U.S. And Europe-Based Hotels Took a Big Hit in RevPAR

With the latest industry data being analyzed, it was revealed that the hotel industry took a sharp decline in RevPAR last April 2009 according to the Smith Travel Research. Even as the financial markets stabilize and the overall economy gain momentum, the hospitality industry is taking its time to respond.

The data revealed that all four major regions including Europe, Asia Pacific, the Middle East, and the Americas suffered from double-digit decreases in all fronts. From their occupancy level to their revenue per share (RevPAR), everything was down compared to 2008.

These revelations are not surprising at all for an industry that’s reeling from the effects of the economic downturn. Almost every known strategy is being implemented to increase hotel sales and boost profitability even during the trouble times. Some hotels are resorting to price cuts while some are focusing more on their hotel revenue management endeavor. Whatever the case, it is clear that the path to recovery will not be easy given this data.

In the Americas, occupancy declined by 11.3%. It now stands at 56.5%. The bad news doesn’t stop there because the average daily rate also declined by 10 percent. Meanwhile, RevPAR which is an important indicator of a hotel’s financial health, dropped by 20 percent as well. Now, hotel revenue managers need to determine what they should do with this inventory. It is the only way to maximize hotel profits.

In London, the same grim situation is happening. RevPAR has dropped by 9.7% in the capital, London, while it declined by up to 14.6% in the nearly provinces. It is apparent that the city experienced a drop in occupancy rate and average room rate as well. But the situation is not as bad in the United Kingdom as it is in the United States at this point. Occupancy is still at 71.4%. It is only a question of whether this rate can be sustained or improved.

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.

RevPAR Guru Helps Hotels Increase Conversion Rate

From the United States to Asia, hotel occupancy, hotel rates, and RevPAR are at their all-time lows. It is said that desperate times calls for desperate strategies. However, while this saying may be true in certain instances, smart strategies are more important in tacking revenue problems in this case. Improving hotel revenue will take so much more than just crossing your fingers. It involves a comprehensive strategy that will enable the hotel, as a business organization, to move forward even during the bad times.

Some of the areas that hotel revenue managers need to focus on to improve RevPAR include:

System Automation

Majority of hotels have a complex system regarding pricing, inventory, and marketing. Manually doing all these tasks can be time-consuming and expensive especially if you add the amount of market research that hotels usually conduct. In addition, relying on humans is subject to errors so this can mean lost income for the hotel. Implementing a good system that can eliminate human error will help hotels achieve sustainable growth especially if they use a stable inventory and pricing software like RevPAR Guru.

Integrating Hotel Operations

As was mentioned earlier, hotels have a complex system wherein everything must work together to function cohesively. In theory, every area of hotel operation is “compatible” with each other. However, in the actual environment, multiple systems do not usually work cohesively with each other. In order to eliminate incompatibility problems and boost hotel sales, the revenue management team needs to look for a RMS system that has a stable platform and user-friendly interface. Software applications like RevPAR Guru will empower an organization to improve online rate distribution, reach pricing optimization, and boost profitability.

Increase in Conversion Rate

One of the major things that hotel revenue managers need to focus on is establishing an effective web presence on the internet. This does not mean merely creating a website and optimizing the pages to achieve rankings. It also means promoting the service to the right target market. Having a lot of traffic does not necessarily lead to high conversion.

Hotel RevPAR to Peak in 2013

The current economic crisis makes it difficult for hotel revenue managers to think beyond the current year or the next year. However, the Jones Lang LaSalle Hotels have released their forecast that the industry will turnabout completely in the next several years. As if that’s not enough, it is also projected that the revenue per available room or RevPAR will actually increase to its highest levels in 2013. It is estimated to reach as much as $68.28 which is even higher than the previous peak in 2007.

It is undeniable though that the market is about to get worse before it gets better. The same firm also expects RevPAR to regress by 12.1 percent because of the 5.1 percent decline in occupancy and 7.4 percent drop in daily rate. Everything is seen to bottom out by 2010. So it is a good indication that upward momentum is on its way.

