While the hospitality sector was among the most impacted sectors by the pandemic, this period also gave us the opportunity to reimagine the business model and emerge stronger. Structural interventions were put in place by the hospitality sector to strategise revenue streams together with aggressive cost management both at a strategic and tactical level.
In order to survive during the pandemic, the hotel industry adopted several strategies which were more focused on heightened safety, enhancing existing services and envisioning more tech-enabled solutions to meet the needs of the consumer.
One of the most important tool to cope with this challenging scenario is efficient revenue optimisation strategy. This involves predicting customer demand and then streamlining prices to increase profit margins. It also involves optimising the available inventory in the best possible manner so that it maximises the profitability.
STEP BY STEP
The travel and hospitality industry is highly visual-driven and most travellers now use online and social media content to find inspiration about destinations they want to travel. Hotels need to re-evaluate and refocus their marketing strategies to garner guest confidence and recover business. It is pertinent for them to promote nearby scenic destinations and eye-catching pictures of the interior and exterior, special offers, promotions and deals, experientials and testimonials to attract guests.
Similarly, reputation management of the property is of utmost importance when it comes to revenue optimisation. This implies striving to deliver an excellent customer experience, encouraging guests to leave reviews and responding swiftly and proficiently to reviews and feedback posted on social media sites. The hotel must communicate what is being done to improve safety and its efforts to keep guests safe. They could harness positive customer reviews to win trust with guests by showing rather than telling.
Hotels should also maintain their rate position comparative to the market. According to a Hotelivate report, the Indian hospitality industry recorded a revenue per available room (RevPAR) of INR 1,582 during FY21, the lowest in the last 22 years. Therefore, the hoteliers must rely on sophisticated revenue management system with the ability to collect and analyse real-time market demand indicators to accurately price their rooms during the pandemic and beyond.
THE LAY OF THE LAND
Understanding market segmentation is the foundation for setting the right pricing strategy as hoteliers live in a fiercely competitive environment and increasing cost of acquisition. Understanding market segments will help them understand sources of revenue, key markets and top performing segment i.e. where are the opportunities and where the market is falling off etc.
Another important aspect to look out is efficient pricing strategy, where they set their prices based on anticipated demand. That means that if the hotel has historically experienced low demand in a particular month, one highly effective strategy involves the use of discount codes to encourage bookings in that month.
Hoteliers can also encourage guests to stay longer by offering them a lower rate if the stay is for multiple days. Another strategy for maximising revenue is to create packages, allowing customers to pay for more than just a room. Even a length of stay strategy would help i.e. adjusting pricing based on the length of the stay.
GAZING THROUGH THE HAZE
A major part of hotel management involves forecasting for optimising financial performance because it enables the hotel management to make important decisions regarding pricing, promotion and distribution based on the anticipated demand and performance. Forecasting is a tool which can help hotels to anticipate future business performance, better equipping them to deal with future uncertainty in the process.
Last but not the least, enhancing direct and voice reservations would help hoteliers maximise revenue as no third-party aggregator would be taking a piece of the pie. Also, when guests are booking directly, it gives an opportunity to hotels to offer ancillary services that the guests are either unaware of or they didn’t wanted it at first place. Hotels should offer a secure, customisable and seamless guest experience for bookings.Â
Revenue management for hotels is a process of creating strategies to boost profitability. As the hotel industry is just coming out of tough times, it can achieve positive outcomes by executing simple strategies and understanding the facts.
