Hotel Revenue Management

Understanding the 5 Basics of Hotel Revenue Management

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Understanding the 5 Basics of Hotel Revenue Management

Revenue management discipline was non-existent until a few years ago. Started in 1980s from the airline industry, the techniques are now adopted across industries and businesses are growing exponentially ever since

The hotel sector today, is more competitive than ever. With increased global competition, hoteliers and property owners are now seeking an analytical overview and strategic knowledge of customers and markets, to make informed decisions that only revenue management can provide.

Revenue management refers to the strategies the hotelier needs to frame, in order to sell the inventory, to the right guests at the right time and through the right channel, to boost revenue growth.

Modern travelers with increased purchasing intelligence, are pressurizing the hoteliers to make accurate forecasts relative to booking demand, room pricing, and promotions. Thus, hotel revenue management is crucial to success for any property, irrespective of its size.

Here are some guidelines to help understand the basics of Revenue Management and incorporate for your property:

1) Pricing in accordance to Perceived Value

We have in our earlier article highlighted the need for value-based pricing, and we reiterate. When managing hotel revenue, one must understand that the offering should revolve around the perceived value. If your guests feel like they are getting maximum value for their money, it’s very likely they’ll be willing to spend more. To increase this value, managers can make improvements to various touchpoints in the customers journey.

Revenue management helps monitor and measure what customers from different segments are willing to pay and capturing as much of this value as you possibly can.

2) Right Mix of Distribution Channels

While it is important to determine the best distribution strategy for your hotel, it is equally important to analyse several different channels and utilize them, as all channels bring value in terms of their marketing capacity.

It is also a good idea to check what your competitors in the area are doing, and if they’re targeting the same markets as you, for the same segments and at the same time. If you can anticipate their strategies, making your own adjustments becomes much easier.

3) Focus on Direct Bookings & Website Experience

It is easy for OTAs and other external partners to lure your guests away as they offer competitive pricing and various reward and loyalty programs. While you might be content with the fact that the booking is finally coming to you, it is important to realise the downside of this arrangement. You are letting your guests to become loyal to your partners instead of you!

Address this issue by developing a direct booking strategy, that provides an additional level of service to the guests who book directly with you. The main goal of this strategy would be to attract, engage, and convert visitors to bookers, directly through your official website. Offering loyalty programs are another great way to rope in customers for life and ensure repeat visits. Rewarding direct booking guests, with discount vouchers on food and drinks, spa and pool usage, free upgrades, etc., are also encouraging ways to build loyalty and increase revenue.

4) Forecasting

Forecasting is important for both rate setting and budgeting. Accurate mapping helps hotel to strategise future pricing and planning, as it gives out metrics such as average customer spending, location, origin of booking, type of reservation, average customer stay per chosen category, etc. By budgeting and forecasting in advance you’ll have plenty of time and opportunity to make strategy adjustments that can help increase your hotels revenue.

5) Knowledge based Decision Making

With a raft of information available on fingertips, hotel revenue managers should always make their decisions based on the most recent and accurate data. Feeling based decisions or outdated data influx can only cause confusions and invalid observations.

Having access to relevant data helps keep a tab on customer behavior and market trends. The detailed analytics and insights derived from STAAH’s Channel Manager, makes this process seamlessly easy and critical to success, as it helps in informed decision making. STAAH Channel Manager for its ease of use and real-time data, has won much love and is one of the favorite tools for hoteliers.

No matter your property size, Revenue Management has become crucial to being successful. We have highlighted just five among the many factors that form the core of successful revenue management. Reach us at with your suggestions and inputs.

This article was originally published by STAAH. For more hotelier tips, trends, and news please click here.

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