As you can see though, growth will not be achieved overnight. In fact, it is expected there will only be a slight growth of 4.7 percent in 2011. Despite all this, it is undeniable that the gradual increase in hotel ADR and increase hotel occupancy will contribute to more hotel transaction and propel the RevPAR growth even further. If you are wondering about the accuracy of this forecast, then it is important to take note that these figures are the result of a comprehensive study of current economic indicators.

Some economic data that were used include gross metro product, gross domestic product, US retail sales, Standard & Poor’s 500 Index, and the customer price index among others. In the past, the indicators have shown dramatic correlation with hotel sales and profit optimization. By studying these statistics and coming up with a comprehensive strategies that will address present issues in the market, hotels will be able to boost profitability.

Another significant aspect that will contribute to the said growth is the fact that investment in new hotel structures is quite limited at this time. The supply pipeline is experiencing attrition because only a limited number of new rooms are not scheduled to be delivered with today’s economy. As a result, the supply does not grow at the rate it should even as the demand picks up as the economy recovers.

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.

Integrating Web 2.0 in Hospitality Revenue Management

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

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

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

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

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

RevPAR Helps With Yield Management

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

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

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

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

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

How Yield Management Can Improve Hotel Revenue in 2009

Hotel yield management has always been an important concept for hotels especially because the demand for hotel inventory fluctuates according to the season. Through the years, hotels have been able to cope with the changing supply, demand, and profitability to be had from the market. But almost none of them have encountered the unique challenges present in 2009.

Many hotels are now fighting for their very survival. As the financial market sank in 2008, the reverberations of this trend are still being felt today. In this period of RevPAR stagnancy or decline, it is important for hotel revenue managers to look outside the box and create innovative solutions.

Creating a Revenue Management Strategy

It is important to go back to the essence of yield management. At its core, it means maximizing profits from a perishable source. So how is a hotel inventory perishable? Well, a year’s worth of inventory will lessens each day whether or not someone occupies it. Effective yield management helps create gains in revenue as against expenses.
Looking beyond the actual room rate to increase RevPAR into the value that the hotel can offer is a good yield management tactic. If the hotel revenue managers are attuned to the economy, they can cope with the situation better. This means they need to analyze market tendencies, research the hotel’s main market and submarkets, and track the performance of competing establishments.

Coming up with accurate figures will help hotels boost profitability especially during slow periods because it can potentially increase the hotel occupancy rate significantly. In addition, an effective revenue management strategy also necessitates the access to updated market area. For example, the vicinity of the airport, the number of surrounding offices, and the scenic location are all factors that might contribute to the increase or decrease of hotel sales.

Putting Yield Management to Work

The market is now wiser than ever before and this has affected how yield management is practiced in the hotel industry. In theory, these practices might be straightforward but in actuality, it requires you to be on top of your game.

If you previously offered hotel rate discounts for convention participants to lengthen the duration of their stay, hoteliers today need to know the tendencies of each segment in order to maximize it. Offering actual solutions instead of price cuts is the more effective way to increase RevPAR and ultimately hotel profits.

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.

Revenue Management and the Internet

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

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

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

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

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

Going Back to the Basics of Revenue Management

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

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

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

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

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

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

Boost Profitability By Competing

Over the years, people hoteliers have come up with many different versions of revenue management. Whether it is referred to as yield management or any other term, it is undeniable that it can mean different things to different people. No matter what it’s called though, everyone agrees that it can work wonders if it is implemented property.

At its core, hotel revenue management can be described as the process of managing the business flow of the property. This “flow” should be tailor-fit to the individual needs of the hotel, its goals, and its target market. The primary goal should be to take advantage of occupancy demand whenever it’s available.

Certain hotels may leave profit optimization to the local management while some dedicate an entire team for this endeavor. The choice of who is put in charge with this important responsibility will have a significant impact on the hotel’s bottom line. There are several critical elements of revenue management. Right now, we will focus on knowing your competition.

Importance of Knowing Your Competition

Revenue management is both an art and a science. Gut feel alone isn’t enough to make it work. Serious work needs to be invested on it. Aside from knowing your internal cost, it is also crucial to find out the situation in the competitive business environment.

