Increase RevPAR by Improving Performance

Revenue per available room (RevPAR) is an undeniably an important factor in increasing hotel sales and boosting profitability overall. However, in some cases, it is also critical to look at other factors that might affect performance. Decisions surrounding the hotel size, long-term strategy, and service orientation all play a role in the hotel’s profitability. Take note that aside from RevPAR, another metric of the hotel’s financial health s performance. When times are lean, hotel revenue managers need to improve operational processes in order to enhance hotel profitability.

On the other hand, performance is also essential during the good times. It can be used as a tool for profit optimization. Effective hotel rate distribution, rate strategies, and the use of forecasting and inventory software are all helpful in ensuring the best results possible. Sometimes, certain hotel chains even take over their competitors in order to experience economies of scale through productivity gains.
There is no doubt that once hotel revenue managers understand how important productivity, RevPAR will increase. These two elements complement, rather than contradict, each other. But many make the mistake of concentrating on one but not the other. The balance between occupancy rate and hotel room rate can be categorized as RevPAR, it basically shows the income of the hotel. Meanwhile, performance and efficiency has more to do with controlling costs.

Hotels are generally labor-intensive but it does not necessarily mean that hotel revenue managers should allow the property to lose money just to keep up the current level of service. Improving efficiency may be a challenge but it is definitely possible to achieve. Today’s hoteliers find today’s condition particularly difficult though because there are too many rooms that are left unoccupied while fixed labor costs still remain.

Fortunately, there are tools like RevPAR Guru. This software application provides real time information about historical data, occupancy levels, and available amount of rooms. Good decisions can be made in real time. Prices can be adjusted according to actual demand and supply while unnecessary costs are eliminated through the use of this accurate forecasting software. It is not surprising that a lot of hoteliers are looking into this software for a solution. In tough economic times, there is no room for error. Basing your decisions on facts, and not guesswork, is your best bet in surviving the current downturn in the hotel industry.

Can Hotels Increase Sales From Business Travelers?

The economic downturn has put a damper on travel. But a potential rebound may be coming from the least expected segment: business travel. A new survey has found that the drastic cut back on corporate travel may merely be the instinctive reaction rather than a carefully laid-out strategy. Right now, there are indications that companies are realizing the benefits of traveling. In-person meetings are critical to maintain strategic relationships and in forging new alliances. It can provide a competitive advantage to companies that make an effort to meet partners despite the economic downturn.

In a recently commissioned survey conducted by APCO Insight, it was revealed that majority of companies are rethinking their initial plan to sit “on the sidelines”. The same survey showed that 72% of companies will increase their travel to build market share. In addition, 53% of those surveys believe that their companies that decrease the amount of their business travel will give their competition an advantage.

So what does this mean to hotel revenue managers? Well, it is important to realize that despite research findings, businesses are still facing a dilemma. They need to balance short-term cost cutting with long-term strategic planning. According to Kellogg Business School Professor Daniel Diermeier, “in tough times, face-to-face interaction may be more important than it was before”. That is the reason why companies need to understand the impact of travel before they adjust their policies about it.

Is Price Reduction Recommended?

For hotels, the knee-jerk reaction is to decrease their price in order to attract more travelers. Although it may work in some instances, it can also do more harm than good if it is not utilized properly. It is critical for hotels to practice hotel revenue management to determine whether or not discounting is appropriate. There are a lot of risks associated with discounting because hotels will lower their revenue and possible damage their brand positioning.

With the right yield management in place, discounting may not be necessary. RevPAR Guru is an alternative revenue management system that enables hotels to increase their sales even during tough economic conditions. Hotel revenue managers need to make use of all their resources and improve the hotel distribution strategy.

From enhancing direct marketing, introducing new technologies, and improving current loyalty programs, hotel revenue managers can effectively and efficiently improve the hotel sales strategy. Aside from this, utilizing the potential of the internet is also recommended. Majority of travelers now make reservations online. It is critical for today’s hotels to modernize their hotel rate strategy and partner with successful travel portals.