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Now more than ever, the ability of your hotel to be impactful for its customers and business will depend on small details.

 

Focusing on your hotel’s bottom line is just one measure of effectiveness, during lean times it’s more important that your business have a strong vision to move forward and focus on customers to offer a superior guest experience. Often, however, this vision is lost in corporate structures or simply doesn’t exist because of the lack of hope the current state of the pandemic has left us with.  That’s why it’s important to gauge the effectiveness of your revenue management strategies using key performance indicators.

 

A great way to avoid making errors, especially errors that could have a negative effect on your hotel, is to understand how these mistakes occur in the first place. There will always be the case that there are some mistakes you simply can’t avoid; conversely some errors can occur due to a lack of experience or having to deal with constant technological changes that make it difficult to have full control of your operation all the time.

 

 As you have probably heard if you’ve read our other blog posts, we love a process that is automated. Automation has become an important part of revenue management, making it easier for humans to be back-seat drivers. Pricepoints ability to absorb market intelligence has evolved in way that it can make decisions for us. Making sure that rates are updated across channels and adjusted appropriately based on market segments and regions so that they are always competitive at any given time is more important than ever before. Automated processes manage the adjustments aligned to comparable competitor offerings in specific markets, helping hotels to gain clarity and precision – not to mention speed – on strategy.

 

One way to reduce human error is by identifying which mistakes your hotel is most likely to make.  Here are a few factors every hotelier should consider when monitoring and adjusting their pricing strategy.

 

Understand channel costs. You can’t manage your hotel’s revenue and not take into account acquisition costs. Otherwise, you won’t know whether a reservation is profitable (or not) to your establishment. Not understanding this metric will prevent you from choosing the most profitable channels, and ultimately hurt your hotel’s bottom line.

 

Measure the impact your pricing strategy has on demand. Price variations affect traveler perception of your business. To avoid devaluing your hotel, it’s important to measure the effect your pricing strategy has on demand. Otherwise you run the risk of distributing to the wrong customer segment.

 

Understand that demand may or may not fluctuate according to price. Nobody can claim with absolute certainty that a fall in prices will be associated with an increase in demand. The customer mix may not be sensitive to cut-rate prices or may perceive a lower quality with lower rates. Therefore, the best option would be to analyze demand and monitor how demand responds to price or product variations.

You or your revenue management software should be focusing on your hotel’s bottom line to maximize profits. All too often, we hear that revenue managers must increase revenue through hotel room occupancy. However, we know that this approach is not completely right.  A hotel’s main focus should be monitoring and increasing RevPar or GOPPar (gross operating profit per available room).

 

Intelligent solutions and processes like Pricepoint’s revenue management solutions driven by automation and machine learning algorithms is an important facet to creating long-term resilience in a currently disrupted and fast-paced hospitality industry.

Wyatt Niblett-Wilson, Marketing Coordinator

 

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