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.

Rate Integrity at Times of Economic Crisis Part 1

Given today’s severe economic crisis, the concepts of rate parity and rate integrity feels like it came from another planet. Over the last few months though, hotel revenue management experts have been advising that dumping hotel rates is not the right strategy to create demand; this recommendation comes amid the worst recession in US history for several decades.

However, even an international brand like Starwood Hotels & Resorts is not immune to outside pressure. The company has cut its rates by as much as 50% to unload too much excess inventory. This cut affected its 600-something properties around the globe. It is important to note though, that cutting hotel rates must be the last option. Keeping a long-term mindset can benefit the hotel over the long run and increase hotel profits when the economy starts to recover. But here comes the question about hotel rate integrity:

How Will Rate Integrity Hold Up If Everyone Else Cuts Their Prices?

If 5-star hotels around your area starting lowering their rates to 3 to 4-star levels, what will happen to rate integrity? Everyone within the hospitality revenue management strategy will be pushed to do the same. In essence, rate integrity is the perceived consumer value. They know that they are buying an inventory that have a certain value and is set at the correct price.

Depending on the room amenities and season, they will pay a bit more or less; and they are willing to do so. Fencing and yielding are already accepted concepts but there is a strong acceptable psychological price range for consumers. If the value is set too low, they might start thinking that the hotel property has less-than-stellar amenities.

The question that many hotel revenue managers is itching to ask is, will their customers still pay $200 for their room if the hotel next door charges $100 or even below that rate? The truth is, the answer cannot be generalized. While many will instinctively say “no”, certain guests also have various factors to consider including their privacy, the service, and the number of people staying at the hotel. In general, hotel revenue management strategies that are quick to adapt to the changing environment are the ones that get most of the opportunities available in the marketplace.

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.

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.

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.

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.

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.

How to Implement Yield Management Strategy at the Front Desk

In today’s highly modern environment, it might be tempting to focus on new hotel distribution channels such as popular travel portals and agency partnerships but there is an important segment that hotel revenue managers need to focus on as well: walk-in clients. Though this market may not be as big as the number of consumers you will receive from the internet and elsewhere, it presents great opportunities for the hotel. Walk-in consumers are usually those who had experienced the hotel’s service in the past, were referred by their friends, or simply received the hotel’s value proposition.

The front desk staff, in this instance, will assume that the walk-in client is a booking client but this is sometimes not the case. This is because they might be put off for some reason whether it is the high rates being charged to them or the “curb appeal” of the hotel does not suit their preferences. Whatever the case, there are techniques that will help improve hotel sales and boost profitability from this market:

Connect with Clients – it cannot be stressed enough that establishments in the hospitality industry, particularly hotels, should focus on service. The front desk staff and everyone in the front line should be trained to meet the needs of the clients whether during the peak or off-peak season to optimize hotel profit. Employees need to establish eye content, smile, and greet guests before they are greeted.

Offer Alternatives – depending on the availability of hotel rooms, which can use established using the inventory software, hotel revenue managers can offer two or more choices to the guest. For example, instead of quoting the highest rates, options should be given upon the guest’s inquiry. Some alternatives can include room vs. suite, view vs. non-view, and standard vs. deluxe among others. Doing this helps changes the question on the client’s mind from “should I book here?” to “what room should I get?”

Describe the Hotel’s Offering Properly – instead of directly using terms like “deluxe rooms” and “continental breakfast”, it might be a good idea to fully describe what these services entail. Put yourself in the guest’s shoes and talk in the kind of language they would appreciate. This is hotel revenue management at its best.

3 Tips to Increase Hotel Sales This 2009

Even though the market is tough and almost every hotel is struggling to survive, it is still possible to increase hotel sales in 2009. It is just important to think of innovative ways to grow hotel revenue and provide value to the consumer. Jumpstarting hotel revenue starts by looking at the opportunities in the market with increasing hotel bookings, RevPAR, and average rate in mind.

Boosting profitability starts with knowing what your customers want and need. Determine how the inventory can be best utilized. In addition, providing a complete hospitality experience by setting up meeting space, restaurants, and fitness facilities can provide a good experience for the guests. Here are other 5 tips to increase RevPAR and increase your hotel revenue this year.

Cater to Families – hotel revenue managers can guarantee adjoining rooms to meet the needs of people traveling in groups. Charging a minimal surcharge will ensure that your hotel will be the preferred option compared to your competitors. And when you’re offering complimentary breakfast, make sure that there is a package for the whole family too. Just charge $5-$10 for the third or fourth child to get their loyalty. Adding a menu for children is likewise a good idea.

Last-Minute Getaways will Continue – most people have unpredictable schedules. That’s why last-minute bookings will still be prevalent even if majority of customers prefer to schedule everything in advance. With this in mind, make sure you take advantage of this opportunity by creating a suit package. Make sure you promote your last-minute deals online by utilizing email marketing, search engine optimization, pay per click, or adding your site to travel portals.

Closer-to-Home-Vacations – another apparent trend nowadays is that both leisure and business travelers are deciding to meet or take a vacation somewhere closer to their home. Though this may sound like bad news for hotels that rely on foreign travelers, it actually presents an opportunity for many. Consider advertising locally more than you used to. You might be surprised by the resulting increase in RevPAR and profit optimization.