There is a popular saying “stay close to your friends, but even closer to your enemies”. Though you shouldn’t think of your competition as the enemy, the same concept holds true. Hotel revenue managers need to know the ins and outs of their own hotel. But they also need to find out what makes their competition stand out in order to boost hotel revenue.

Look into industry sources and compare your hotel to others in terms of hotel average rate, occupancy rate, and RevPAR. Doing this will determine how you can position the property you’re managing in the marketplace.

Right now, many hotels particularly independent properties are still placing themselves in a box. They don’t look further than their immediate surroundings. Well, this is one of the biggest mistakes they can make. After all, it is difficult to set competitive rates that will increase RevPAR and improve yield management if you don’t know what others are offering.

Hidden Ways to Increase Hotel Revenue

The goal of every hotel revenue manager is to optimize sales from every channel including the central reservations office. A lot of hoteliers make the mistake of overlooking this area. Depending on your target market, the total contribution from the central reservation system can be anywhere from 10 percent to over 35 percent. It is important to give every hotel sales channel the best tool for conversion.

Increasingly, hotels are concentrating their efforts on increasing hotel online sales. There is nothing wrong about that especially since online bookings have been experiencing significant growth year in and year out. But this development doesn’t mean that other sources should be overlooked. On the contrary, it is possible to achieve profit optimization in both.

In addition, the two hotel distribution channels can actually complement each other. Today’s savvy deal-seeker is checking both mediums. For example, they try to look for the best rates online before calling the reservations system so they can be sure that they are given the bets rate possible. Realizing the interconnectivity of hotel electronic sales and offline sales can prove to be beneficial for property managers especially in today’s economic crisis.

Below are some tips that can help you increase hotel profit:

Use Alluring Descriptions – first of all, it is important to go beyond the standard feature of the hotel and highlight the things that make your property stand out. Also use words that entice rather than simply inform. Most clients will respond to visually descriptive language that paint pictures on their minds. In many cases, they will book their reservation even if the rate is priced higher than the competitor when the picture is already painted on their minds.

Update Property Information – keeping the information updated on both the hotel’s website and the central reservation every six months is critical. All data that is no longer relevant should be eliminated. Otherwise, guests might expect certain features that are not available anymore or miss out on new developments about the property.

Make Sure All Key Attractions are referenced – probably one of the primary reasons why people stay at hotels is its location. If you are located near business parks, entertainment centers, or even a popular business complex, be sure to include it in marketing. Also, major events including festivals, air shows, and sporting events among others might interest the guest.

By following the tips outlined above, your hotel will hopefully enjoy increased RevPAR. This is especially possible if it uses RevPAR Guru as a tool for profit optimization.

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.

Boosting Electronic Hotel Sales with Social Media

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

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

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

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

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

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

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

The Rate Game: How Should You Set Room Rates?

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

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

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

Stop Tinkering with the Published Rate Structure

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

Aggressively Seek Out Groups

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

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

Implementing New Hotel Revenue Management Metrics

It has never been more imperative for hotel revenue management and hotel sales activities to set objective metrics that accurately measures effectiveness. Until the economic crisis, many hotel staff including those from the sales department and revenue management has been contented to go with the flow. It is important right now to let these individuals know that their strategies or skill set is no longer sufficient in this economy. Rather than firing those with inadequate skills, it might be a better idea to give them the opportunity to improve.

Right now, the benchmarking standards implemented by hotels can be described as arbitrary at best. Only a few hotel revenue managers seem to set metrics that measure the success of their strategies. But in today’s challenging environment, the importance of effective revenue management is at its highest. There are some steps you can take to develop these metrics and boost hotel sales. Below is an outline of what you can implement:

• Creating a Personal Sales Strategy – determine how many prospects you have, the alternatives, and the type of market you can attract. After you find out these things, it is essential to identity how you will find these prospects and what marketing activity they will most likely respond to.

