impossible. Adapting the strategy to certain market changes and being dynamic builds on the success.

Price Fencing – reward guests for loyal stays. If they stay for a week, maybe you can offer then 1 night free. Or if they reserve for five nights (or any length you have in mind), give them steep discounts.

Lead Time Pricing – giving early bird discounts is still a strong strategy. Determine your booking window and then before the usually pick-up curve, this is where you can offer the discount. Your competition might still be asleep while you are eating a significant portion of their market share.

Rate Integrity – this is what the article is all about. It is actually not necessary to maintain your old rates. However, it’s not required for you to go as low as your competitors as well. Just look at the stock market, sometimes it is up and at other times it is down. The same principle works in hospitality revenue management. Just never go too low that your brand itself starts to suffer.

Hotel Revenue Managers Need to Work Harder to Penetrate the Internet Marketplace

Interacting with your target consumers online is not the same as talking with them face-to-face. This is the reason why hotel revenue managers, and most companies involved in the hospitality industry must work even harder at enhancing end-to-end site experience for their users. Building a strong, long-term relationship with guests requires constant follow-ups, updates, and encouragement. According to research studies conducted by eDigital Research, online travel sites have to go beyond the “wow” aspect and into the real needs and wants of hotel guest to increase hotel profits.

The first eTravel Benchmark revealed that the online travel industry, as a whole, is actually competing with the cutting-edge technologies being used by companies in other industries. Consumers are now expecting consumer service, user-friendliness of the website, and good navigational structure. Failure to meet these requirements will mean that the potential guest might be disappointed in what the yield management strategy of the hotel.

Aside from hotel revenue managers, airlines, restaurants, and cruise websites also need to focus their attention to these findings. It will help them come up with effective hospitality revenue management strategy that will work over the long term. The research, in particular, revealed that most airlines usually have very poor customer service.

There is only one airline, British Airways, which was rated as one of the top 10. Meanwhile, British Airways and Virgin Atlantic did well for email customer support. While customer support problems are not hobbling the hotel industry at this stage, it is crucial to keep it that way. After all, it is actually easier to switch hotels due to the vast range of choices than to switch airlines.

As Derek Eccleston has said, “in a sector whose customers are particularly promiscuous – switching brands for a better deal, looking for recommendations and picking the purchase channel that most suits them at that particular time – failing to perform well across the board is more than a missed opportunity, it is commercial suicide.”

Effectiveness of Loyalty Programs in Increasing Hotel Sales

Because of the recession, American consumers are still at the phase when they are cautious about spending. They want to derive value from each dollar they shell out. Many hospitality revenue management companies operate under this concept. So they offer loyalty programs to encourage people to spend. But the question is, does this method really work?

Loyalty programs are nothing new in the hospitality revenue management industry. In the past, it has proven to be effective although it is certainly tricky to implement. In today’s business climate, using hotel loyalty programs to increase RevPAR and achieve profit optimization has only become trickier. Hotels.com, which commissioned the survey, points out that there are shortcomings that had been identified using this technique.

Some of the most obvious problems include its heavy restrictions, complicated fine print, and big redemption requirements. Majority of travelers would not be able to meet these requirements. In fact, only frequent business travelers, who are not looking for these deals anyway, benefit from it. Based on the survey conducted, travelers said that:

• 93 percent want to see improved terms on their travel memberships
• About half said that they were not able to use their benefits last year
• Around six out of 10 people want less restriction on how benefits can be used
• One third of those surveyed said that the bonus is not as great as was advertised
• More than a quarter dislike the fine print attached to their membership

If hotel revenue managers want to be more competitive and increase RevPAR, taking a second look at their loyalty programs may be worthwhile. It provides customers with a sense of value and “being special” at a reasonable cost to the hotel. In addition, if these clients really become “loyal”, then yield management can drastically be improved over the long term. This can increase hotel sales and boost profitability: the two things all revenue managers aim for.

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.

Knowing Your Customers Though Online Travel Communities

If you were asked how well you know your customers right now, what would you answer? Beyond demographics, it is important to understand what your customers are really like.

Many hospitality companies have composite profiles that give details about their customer’s job titles, frequency of travel, and purpose of visit. But while it is important to know these things, it is no longer enough. Relying on impersonal information makes it difficult for hotels to connect to their clients at the deeper level. In fact, some hotel revenue management staff even describes it as trying to converse with a cardboard. Experts at yield management know that customers are not likely to respond if the offer does not suit their needs.