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.

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.

From Managing to Generating Customer Demand in Revenue Management

With the stagnation in the market today, hotel revenue managers need to shift their focus from managing demand to generating demand. Supply will remain consistent because with the exception of capacity expansion, this inventory is fixed. Previously, hotel revenue management was designed to maximize profits during the high and peak season. After all, any yield management teams are always on the lookout for better business ideas that will increase hotel sales and boost profitability.

No one probably expected that such a drastic turnaround can occur within such a short timeframe. Right now, every hotelier is scrambling to use hotel revenue software not to manage demand but to increase it through accurate price predications, improve hotel online channel distribution, and analyze market conditions. Nevertheless, it is important to recognize that hotel revenue management plays an even bigger role in the tough times than in the good ones. To help you improve your yield management strategy, below are some tips:

Analyze Existing Market Strategies – before reacting to current difficulties in a “panic” mode, it is important to step back and see what methodologies are currently effective. If the previous marketing plan implemented by the hotel is still working, it would be best to complement it instead of eliminating it altogether.

Restructure the Value Proposition of the Property – what kind of message does the hotel send out to prospects? Looking into the value proposition found on the website, travel portals, and even travel agencies have a great impact on the customer’s buying decision. It is crucial to know whether you should brand your hotel as a “family-friendly” establishment, a “pet friendly environment”, a “business accommodations hotel” or any other proposition.

Make the Customer Find You – potential customers cannot stay at your hotel if they don’t know you exist? Market your hotel effectively online and offline. Your business should be visible across all hotel sales channels. This is one of the key methods of increasing hotel bookings and RevPAR.

Revenue Management Takes Center Stage during Bad Times

It is said that a good brand will prosper in good times but it will be one of the first ones to struggle during adverse economic conditions. One of the reasons why include its price. Traditionally, price has always been pointed out as the culprit that determines whether a hotel will survive or not. However, during today’s times with the internet and globalization, this need not be accurate.

Particular attention should be given to online hotel distribution because it can lead to profit optimization and increase RevPAR. Using technology to make things happen will maximize current resources and competitive advantage even during the tough times. Though the sentiment today can be described as “declined”, “down”, or “depressed”, this doesn’t necessary imply that this spells the end of major hotel brands.

Take the example of the Asia Pacific region. Hotel transaction in the area was actually down in 2008 from its high in 2007. But this does not signal its doom though because on the fourth quarter of the same year, 2008, hotel sales actually grew marginally. Revenue management plays a significant role in this. In addition, certain hotels even take the weather into consideration.

For example, if stormy weather and dark clouds are predicted, hotel revenue managers know that customers are more likely than not, will stay indoors and search online for the best travel deals. These hoteliers also realize that once online hotel sales become the norm as customers become used to it, they will need to adapt. There is an advantage because shorter lead times will result from it.

It should also be noted that as lead times become shorter, previous historical data will no longer be relevant as it used to be. It will have limited value for the future so more extensive data gathering initiatives for yield optimization may be required.

Maximizing Hotel Yield Management

Yield management, at its core, is based on the concept of supply and demand. This economic theory tries to maximize profit at times when demand is at its highest. In the hospitality industry, that means asking for the premium rate during the peak season and lowering the hotel rate during periods of lean season. It is important to take note that revenue management also depends on studying the number if inventory available in the market. When the supply is limited, prices will inevitably rise and when there is over-supply, prices will drop.

In most cases, clients with the least flexibility in location and date are those who are willing to shell out the highest amount. At the same time though, he would expect those in the hospitality business including the airline and his hotel to give him a level of flexibility in case he decides to change his current arrangement. On the other hand, clients that have a high level of flexibility will expect the lowest price possible. However, this client also recognizes that once he books, flexibility becomes limited.

In essence, hotel yield management operates in the industry in terms of these aspects:

• Inventory is relatively fixed
• Demand comes from, distinguished segments of the market
• “Perishable” inventory (ie. rooms that are unsold today cannot be sold tomorrow)
• The product is paid for before actual consumption
• Demand dramatically fluctuates depending on the season

In this case, yield can be described as the percentage which is the room revenue as a part of the total potential hotel sales revenue. The closer the figure becomes to 100, the higher the hotel yield is. It has been observed that an average hotel will typically achieve a 60 percent yield. A measurement on revenue management in an international scale enables hotel revenue managers know how their market is coping and what they can do to achieve profit optimization.

Comparing hotel RevPAR is highly important. This is because the figure is derived by dividing the total revenue by the total number of available inventory in varied price structure. Some hoteliers might be dismayed to find that the figure is lower compared to the traditional measurement of hotel occupancy and average rate. But doing this will help them discover the true reflection of the market.

Strategies that will Boost Hotel Sales during Tough Times

Anyone who has been reading this blog for some time has probably seen the importance of using the internet stressed many times over. This is because the power of the online marketplace in the travel industry is now undeniable. If in the past, travel agencies hold the power over the hospitality, it is no longer true now. For better or for worse, travelers are seeking the best deals from the internet. Smart hotel revenue managers need to utilize this tool to increase RevPAR and achieve profit optimization.

