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 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.

Integrity of Hotel Reviews May Have Been Compromised

Can too much of a good thing be bad? It is, if these “good” things are actually based on lies and misinformation. Similar to almost all industries in the world, revenue managers are not immune to the temptation of tricking people in an effort to boost hotel profitability. For example, some have resorted to posting fake reviews on popular web portals to increase their web popularity. It isn’t so bad if they can live up to these promises. But the problem lies mostly in principle.

As if that’s not bad enough, some hotel revenue management staff has even resorted to bad-mouthing their competitor online. This unethical practice undermines the credibility of user-generated content available on the internet. People used to trust to feedback of their peers but with these kinds of developments. However, as more people find out about the unethical practices of certain firms, they might start to think twice before looking into hotel reviews online again. It is possible that they might simply revert back to their old networks for information.

There are many other reasons why faking reviews should not be done for the purpose of increasing RevPAR and boosting hotel sales. Popular portals such as TripAdvisor.com are now cracking down on unscrupulous hoteliers. In fact, the site has already posted a warning as well as a disclaimer telling users to be careful about the practices of certain establishments.

Tripadvisor.com is not alone in its quest to clean out fraudulent reviews. Beyond the hospitality revenue management industry, technology companies like Apple are also utilizing certain measures to preserve the credibility of its site. For example, the tech company had required customers to download or purchase its products first before they get a chance to review it on the site.

These developments should serve as a warning to yield management teams not to engage in misleading practices. Technology is fast catching up and soon, they will not only be penalized, their reputation will also be destroyed if they get caught.

Google City Tours: How Will It Impact Hotels

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

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

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

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

Maintaining Rate Integrity to Increase Hotel Profitability

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

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

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

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

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

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

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

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

Sign 2: No One Understands What the Dashboard Means

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

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

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

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

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

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

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.

Hotel Profits to Increase - Goldman Sachs

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

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

Hotel Revenue Management Techniques for Today

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

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

Increasing Brand Loyalty through Your Online Presence

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

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

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

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

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.

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.

Automated Revenue Management Will Improve Efficiency

When organic hotel sales start to go down, hotel revenue management takes on a new level of importance. This is because it becomes critical for hotels to go after the remaining market. The marketing department will also experience the same problems and opportunities. To reduce redundancies, the two can be meshed together.

Avoiding Redundancies

Implementing technologies such as the RevPAR Guru can help boost efficiency greatly. This solution can provide automated forecasting not only for North American properties but for properties anywhere in the world. A significant number of man-hours can be saved. And the best part is, the result of the system will increase RevPAR and manifest itself to profit optimization.

More than using technology though, there should also be cooperation between the hotels sales & marketing department and revenue management. By working together, hotel managers can identify areas for promotions and what the optimal hotel rate should be.

In the previous articles, we have discussed the tension between the two groups. For example, the misconception of hotel managers that sales are only interested in profits. This type of thinking should be eliminated for any type of effective cooperation to take place.

RevPAR Guru as a Tool

Before RevPAR Guru has been introduced, hotel revenue managers simply used Excel to calculate the appropriate rate. This is time-consuming and typically inaccurate. But there is no need to say with this old style. By using algorithm processes to process data, the software is able to project how much the hotel can expect from its transient sales.

However, thinking that any software application can replace the touch of an employee is quite misguided. It should be seen as a tool rather than the ultimate solution. For example, it is not a substitute for hotel revenue managers. Some tasks that are related to hotel management are things that only a human being with actual experience and rational thinking can solve.

With this in mind, it is even more important to respect the capabilities of hotel revenue managers. It is true that technology today is incredibly advanced. Booking software, inventory software, and revenue management software are impressive. Without a human to feed and interpret data though, software applications can do just the opposite of what they were designed to do.

Online Hotel Sales Revenue Management

It is no secret that hotels are now deriving a significant part of their revenue from internet sales, either it is from electronic distribution channels (GDS), franchise websites, or even the hotel’s own home page. For this reason, many hoteliers are concentrating their efforts online. Right now, many have already re-allocated their resources from traditional channels to internet marketing and promotions with the objective of manipulating their internet presence to increase hotel sales.

Hotel revenue managers are certainly correct in this initiative. After all, the internet presents a lot of growth opportunities for hotels that are struggling in today’s tough times. In addition, they can expect their yield management to be improved and increase hotel sales.

Frustrated hoteliers should remember the saying that if you “keep on doing what you have always done, you will continue to get what you have always gotten.” In the business environment today, this means diminishing hotel revenue unless they do something about it. The internet should be utilized as an effective tool to drive hotel sales. Before embarking on this initiative though, hoteliers must realize that it is important to include the sales department because the this revenue management strategy will ensure that the product positioning will be uniform across all hotel distribution channels.

The three main stages that hotels can take include:

• Target Market Positioning – this strategy mainly involves locating new markets when the existing customers are generating less revenue. Hoteliers make the decision to concentrate on markets that used to be ignored. The new market can be composed of affinity groups or even the government.

• Market Penetration Strategy – as its name implies, this means deciding on which method will penetrate the market best. In this stage, it is critical to know the “depth” of the market to ascertain its potential and boost profitability.

• Initial Approach – this third approach entails actually approaching the market. There are two ways to conduct this: traditional and cyber. Obviously, the approach implemented in the two channels should be different. For example, in the internet, the first contact may come from travel portals or third parties while in traditional marketing; it might come from travel agencies.

The three stages outlined above is only a brief overview of what hotel revenue managers and their sales department can do to reach new markets on the internet. However, while the online marketplace presents vast opportunities, it is also quite important for hotels to keep their current clients and maintain the level of relationships they always had.