• Prioritize and Organize – while organizing is important, it may not be as critical as prioritizing the right things. Learn to discipline yourself. Actually, no one cares if your desk is cluttered. But they will care of the hotel is not producing the kind of revenue it should. At the start of the day, know which tasks should be prioritized and what the hotel can do for them. This will enable you to increase hotel sales.

• Set Metrics – it is impossible to manage what you can’t measure. The concept behind this is simple; you can improve if you don’t have a solid measurement for success. The metrics can be as simple as setting how much online hotel sales you want to generate each month. Other metrics can include determining the productivity of each employee involved in sales.

The importance of setting metrics is undeniable. It sets acceptable standards that everyone in the sales and revenue management team should accomplish. In addition, it will enable quality output to be produced consistently. Hotel revenue managers who implemented effective metrics for their yield management strategy are deriving the benefits of this initiative. It will help hotels succeed even during the bad times.

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.

Focusing on Increasing Hotel Sales

Sales forecast is not something that most hotel revenue managers want to focus on. But this is an essential element to consider because it will affect the company’s strategy, hotel rate positioning, and pricing strategies among others. Every start of the year, most people look back at what happened the previous year. And for the new strategy to be successful, it is critical to know what worked and what didn’t in the previous years and how these can be improved upon in the next year. In addition, hotel revenue managers should not only lay out the forecast and stick to it stubbornly. It is sometimes wise to consider the current market condition to change the hotel rate strategy appropriately.

After this step, the next one is implementation. This is where more problems start to occur. Many hotel revenue managers say that they have a problem about “time management”. They take unnecessary calls that could have been left to the secretary to answer. They welcome interruptions from different people within the hotel. And they spend too much time in redesigning work flow and other systems. While this initiative may be necessary, it is the task of the hotelier to know which area should be prioritized.

In truth, most revenue managers don’t have an issue with time management; they have sufficient organizational skills to manage their time effectively. Their main concern should be their lack of focus. Focus is different from management. It is not about organization but about prioritization. The organization with streamlined operations may not experience profit optimization if it is targeting the wrong market. In the same way, managers who put their time and effort into unproductive undertaking will yield no tangible results.

Fortunately, there are things that can help hoteliers and staff keep their focus on the right things. Among the steps they can take include:

Analyzing Daily Activity – writing down the activity of the day and then analyzing it will determine how productive the hotel revenue manager is. This will help them identify which tasks needs to be eliminated and which should be placed at the top of the list.

Prioritized Identified Areas – once the critical aspects of operations have been identified, the next step is to know which proposals, contracts, or any other tasks should be done for the day.

Reduce Interruptions – one of the things that make a person less productive is distractions. By eliminating interruptions and other unnecessary tasks, the main priority can be finished during the day or during the specified timeframe.

Integrating Revenue Drivers to Optimize Hotel Sales

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

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

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

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

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

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

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

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

Pre-Marketing Plan in Revenue Management Strategy

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

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

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

The Four Step Process

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

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

People Behind the Revenue Management System

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

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

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

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

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

Improve Hotel Revenue Management During the Tough Times

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

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

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

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

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

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

Is There a Disconnect Between Hotel Revenue Management and Sales Strategy?

Many would think that revenue management and sales strategies automatically complement each other. After all, these two are deeply interrelated to one another. However, this perception is idealistic at best because in reality the sales department and the hotel revenue management are usually at odds with each other. When this happens, frustration occurs and this can hinder the thought process that makes good decisions possible. It is a good thing that majority of hotel revenue managers are willing to compromise to bridge the gap.

In many cases, it has been observed that the frustrations of hotel revenue managers arise from the fact that the sales department wants to provide “sale” prices at inappropriate times because they want their bonus incentive when they reach their quota. This is against the revenue manager’s job of ensuring the profit is optimized at all times for the overall well-being of the hotel. While this perception may be true in some cases, it is important to look past this bias and look deeper into specific problems. Among those that can be identified include:

Inappropriate Discounting – using the discounting strategy to cope with low market demand is an almost automatic reaction for sales people. It has been the standard operating procedure (SOP) ever since the demand drastically decreased because of the deep recession. And when you couple this with travelers who have reduced their budget, sales people scramble to give the lowest rate possible. It is important to analyze the market first before giving drastic discounts. Effective yield management should be prioritized in this case.