Using Third Party Websites

Third party websites have significant power in the travel industry. Even if these sites ask for a certain percentage in the profits, there are many instances when getting these services is a necessity. The hotel revenue management sometimes hesitates before using these services because of the high commissions. But this type of hesitation is a reflection of short-term strategizing.

In a lot of cases, the increased occupancy from online GDS systems could not have been generated using another technique. Unless the revenue managers can come up with ways to increase RevPAR any other way, it is a wise decision to use third party aggregator.

Complaints like this do not reflect the true essence of yield management. If travel portals are able to give you a base business, it becomes possible for you to increase hotel rates on the remaining inventory in order to improve overall RevPAR.

Generally, internet travel portals provide an international audience for your hotel. This is difficult to establish on your own. Since these sites are spending millions in advertisement alone, you can be sure that joining these sites would be an investment well worth it over the long term.

Give Travelers a Reason to Stay

With a few exceptions, hotels are rarely the end destination of travelers. They merely stay in the hotel because of its convenient location. If you want to increase hotel revenue, go back to the main target audience of your hotel. Evaluate the hotels competitive advantage and focus on it. For example, if you are near the city center, focus on location instead of trying to promote the spa inside the hotel.

Recognize that there are essential and non-essential reasons why clients choose your hotel. They will stay there for the location, for instance. But you can offer them the services of the spa once they know you exist.

Selling Hotel Rooms in a Sluggish Economy

In a sluggish market, using the core concepts of revenue management can definitely help hotels increase their occupancy rate and average room rate. Even during harsh economic conditions, it is possible for hotels to generate high demand with the right implementation of yield management. In addition, recognizing periods when the demand for hotel rooms significantly increases is critical. This enables hotel revenue managers to drive rates when they can and modify rates to charge customers lower during periods of low demand.

Although predicting these instances may be time-consuming, it can pay off big time. Hotels that practice effective revenue management can make the right decisions that provide the best value for the entire operations. The premise of any strategy is to have good data. However, collecting data is not guesswork. It requires diligent and thorough research about the market including the competition. Some of the techniques you can implement include:

Re-examine the Competition

Although some hoteliers might not realize it, competition actually becomes tougher during hard times. This is because even high-end hotels will try to get mid-range clients and vice-versa. Other hotels will try to capture additional market share that previously weren’t even theirs.

In a sluggish economy, knowing who your competition is is an absolute necessity. Take note that by competition, this does not necessarily mean the hotel down the corner; it can also mean other hotels in the city or even the travel packages available on the internet. But this can also mean a lot of opportunities if hoteliers know how to take advantage of the situation.

Strengthening Your Web Presence

As is oft repeated on this blog time and again, internet sales are absolutely crucial in today’s time. It is a fact that 70% of all travelers search the internet for travel deals and accommodations. Now, there is a question of whether they can locate your hotel or not. Improving web presence can increase hotel sales; in fact, you can even significantly increase occupancy and even room rate with this technique.

The internet can mean the difference between success and failure. This particular hotel distribution channel has come a long way from its beginnings. Some would even say that it revolutionized the industry because travelers no longer need to plan for months ahead, they can travel immediately within a few days of their arrangements.

Market Demand: Should You Lower Hotel Rates?

Anyone involved in revenue management can reveal that the reveal that the hotel demand pattern nowadays is completely different than they were previously. Now, the question remains, will this trend continue or will it revert back to its previous pattern? This is a very important concern because it determines whether hotel revenue managers should “hang on” until the times get better or if they should think out-of-the-box and implement innovative measures that will ensure their survival in the future.

From all indications, the impact of business and leisure travel on hotel sales has been significant. Companies around the world are cost-cutting by reducing spending including corporate travel. Instead of cutting back on travel completely though, they are choosing shorter trips and less-expensive hotels. Meanwhile, leisure travelers have also changed their attitude. Many are opting for travel packages to save money. In addition, around 84 percent of all American travelers are trying to cut cost by staying fewer nights or taking more day trips.

It is apparent that the current trend has become the “new normal” today and in the future. This is because even if the economy picks up, old habits will be difficult to break. People who are used to spending less are most likely to set aside the same amount for their travels in the future. Also, as business and leisure travelers realize that there are a lot of deals (due to price cuts) out there, they will demand the same pricing level next time.

So is there a positive aspect in all this? Innovative hotel revenue managers will certainly answer yes. The current condition gives them a chance to increase RevPAR, improve electronic hotel sales, and boost profitability all at the same time. It is true that the knee-jerk reaction for most will be to lower hotel rates to maximize profits. Yet, the true essence of yield management doesn’t work that way.

Do not lower hotel rates too drastically. You may be thinking that “it is easy for you to say” but over the long-term, you will see that this is a good strategy in revenue management. The profitability of hotels lie on its perceived value compared to the competition. If your value proposition is low-rates, then you will not be able to increase hotel revenue as much as you can. Balancing hotel rate and its value is the task that good hoteliers should complete.