It is critical to finally recognize that hotel guests are real people. They have genuine needs, issues, and motivations that drive their behavior. Companies in the hospitality revenue management industry must know them deeper in order to respond to their concerns. In addition, they are also very dynamic and their situation can change easily. For example, in this troubled economic times, some of them might have lost their jobs, lost money on investments, or are otherwise just cutting back in preparation for tougher times ahead.

In this kind of critical condition, better monitoring is not an option; it has become a necessity for hotels to survive and thrive. More comprehensive market research is required to boost profitability. But aside from relying on historical data, it might be a good idea to get connected to the consumers now. Joining online communities to observe and learn is highly recommended.

Online communities are a good place to pick the customer’s mind and increase RevPAR. Join a community that has enough members to get a wide range of perspectives. It will also give you an idea about what general sentiments are like. Better yet, you can start a discussion yourself so you can know their feedback and suggestions.

Optimize Hotel GDS Distribution

The objective of improving the hotel distribution system lies in the Global Distribution System and it is not really as difficult as it first appears. Effective hotel revenue managers know that they can easily take control of their hotel GDS by knowing the opportunities available in their properties. These opportunities can range from marketing the hotel using targeted advertising so that they can be placed at the top of hotel listings.

Meanwhile, doing simple steps like using revenue management features such as “Hotel UpSell” and “Best Available Rate” can help as well. It is important to realize that there are actually tons of available opportunities to advertise within the hotel GDS. Still though, hotel revenue management teams should determine when the best time to advertise is and what messages should be given.

Specific GDS Promotions

Specific messages should also be promoted. For example, in some cases, hotels want to market a specific destination while some are pushing their brand to a new target market. A lot of GDS today can provide personalized programs that are customized according to the hotel’s needs. It can include various advertising tools that are available in the hotel distribution system.

Effective advertising tools usually available from major GDS include:
• Sign-in Advertising – direct advertising messages during at the period of signing in to the GDS by agents.

• Targeted Textual Advertising – helps hotels promote the products and services to the target market during the time when they are ready to make their decisions.

• Travel Agency Portals – usually related to graphical user interface or GUI. Hotel GUIs allows hotels to use the combination of text and graphics to make a bigger impact. Because of this, the tool is particularly beneficial when promoting brand awareness or a certain property with pictures.

• Online Itineraries – more visual content is used in this case. The strong images coupled with the strong push marketing strategy helps hotels make a greater impact in the minds of their consumers. This can ultimately increase hotel sales.

Each GDS should provide targeted promotional tools so that hotels can use this to further promote their brand or properties. Meanwhile, online hotel GDS can be composed of travel agency portals, internet brochures, and online itineraries; these can be maintained by the hotel itself depending on the GDS in question.

Understanding American Behavior in Booking Travel

It is no secret that American travelers are now using the internet to get the best travel deals for their family. And once they are on vacation, it is their desire to spend as much time with their loved ones as possible. The chairman and CEO of Ypartnership, Peter Yesawich, provided an overview of consumer behavior with regards to their travel and leisure activities.

Citing the findings of the National Travel Monitor, he revealed that social values and technology play a big part in influencing American travelers. According to the findings, technology is especially important because 61 percent of travelers cited that they used the internet exclusively for their purchase decisions. In addition, the 2009 Monitor further declared that 56 percent of these travelers make their online travel bookings.

Based on the study, it seems that only 7 percent of American still go to travel agents exclusively for help. Meanwhile, 24 percent said that they used both travel agents and the internet in making their decisions. Aside from researching online, American travelers are also increasingly becoming active in online communities.

Price-Driven Market

Americans are using websites to check out the lowest possible price for their requirements. It remains the most important feature for searchers with 87 percent of them citing that this is the main reason they browse online. Another feature that can help boost hotel sales is the booking capability.

Effective yield management staff knows that this can significantly increase RevPAR and help maximize profits. In fact, 74 percent o f the respondents said that they prefer to book conveniently from the website. Other features such as the capability to share media content like photographs, videos, and articles are also very helpful.

Family Values is Still the Most Important

But before you think that price is the most critical factor, the Monitor discovered that Americans are actually more interested in spending quality time with their families. The intergenerational travel packages are quite hot because of this. In addition, many people still value their time. So they would much prefer to get personalized services than do everything themselves from scratch.