Revenues from Different Profit Centers – the sales department is more likely than not to be familiar with the customer behavior. They can actually help the hotel revenue managers in this case by helping develop the hotel rate strategy for specific times of the week and the month. The highest demand from corporate travelers tends to occur during midweek while weekends are preferred by vacationers.

Building Client Relationships – this is a common cause of tension between sales and revenue managers. Though revenue managers know the value of building and maintaining relationships, it may not be their first priority in all cases. Meanwhile, sales people usually strive to accommodate all client requests at the expense of the hotel’s profitability. This needs to be ironed out for maximize hotel sales.

Using Hotel Revenue Management Software to Increase RevPAR

A Cornell University Study, published in the Analysis if Revenue Management Vol. 5, No. 6, in the April of 2005, revealed that hotels that price above their competitors have the most aggressive hotel revenue managers. They are the best when it comes to increasing RevPAR, improving yield management, and boosting profitability. Many hotels want to raise their room rates in order to increase RevPAR but this strategy may not always work. Its success depends on brand image, amount of available facilities, location, demand, the number of competition, and general economic condition.

It should be noted though that the most successful hotels when it comes to revenue per available room implements hotel revenue management strategies. However, it you should note that the requirements of revenue management systems for individual hotels are different. For example, the needs of a 50-room boutique establishment are far different form a 600-room chain hotel. Before buying inventory software, booking software, or a yield management software, establishing the exact requirements of the hotel in terms of RMS systems and functionality is important.

If you’re anticipating the implementation or the upgrade of a system, evaluating the potential return of investment of the revenue management systems including their sustainability needs to be done. Below are some guidelines that will help you find the best hotel revenue management software:

Departmental Needs – each department has its own requirement when it comes to documentations needs, report, and other data gathering and retrieval technique for effective decision making. Hotel revenue managers need to know the minimum and the optimal requirement of each department.

Existing Hotel Revenue Management System – if you already have a revenue management system in place, consider if it would be more cost effective to replace it or to add certain functionalities. In addition, be sure to find out what the exact requirements are. The last thing you want is to have the same problems in the new system.

Hotel Channel Management – most hotel applications have this feature. Finding the right one is only a matter of how complex your business structure and the promotional mix. A system that allows you to evaluate the different revenue streams is a particularly effective one.

Customer Behavior Analysis – a good revenue management system should be able to forecast customer behavior based on historical data and customer information. The information helps the hotel revenue managers make better decisions based on actual data, not on guess work.

Price Integrity for Hotel Revenue Management

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

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

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

Price Integrity – Increasing Hotel Sales

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

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

Simple Ways to Increase Hotel Internet Sales Part 2

If you want to increase your hotel’s internet sales, it is important to allocate a significant amount of resources into internet marketing as well. Right now, it is believed that all major hotel brands are already generating more than 40 percent of their bookings through their hotel internet channels. By 2010, it is projected that 45 percent of bookings will be completed using internet booking software. Before you invest a significant amount of money in your online endeavors though, it is critical to know which areas and channels you need to focus on:

Paid Search Campaigns

Investing in search engine optimization (SEO) may be a good idea, but it takes time before results start to trickle in. An alternative to this is the pay per click campaign. Popular programs include Google AdWords and Yahoo Search Marketing. This program is worth considering for the hotel industry because it significantly improves web visibility. PPC is a particularly beneficial program while you’re waiting for your site to increase in ranking.

After your hotel website builds a good reputation, you can gradually stop this campaign. Some people use this as a replacement. However, it is never a good idea to use this over the long-term because of the extensive investment involved in order to sustain it. In addition, searchers are more inclined to trust search engine results instead of paid results. This will translate to better hotel revenue management on your bottom line.

Packages and Promotions

Just because you’re marketing your services online doesn’t mean you need to give up on offline marketing strategies altogether. Find out what packages click with your target audience and include it in your online service offerings. If people are booking your hotel because of its good location, free breakfast, corporate amenities, and scenic views, be sure to mention it on different hotel distribution channels including the internet.

