Hotel Revenue Management as a service
As a small, privately owned hotel, you face the daily challenge of competing against the big players in the industry - from marketing to revenue management, from getting the best room rate to optimizing revenue, from acquiring new guests to managing all the social media channels. This, with limited resources, can often be an impossible task.
Have you ever considered outsourcing certain areas and thus having more time for other things? Revenue management in particular is a science in itself and you can only achieve significant results if you really know your way around it. The potential that lies in revenue management should by no means be underestimated.
What exactly is revenue management?
Revenue management is about optimizing revenues, which is why it is often referred to as yield management. The right product must be offered to the right customer at the right time and at the best price.
Today's technologies can be very helpful in this regard. They are able to evaluate historical data and draw conclusions for the future or the current point in time. Basically, it's about the best possible pricing, taking into account a huge amount of data and factors.
Revenue management is strategic sales
Instead of "just" selling hotel rooms, the aim is to find the best price in each case according to different guest segments and times. Factors such as competitors, amenities, and supply and demand must be integrated.
Good software and experts in revenue management ensure that you can offer a different price to each customer (or customer segment), based on extensive data analysis and past experience.
What is the special feature of revenue management in the hotel industry?
In the hotel industry, we work in an industry that offers a particularly "perishable" commodity. A textile merchant can still sell his textiles the next day, but an unsold hotel room is lost.
Revenue management in the hotel is a mixture of utilization planning, capacity optimization, market changes (supply and demand) and pricing (yield management or dynamic price adjustment). In the process, many different key performance indicators (KPI) are used and, conversely, also generated, on the basis of which efficient controlling can take place.
Revenue management in a hotel therefore refers not only to lodging, but also to the F&B area and other sources of income (minibar, spa, etc.). What begins with yield management for rooms is consequently continued with revenue management in the entire hotel.
What is the difference between yield management and revenue management?
Especially when translated into German, both terms are often referred to synonymously as yield management. However, there are crucial differences. Yield management is rather to be understood as part of revenue management.
Revenue Management is about the holistic view and the strategies of sales and revenue optimization in the entire hotel sector. Yield Management is more specifically about the operational execution and implementation in the booking systems for the rooms.
In some areas, however, the transition between the two models is very fluid and cannot always be precisely delineated. In the end, it comes down to the perfect interplay of both strategies.
What are simple solutions for revenue optimization?
Let's take a look at ways to optimize revenue using some key metrics developed as part of revenue management:
Optimizing ADR (average room rate)
Probably the most effective solution for increasing revenue is to optimize the average room rate. To do this, divide the lodging revenue by the number of occupied rooms. Optimizations can be achieved by taking into account different rates for different groups of guests (private travelers, business customers) or also events in the vicinity of the hotel (trade fairs, conferences).
Improving occupancy rates (OCC)
Another basic approach to improving revenue is to increase occupancy. Obviously, the more rooms you sell, the more revenue you make. But occupancy doesn't just impact lodging revenue. The increased number of guests in the property will also benefit the F&B area, the spa and other revenue drivers.
Increasing RevPAR
RevPAR (revenue per available room) is calculated by dividing room revenue by the total number of rooms. If you want to increase RevPAR, you have two options: You can either raise room rates or increase occupancy.
What are simple solutions for cost optimization?
However, with strategic revenue management, not only can revenue be optimized, but costs can also be saved.
Time is money
Most of the work in revenue management is done by good software like TourSol's system. You can sit back and relax and use the evaluations and analyses to make better decisions. In addition, you have more time for the really important things in everyday hotel life.
Accurate information on guest behavior, projected occupancy rates, and sales also helps you plan staffing more precisely and deploy existing employees with pinpoint accuracy.
How TourSol can help you with revenue management!
Revenue management is not witchcraft. However, you first have to invest some time and also find your way around in all the contexts. Hopefully, we were able to clearly demonstrate in our article that good revenue management is indispensable nowadays, especially in a smaller company.
Large hotels and chain hotels have a dedicated (cluster) revenue manager, marketing manager and sales manager to take care of all this. As a smaller hotel you don't have this luxury - but you still don't have to miss out on the possibilities that Revenue Management offers you. With Toursol's revenue management software solution and our expertise, you can use our service to optimize your revenue as well.
Effective price differentiation is a key strategy in yield management to maximize revenue and occupancy in the hotel industry. By continuously monitoring demand and adjusting prices, revenue managers can increase key performance indicators such as revenue-per-available-room (RevPAR). It is important to keep an eye on capacity and bookings around the clock, as demand and revenue can vary 24/7. Sound pricing and the implementation of revenue management-oriented strategies enable hotels to optimally market their hotel rooms and increase profitability.