Hotel SEO: The Next Big Technique to Boost Profitability

Previously, hotels can simply rely on their location and brand image to drive revenues. Some just piggybacked on their partnerships with travel agencies and booking websites. But as the market becomes more competitive, it is becoming clear that conducting their own internet marketing and search engine optimization (SEO) initiatives is a key driver to future growth.

Getting bookings directly from the hotel’s website can dramatically increase hotel sales and overall revenue. Basically, the establishment would no longer need to pay a certain “commission” to their partners so the profits derived all remain within the hotel. Ranking high on the search engine has an added advantage. Customers can directly access the website and will be able to make judgments for themselves without bias. Other channel distribution partners might have existing agreements with other hotels and the establishment might not be optimally promoted using this medium.

Implementing other marketing technique will also be very helpful. Among the things you can consider include:

Copywriting and Blogging – helps the company become recognized leader in the field. It also connects the hotel with the consumers so it can create a lot of buzz. In addition, it is a proven yield management technique to increase traffic and improve visitor loyalty.

Web Marketing – in order to boost profitability, an all around web marketing strategy needs to be effected. It can increase hotel bookings, improve RevPAR, and maximize profitability.

Video Marketing and Social Networking – it has been proven, time and again that using Web 2.0 tools like videos, images, and blogs increases hotel revenue. Video marketing is becoming particularly popular these days especially when it comes to connecting social networks. Hotels can greatly benefit from this.

Email Marketing – newsletters essentially keeps you on the top of mind of your targeted consumers. This is because the audience will frequently be reminded of the hotel’s brand, its amenities, and the level of service it provides. If done properly, it can greatly increase RevPAR and boost hotel profitability.

How Does Hotel Internet Marketing Work?

Last August 2008, the Prophis eResearch conducted an in-depth study on consumer behavior when it comes to booking hotels online. The research involved 433 American consumers and it aimed to determine how much influence user-generated content, reviews, video, and other social media influenced their buying decisions. In addition, it also tried to explore how much impact meandering search engines and other websites had on their opinion of the hotels.

In essence, the research body discovered that while people still very much value the feedback of their family and friends (it ranks number 1 in terms of influencing their hotel booking), social media comes in second. Offline and online, this proves that word-of-mouth is the top trusted source of decisions. Online, hotels can take advantage of features such as “forward to friend”, e-newsletters, and reviews to enhance their brand image and boost profitability.

There are specific steps they can implement in their online hotel revenue management promotional strategies. Among these are:

• Web Copy – some hotels stop their website efforts after the initial site has been set up. It is important to continue updating the website with press release, news feeds, and other interesting info to keep consumers interested. This can drastically help increase RevPAR and hotel sales.

• Keyword Research – any internet marketer will tell you that research should be the foundation of any hotel online sales strategy. This is because promoting your site using the wrong keywords is just pointless.

• Alt Tag Placement – each web page needs to be appropriate alt tags for search engine optimization

• Meta Tag Placement – some hotel revenue managers underestimate the value of placing proper meta tags on the website. Relevant and original meta tags have been cited as one of the top reasons why certain websites rank highly on the search engine results page. The structure of the meta-tags will be discovered by search engine spiders and when it is found relevant, it will be ranked as such.

Hotel revenue managers can benefit greatly from the hotel online marketing trend if they come up with effective yield management strategies.

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.

Integrating Web 2.0 in Hospitality Revenue Management

Marketing and revenue management, at its core, have the same aim which is to improve profit and minimize expenses. Yet, the effectiveness and efficiency between the two systems can sometimes contradict each other. There is an undeniable tension because while both are aiming for increased hotel revenue, there is also the possibility that the brand integrity will be compromised. This is an issue that is sensitive for both parties.

Other issues that both marketing and hotel revenue management needs to deal with is the emergence of new technologies. With the internet becoming a significant player in the travel industry, it has now become more important to create a positive image online. This can be done through creating a website, forming partnerships, and most importantly making use of viral marketing.

New media capabilities, both informal and informal, can drive tons of traffic into a hotel’s website. Once the visitor goes into the site, there is a high chance that this will convert into sales especially if the hotel is in the location the traveler wants to go to. According to travel industry experts, the social media is the new television. Children, young adults, and even the older audience are familiar with the way the internet works. In fact, a significant portion of the population spends more time on the internet than watching television.

Now, the question that most hoteliers face is, how can they take advantage of viral marketing to boost profitability over the long term? The answer is both simple and complicated: building relationships with customers and prospects. This will enable the hotel to increase brand awareness through word of mouth.