User Generated Content

Some of the most successful websites today rely on users to generate its content. For example, video sharing sites, P2P, Wikipedia, and even YouTube depends on thousands of users to create and patronize its services. The same concept holds true in the hospitality industry. For example, social media sites can be very helpful in boosting hotel profitability. This is because people generally trust the opinions of others within their network; when their friends give reviews, they listen. In addition, travel-centric media sites that offer reviews are used by countless people when making purchase decisions.

Simple Ways to Increase Hotel Internet Sales Part 1

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

Creating and Updating Hotel Websites

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

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

Search Engine Optimization

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

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

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

Measuring Weekly Hotel Performance

It is no secret that the hospitality industry has been struggling in different fronts ever since the global economic crisis occurred. To get an accurate overview of the condition in the United States today, performance measurements for the week March 15-21 has been conducted. Metrics per month and per quarter are very helpful in determining financial performance, but this weekly year-on-year comparison provides a better overview of the real effects of the tough times.

Using this measurement, all three key measurements declined according to the STR. The occupancy rate fell by 4.7 percent, average daily rate declined 8.0 percent, and revenue per available room dropped to 12.3 percent this week. The average daily rate is now pegged at US$99092 while RevPAR is at $US58.45. If this is not alarming already, all major cities except for Washington DC showed declining performance during this timeframe.

Washington, DC was the only market that increased on its key performance measurements. However, even that increase is on the low side of the scale. Occupancy was 69 percent which is 1.7 percent. Meanwhile ADR was pegged at US$152.91 which is up 0.9 percent. And the RevPAR of the city increased to US$105.46 which is up 2.6 percent from last year.

Seeing that the United States is a very diverse market, its remaining top 25 cities showed mixed rates. For example, St. Louis, Illinois showed an increase in occupancy while Houston, Texas declined by 1.3 percent. One notable decrease is that from New York, New York. It dropped 25.5 percent in its ADR which is the largest in the research. The city also posted the largest RevPAR decrease because it dropped 36.6 percent to only US$151.05.

Given these severe setbacks in the hospitality industry, hotel revenue managers might wonder, is there still hope in increasing hotel sales in the next few months? The truth is, the condition today is one of the worst in history. In fact, economic performance has not been this bad since the Great Depression.

Yet, it is important to realize that the conditions from the previous eras are far different from the conditions today. Now, it is possible to use inventory software, hotel revenue management software, and internet marketing to reach a larger audience: a worldwide audience. With this fact in mind, the answer is yes. It is possible to increase RevPAR and boost hotel sales even during difficult economic times.

Increase Hotel Sales by Using RevPAR Guru

Despite the amount of sophisticated technology available today, a lot of hotels are still suffering from manual processing, and poor information flow. They fail to get updated and real-time information about guest, inventory levels, and industry data. This leads to reduced revenue and has a severe impact on hotel profitability. In today’s economic condition when the industry is struggling just to break-even, it is critical to utilize all available tools to improve RevPAR and boost hotel sales.

Among some of the most common mistake that a hotel revenue managers can make include focusing too much on administrative processes instead of sales, unreliable information flow among hotel distribution channels, lack of leads about sales statistics, redundant systems and infrastructure, and inflexible systems that cannot support new hotel rate strategies and new technologies.

Requirements of Hotel Revenue Management Software

• User-friendly interface
• Real time inventory information
• Modular structure
• Integrated technology elements including channel management, revenue management, account management, business management, and contact management
• Solid technology platform
• Data accuracy

These elements are very useful in when it comes to hotel management. It helps streamline processes, improve efficiency, and most importantly, increase hotel revenue.

RevPAR Guru: Solving your Problems in Real Time

With all these challenges, it is a good thing that a software application such as the RevPAR Guru exists to help hoteliers. It is a revenue management software, hotel booking software, and hotel management systems software combined into one. It is quick and easy to implement. With the right utilization, it can show a significant improvement on hotel sales.

