Rising competition coupled with new technology and distribution models are compelling revenue managers to devise innovative ways to tap short and long-stay guests
By Vinita Bhatia
It is fascinating how technology’s evolution has changed guests’ booking habits and given rise to newer distribution channels in the hospitality industry, causing inescapable changes. This has led to shorter lead-time, whilst the advent of online and mobile platforms that offer discounted rates have reduced loyalty buying.
It has also challenged revenue managers to move away from traditional income maximisation techniques and individually create a need for customers to book their hotel rooms, for short or long-stay. To arrive at this, they need to analyse the stay
length, booking lead period, weekday/weekend pattern, long weekends, peak and valley periods, source markets, with the latest addition being the rate type being booked.
Yogita Waghmare, assistant manager of revenue for Four Points By Sheraton, Hotel and Serviced Apartments, said that rates no longer need to be managed more than a few times in a day. Knowing when to create value-added and discount packages in shorter windows is a necessity to capitalise every opportunity in a short span of time.
According to her, there is also a growing trend to create unique leisure packages to boost their weekend business. Using the informative competition data from trusted sources enable revenue managers to make informed decisions that are not only demand and price-driven but also increase competitiveness.
The key differentiator for the guests is the additional frills that they would like to be included in their rate during their stay. It is this utility that revenue managers need to identify and capitalise on.
A MATTER OF PRICE
Most revenue manager is likely to claim that pricing of extended length hotels and serviced apartments are a challenging concept. Could this explain why hotels chains are wary of approaching this segment despite the revenue opportunity they present?
Waghmare felt that comparison of five star hotel rates is no more with just other hotels; the upcoming trend of unorganised sectors offering fully furnished service apartments with five star amenities also pose as a challenge. “As cost benefit is a primary factor for decision making with the long stay sector, it may not always be a profitable business opportunity for a five star hotel segment. Owners of hotels look at five star residences as extended suites and customers look at it as just another room, this gap in different positioning of the same product is a marketing scope in itself,” she elucidated. To thrive in the extended stay realm, revenue managers need to develop accurate demand forecasts using predictive analysis based on the varying stay length and guest profiles within the same property. The new concept of integrated sales, marketing and revenue is a key driver here.
Waghmare believed that knowing competition performance is essential to take smart pricing decisions. When all these functions work together on collecting and sharing information on a daily basis, added to the traditional method of lead period, source markets, segment performance, MICE space, etc, smart pricing and measurable decisions can be made.
To decide pricing with assurance, revenue managers have to rely on data available at their disposal and meld it with keen understanding of the processes built into the system. And of course, they need to have their ear to the ground to know what is happening in the market, because not all information is available in bitrates – some of it still comes from the grapevine, a revenue manager’s best resource.