It is true that paying for advertisements and other paid programs can still work. However, internet users have more choices than they do in television. They can’t be forced to think one way when there are so many choices available to them at the click of the mouse. What changes their mind and make them prefer one destination over the others are the opinions of their peers and the feedback they receive. If hotels are able to utilize viral marketing well, it will help them increase RevPAR and increase hotel sales overall.

Revenue Management and the Internet

Within the hospitality industry, there is an ongoing revolution. Internet marketing and revenue management is increasingly overlapping. In fact, is now almost impossible to think about yield management without considering online hotel sales. For this reason, hotel revenue managers need to find how the two disciplines will evolve in the future in order to anticipate it.

In today’s challenging environment, travelers are becoming budget-conscious. One of the most popular mediums they look into is the internet. However, simply classifying the online marketplace as the “internet” is not sufficient. There are so many things that are involved in strategizing it. For example, some hotels focus too much resource on creating their website and home page. Meanwhile, others try to increase their web presence through SEO even as the content of their site suffers.

To find out the best strategy you can use for this hotel electronic sales channel, it is important to know your target market. If your target customers frequent one particular forum, for instance, then placing advertisement within that site might be a good idea. On the other hand, if they are more likely to type “Budget Hotels Florida” on the search engines, then optimizing your web pages using effective search engine optimization techniques is highly adviced.

Another strategy is to get into the Web 2.0 or even Web 3.0 phenomenon today. Social networking, social bookmarking, and other user-generated websites are popular among virtually all internet users. This is because they trust the opinions of their peers more than they do the brochure of the company. No matter what market you’re targeting, getting links and positive reviews from these websites will be very helpful.

And of course, there are the travel portals. Depending on the rate of the hotel, some properties shy away from these sites while some use it as an important medium to increase RevPAR and improve hotel sales. Some shy away because of the cut these travel portals get every time a guest books a room from the site. The commissions can sometimes be rather high. Sometimes, certain hotels can ill-afford to give it. If your main concern at this point is promotion and brand image though, this should be considered as an investment rather than a cost because of the potential it brings.

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.

Boosting Electronic Hotel Sales with Social Media

With the number of user-generated content websites and social media sites today, making sales is all about interaction. These interactions need to go beyond the one-on-one interactions that characterized the hotel’s strategy in the past. Now, it is all about networked relationships that connect different people to events, places, and other people. How can this be done? Well, in most instances, the best medium for this type of interaction is the internet.

Aside from the fact that internet users and travelers booking travel over the internet has been steadily increasing, technological innovations also made it possible for properties to boost hotel sales through interactive hotel electronic sales channels. With the effective utilization of social media, hotels can increase RevPAR and achieve profit optimization.

It is important for hotel revenue managers to realize the potential of investing in technologies that will enable them to build relationship with consumers online through conversations, customer service, and honest reviews. Hotels should focus on websites where their target consumers spend significant number of hours. Social media and user-generated content can provide free marketing, connection, and commerce to the hospitality industry and ultimately increase hotel sales.

But before you engage in such endeavor, it is also important to note that leveraging on this trend relies on consumer reach and brand awareness through effective placement in social networking sites. There are some tips that will help you in this.

Identify the Most Appropriate Social Media Sites – there are numerous Web 2.0 websites over the internet. It can get expensive and confusing if you try to use every single one of them. The key is to concentrate your efforts only on the most appropriate sites to increase hotel sales and boost revenue.

Interact with the Target Market – interaction can be tricky. For example, if you decide to open a MySpace or Facebook account, it is essential for your market to be added as your “friends”. Meanwhile, blog sites can likewise be effective but it takes time and consistency to gain the loyalty of your readers.

Provide Packages that Offer Value – after you gain the trust of your target customers, the next step is to offer hotel packages or special discounts with the goal of increasing hotel revenue while strengthening customer relationship. By interacting directly with the target customer, it becomes possible to offer to best rates because it cuts the middleman, such as travel portals, out of the picture.

The Rate Game: How Should You Set Room Rates?

There are many misconceptions about what hotel rates should be. It is true that rates fluctuate up and down depending on specific market conditions. But the questions that most hotel revenue managers need to face is, how high or how low should they go to achieve profit optimization. Some yield management strategist still holds to the belief that they can keep their rates consistent with previous years. Meanwhile, some are adapting a more aggressive hotel pricing strategy in order to keep up with the challenges today.

