Ten tips for better revenue management in independent hotels
NB: This is a guest post by Yunna Takeuchi, director of e-distribution at Evolution, a reservation system provider to hotels.
Social media, distribution channels, web investment, discounting, being risky and target-setting – it couldn’t be easier as an independent hotel owner, right?
1. Everyone’s listening.
Social media, what exactly is it? Ignore the myth that social media is just Facebook and Twitter, these days the internet is social media and a strategy for managing it has never been more important. Facebook and Twitter are important, but don’t forget the numerous other channels including TripAdvisor, Foursquare, YouTube and local websites and blogs.
Communication on the internet takes place everywhere; make sure someone is monitoring it. Revenue managers often don’t have time to monitor social media and over the next few years, the position of social media manager will become an important role. Don’t get left behind and ensure you implement an effective social media strategy. There are many partners available who can help you build an effective strategy if your resources don’t allow it.
2. Choose the right distribution channels.
How do you choose which e-distribution channels are right for your hotel? Several factors need to be taken into consideration, from channel contribution potential, distribution spread and cost to how easy the channels are to manage, what types of marketing exposure they can provide and the sort of technology they use
If you want to target the mobile-commerce market, choose a distribution partner that has access to these channels. Demand is slowly improving, and it has never been more important to ensure your hotel is seen everywhere.
Identify the right channels for you, manage your rates dynamically and don’t lose sight of rate parity across those channels. If you’re currently distributing rates manually to a number of different channels, a channel manager may be a suitable option for you, making your life easier and leaving that all important time available to make vital strategic decisions.
3. Invest in your own website.
A good revenue management strategy should be carried through to the hotels’ most important revenue channel, their own website. At least 10% of revenue should be generated from your website and it should generate at least 25% of your revenue in the next couple of years.
One of the key factors to achieving this is through search engine optimisation (SEO) and Pay Per Click (PPC) campaigns and as a revenue manager you should already be thinking about these strategies.
Consider your target market, identify what keywords your audience is searching for and ensure your website is optimised for these keywords. Take a look at the competition – what key words is your competitive set appearing for in the search engines?
Think seasonally – are your key words changing when you promote new rates and offers? Talk to your webmaster and ensure they are doing this properly. It they’re not working on this at least three times a week, you’re not optimising your website as much as you should be.
A good representation company should be able to help you devise an effective SEO and PPC strategy.
4. Value is king.
Following a recent analysis of the hospitality industry, research shows that the supply of new build hotels is slowing due to the long suffering global economy.
However, figures show demand for hotel rooms is slowly improving but the ADR (average daily rate) weakness continues and is set to do so for the next few months. A moderate improvement is set to happen by the end of the year and a good growth is anticipated for 2011.
To drive hotel ADR, we need to remember one thing – Value is king. In a price sensitive market, value is the most important factor but this doesn’t mean you have to compromise on your prices. Look at offering value added packages, free nights offers and length of stay discounts.
Whenever you implement a rate strategy, keep this in mind and make sure your rates are brave but can also guarantee good value for money.
5. Better relationships, better profits!
One of the key factors these days in the world of revenue management is relationships. Don’t try and do everything on your own. Invest time in building strong relationships with all of your distribution partners including online travel agents, consortia programmes and corporate accounts.
A good representation company will be able to give you best practice tips and will help you to set the most effective revenue management strategy as well as expanding your relationships with additional channels.
6. Early birds or leaving it until the last minute?
As the economy slowly emerges from recession, it is likely that not only your target market has changed but also they way they are now booking their holidays, so ensure you reassess who your core customers are.
Are you targeting the right clientele? Could you attract higher spenders?
Once you’ve identified your target market look at how they book their holidays – are they booking last minute or are they looking for early bird deals? Are they booking through travel agents or through their mobile?
Don’t assume your customer’s habits are the same as they were two years ago and ensure you adapt your strategies to respond to the changes.
7. Look to the future.
Booking patterns can change dramatically, whether it is with the seasons or the economic environment. Although revenue management relies strongly on historical data, in a volatile economy, it’s important to look ahead and understand how economic and seasonal changes will affect the way people book your hotel.
The internet now gives access to last minute availability and allows people to shop around for the best deal very easily. The fragile economic climate has also changed the way people think about their holiday, with a uncertain employment climate, people don’t want to commit to a holiday too far in advance.
People are still travelling but are happy to book last minute and for a shorter length of stay. Respond to changes such as these with targeted and differentiated rates and packages such as attractive last minute offers.
It’s a challenge for revenue managers to react to how people want to make their bookings but get it right and you’ll notice the results. Your representation partner will be able to help you identify these changes and assess the impact on your business.
8. Make sure you’re in the loop.
The world of revenue management is constantly evolving and is more competitive than ever. Stay ahead of the fast-paced nature of the industry by attending conferences, events, seminars and trainings to keep up with new trends and establish partnerships to gain best practice advice.
If you have access to the expertise of a revenue management specialist don’t be afraid to use them!
9. Dare to take risks!
Revenue management is all about selling the right room, to the right customer, at the right time, for the right price and for the right length of stay.
Nobody gets it right first time and to get all of these factors spot on will involve taking a few risks. How else will you know what works and what doesn’t? Don’t be afraid to take risks, just make sure you’ve thought about the consequences and if it goes wrong, learn from your mistakes!
Keep your competitors in mind, but don’t let them dictate your own strategies and tactics.
10. Set your targets and budgets early.
Now is the time to set your revenue management targets and budgets for next year. Leave your self enough time and try to anticipate any problems that may occur.
Ensure you take into account all the points raised above and include them in your budgets including SEO, PPC and social media strategies.
Understand your current situation and set SMART goals – they should be specific, measurable, attainable, relevant and time-based.
Don’t do all the work yourself, collaborate with other departmental objectives and always communicate your revenue management objectives to your colleagues, in particular the sales department to ensure you are all working towards the same goals.
NB: This is a guest post by Yunna Takeuchi, director of e-distribution at Evolution, reservation system provider to hotels.
Special Nodes is the byline under which Tnooz publishes articles by guest authors from around the industry.