It is critical to choose an application that has been specifically designed for hotel revenue management. There are many software solutions available but only a few of them can actually meet the unique needs of a hospitality business. It is true that certain technologies can be “modified” to adapt to the hotel’s requirements. However, it is very expensive and in some cases, it is not flexible enough to meet ongoing improvements. The RevPAR Guru is different because it understands all the challenges of the business. All functions are designed to deliver effective yield management and profit optimization.

It is not surprising that a lot of hotel revenue managers are turning to RevPAR Guru to help them cope with the changing times. The software application is very useful in both good economic conditions and bad.

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.

Hotel Industry Performance In Europe

Most hotel revenue managers are probably tired of hearing about the economic crisis, its negative effects on the economy, and the falling occupancy. But for many, this is just the tip of the iceberg as people cut back on travel. One of the worst affected markets was the United States but its effects have spread throughout the world most notably Europe and Asia. Two cities in Europe show how grim the picture is for the hotel industry.

Vienna’s Hotel Rate Distribution and Sales

The hospitality industry in this city saw their profit decline by almost two-thirds per available room. This has significantly reduced their RevPAR. Other cities that took the brunt include Prague and Amsterdam. Prague saw its profit decline by half while Amsterdam declined by 45.2 percent. The single city that did not experience double-digit reduction was Hamburg.

The situation is particularly concerning in Vienna. Its labor costs now take up to 55.5 percent of its revenue. This incredibly high cost of labor is making it harder for the market to recover. Although the payroll expense traditionally has been high during the first part of the year when hotel sales are at its lowest, having the labor costs comprise of more than half the total revenue is not normal.

How London and Paris is Coping

Both London and Paris experienced almost the same level of decline in terms of occupancy rate. The occupancy rate in London is down to 70 percent while the figure is 69.3 in Paris. In terms of hotel profitability, the figure fell by 21.5 percent in London and 20.6 percent in Paris, France. These developments have forced London hotels to implement new hotel rate strategies. Most hotels have already provided discount for travelers.

Average room rate have now dropped by 8.4 percent in the city while Paris did not cut their rates that drastically. In their quest to improve hotel sales, hotel revenue managers are pulling all the stops. Discounts, customer service, expanded hotel distribution channels, and online presence are all utilized to boosts hotel profitability. Time will tell whether these initiatives are actually effective for the entire hospitality industry. Consumers need to build more confidence on the economy before they spend at the same levels they once did.

Increase Hotel Revenue Even During Tough Times

One of the biggest questions in the minds of hoteliers around the world is can consumers afford to take a vacation? Or rather, can they afford it? In the second part of the 20th century, vacationing seemed close to being human right. Everyone takes a vacation at one point or another during the year. And because of global competition and the internet, it has become very affordable as well. However, with the economic crunch being felt by both the corporate travelers and the individual consumer, hotel revenue managers are realizing that this “human right” is not necessarily concrete. They need to look for ways to increase RevPAR and boost profitability.

According to Norbert Walter, the Chief Economist of Deutsche Bank Research, the market will get worse before it gets better. Several economists share the same view. At the same time, there are also others who believe that the economy will recover by 2010. Only time will tell which prediction is true. But what is undeniable right now is that hotel sales are down and a lot of companies in the hospitality industry are cutting rates in order to cope.

Although the oil prices have fallen, the stable costs of transportation are not enough to get people back to traveling. The world is experiencing its deepest recession since the war, according to Dr. Walter. Because of this, it is critical for hotel revenue managers to be cautious about the next year. He said that “We have been trying a lot of different therapies to get us out of the crisis”. Yet, none of this provides an assurance for the future. The picture is far from being out of control though, because as of now, the government is doing what it can to help all industries.

Correctly interpreting the result of economic contraction, the chief economist focused on its effect on tourism. The crisis has undeniably dampened the outlook for hotel sales. In particular, the middle and upper segments took worst hit. As a result, it is predicted that the luxury enjoyed in the past will be difficult to regain. Despite all these setbacks though, traveling isn’t dead. It is important to realize that it is among every man’s dream to travel, explore new sights, and discover new sights. This will not change and the hotel industry will certainly gain momentum once the economy improves.