Trying to maintain the same rate because the “product is worth it” simply does not make sense during today’s economic downturn because hotels risk losing their remaining market share. Don’t make the mistake of maintaining this mindset even if all evidence points to the contrary. Remember that a product, hotel inventory or otherwise, is only worth what consumers are willing to pay for it. If very few people are willing to pay, yield indices, RevPAR, and market share all become out of balance.

Meanwhile, it also isn’t a good idea to go as low as possible. Slashing rates below profitable levels may acquire market share but at the expense of increasing hotel profits. Both RevPAR and other yield indices suffer in this instance as well. So what is the solution? Effective hotel revenue management. With good yield management strategy, hotels can increase RevPAR without losing market share or profits.

Stop Tinkering with the Published Rate Structure

It is highly likely that you’ve experienced a drastic decline in revenue. Business and leisure travelers are cutting back and it is tempting to decrease your rates to go after a larger share of the market. But your “value rate” such as group rates, LNR, etc should be able to compensate for the rack segments.

Aggressively Seek Out Groups

Bid on one-time groups, tours, and large groups to increase your occupancy. Some steps you can take include looking back at files and prospects you previously rejected because the proposed rate was too low for you. Then watch out for tour buses and company vehicles in your company’s parking lot. Check your competitor’s rate and try to meet it.

Before you utilize this strategy though, it is essential for you to know just how low you can go. It is never good to be in the position of having to call back during the negotiation process. Act on the opportunity while it is available.

Integrating Revenue Drivers to Optimize Hotel Sales

Summer is usually the peak season for most hotels. But due to the economic climate today, hotel revenue managers are definitely expecting that hotel sales will not be as great as before. However, the fact remains that this is the most important time to maximize hotel profits. If this isn’t achieved during this season, hotels will have a difficult time meeting their sales target for the year. To achieve this, it is important to implement good revenue management.

Currently, customers are wiser than they used to be. They know how to look at the elements of their accommodation including location, hotel choice, facilities, and brand. It is important to get into the customer’s mind in order to provide the best service to them. Take note that revenue management can mean different things to different managers.

Basically though, the main aim of hotel revenue management is to increase RevPAR. Most have a pretty clear idea of how an increase in RevPAR can be achieved. However, based on data and consultations, many hotel revenue managers seem to lack coordination with their revenue drivers. These drivers include central reservation, hotel electronic distribution channels, sales department, and online sales. Overall, it provides the revenue for the entire organization.

One of the main concerns that a lot of hotel revenue managers expressed in many consultations is that they are unaware of the rate changes in their own hotels, specifically those that are posted in electronic distribution channels. Sometimes, it becomes too high that attendees from certain meetings have to book elsewhere instead of going for the group block. At other times, the rate posted is lower compared to what the hotels negotiated with third parties.

To avoid these problems, it is important to collaborate within all levels of the distribution channels and at all levels of the organization. This process will ensure continuity. Below are some tips that will help you do just that:

Product Positioning – it mainly involves the rate that will be charged for group bookings, competitive set, and reservations among others. It will need to be adjusted so monitoring the franchise yield management software is critical.

Look over Contracts – all existing and forecasted contracts should be analyzed. Everything from volume contracts with wholesalers, group contracts, and other obligations should be based on the rate structure. This should be determined by both the sales and revenue management department.

Online Presence – right now, many are finding their hotels through the search engines and hotel electronic sales channels. For a hotel property to increase hotel sales, they should look into these channels seriously.

Pre-Marketing Plan in Revenue Management Strategy

In any business undertaking, the marketing plan is seen as a crucial tool to success. But what many fail to consider is that revenue management should be an integral part of the marketing strategy and should be considered distinct from the marketing budget. Many hoteliers seem to think that the budget and the revenue management are one and the same thing. Even those who have a better understanding of it believe that the marketing budget and the revenue management strategy are interrelated and needs to be placed on the same page.

If there’s one thing you should know right now, it is the fact that this belief isn’t accurate. The hotel revenue management system needs to incorporate different revenue sources including the hotel web site, the electronic distribution channel, and the hotel GDS. In addition, it requires the involvement of all profit departments of the hotel such as the sales department. It is a revolving process that requires adjustment according to specific market conditions. This is very much unlike the budget wherein everything is set in stone.

A good hotel revenue management strategy requires profit optimization and tactics that will boost hotel sales. It should encompass everything from the cost of commissions to optimizing revenue. This means manipulating GDS, using electronic distribution channels, and allocating proper resources. Its development should enable sales to determine the inventory available in a given period and at what rate these rooms should be rented out. So how, exactly should this process work?

The Four Step Process

• Gather the Info – the process starts off by seeking relevant information that will provide an accurate forecast. The report logs from the previous years should be sorted out. In addition, a situational analysis should be completed to identity possible opportunities and challenges for the year ahead.
• Analyze Revenue Information – all revenue drivers should be looked into. Through this, those with the most potential will be identified. Currently, it is a well-known fact that a significant part of the hotel sales will come from the internet.
• Facilitation – everyone involved in increasing the hotel’s revenue should come together. This “meeting of the mind” will enable the best possible strategy to be identified.
• Revenue management strategy – after compromise, the situational analysis, and everything else, the revenue strategy should be created. The main aim is to increase RevPAR by utilizing an ideal mix of revenue, rate, and software solutions.

After the strategy has been created, it is important for the “facilitation” group to periodically meet in order to discuss the strategy. Reviewing it and basing it on reality is the key to successful hotel revenue management implementation.

People Behind the Revenue Management System

An effective hotel revenue management system is the key driver behind the hospitality industry’s ability to survive the economic crisis, retain and attract customers, and increase RevPAR. And the importance of revenue management has never been more important than now. Since the market is expected to decline overall, the average RevPAR and other hotel metrics will expectedly experience a downtrend as well. With a good system in place though, a hotel revenue manager can look past this into the real potential of his hotel.

Getting a deeper understanding of the hotel clients is crucial in this stage. For example, in a normal urban/suburban transient property for corporate executives, price sensitivity is lower because they are not the ones paying the bill. Even if the corporation is managing the cost of travel, the reality is that travelers will still prefer prime locations, complete facilities, and other amenities.

Another factor that should be considered is the bookings from hotel electronic sources. Because of the popularity of the internet, electronic hotel sales have been steadily increasing for the past decade. Hotel sales channels such as e-commerce, franchise web sites, and GDS systems should be looked into carefully. Usually, the hotel sales derived from these mediums come from leisure travelers who are looking for good deals.

It is important to measure the potential of each contract. This will enable both the hotel revenue manager as well as the sales staff determine how the business can be aligned in relation to their client profiles. But more than that, all the people involved in the hotel revenue management strategy should really believe that it is effective in order to execute it property and boost profitability.

If the people who are behind the yield management strategy and hotel software don’t believe in its capability, it will reflect on their performance. Remember that no matter how sophisticated inventory software, yield management software, or hotel software is; ultimately it is still people who use these tools. Unless it is utilized to increase RevPAR and increase hotel profitability, it will just be another tool that can be effective or ineffective in the decision-making process.

Improve Hotel Revenue Management During the Tough Times

There is a saying that a “rising tide floats all boats”. In the hospitality industry, it just means that when the market is doing well, there is a good chance that your hotel will do good as well. The problem starts when the market is doing badly. As all hotel revenue managers probably already know, today’s situation is unique than ever before. Travelling has become a popular activity until the recent economic crisis. And the result is that there are so many rooms and inventory from various hotel establishments. Some have no choice but to drastically lower their prices just to generate hotel sales.

If you have previously already discovering that going with the tide is not something you want for your hotel, then good for you. Your hotel revenue management system can probably withstand different conditions in the market. However, if you’ve been left behind because you have become too comfortable in the few years past, then all is not lost. You can still increase hotel sales and boost profitability by looking over these targeted areas:

• Hotel Rate Positioning – first and foremost, decide on the hotel rate structure. It is important to look at your market position as well as your competitive set. Where are you located and when is your peak season? Knowing who your clients are and what they can afford is critical in determining the hotel rate positioning.

• Revenue Management System – if you don’t have a hotel revenue management strategy in place already, it is critical to design one. Whether you are running a chain of inns or a 900-room resort, having a good system in place ensures that you generate the best hotel room rates based on facts. The revenue management system should encompass the booking software, inventory software, and historical data for more accurate results.

• Property Management Software – every hotel has certain reports and data that are used for management. The hotel revenue manager probably knows all about this and decides on the yield management strategy of the properly. However, the hotel staff should also know the system well. After they know the basic, additional training should be given to maximize the potential of the property management software.

There are other aspects that should be looked into in order to come up with the best overall strategy for the hotel. While looking through this endeavor, checking how the hotel is performing when it comes to hotel online sales is also important because majority of sales is expected to come from the internet for most hotels.