I would be rich by now if I received a penny every time a hotelier told me "revenue management is great, but can’t be applied in my hotel".
What is even more depressing when I meet an hotelier and I hear this sentence is that it is absolutely wrong!
Revenue management is applicable to all kind of hotels: small, big, city, resort, independent, chain hotels, business or leisure hotels.
As long as every single day a hotel needs to get the most of its fixed capacity depending of the level of demand expected, they will leave money on the table for not implementing some degree of revenue management.
In our daily environment we face lots of service companies that are applying their own revenue management, such as train companies, car rentals, cinemas, theaters, spas and golf clubs.
Once, with one of my colleagues who likes bowling, we‘ve start thinking about how to implement revenue management for a bowling center.
As there was more demand on Friday night, Saturday and Sunday, we needed to put some restrictions on the number of players to increase the turnover.
Wednesday was also a busy period, but for teens and students, so we had to do a special pricing for them as well as for holiday periods.
A bowling center has also a low demand period, and the issue is to displace the demand to Monday or Tuesday night with some bowling classes or bowling competitions. We were very creative…
So if a bowling center can apply revenue management, why can’t it be done in your hotel? Or do you simply not care about losing out on potential revenue?
Revenue Management does not have to be complicated - just start with the Basics!
First simply analyze your market and identify what’s going on.
Look ahead over the next 12 months, single out periods or days with strong and weak demand - this is the first step to forecasting.
As soon as you know what will be the level of demand you can expect, build your rate strategy and work on your distribution. When all has been planned correctly the daily management of your rates and inventory becomes easier.
Revenue management will help hotels work in the long run - it’s where the money is. Working 12 months ahead will make you more competitive with regards to your closest rivals and get clients that are booking in advance for your hotel.
Have you already start loaded appropriate rates on all online travel agency for 2012? Have you already built your net rate grid for 2012 for tour operators?
From our experience, REVPAR can be actually be increased easily by 20%. But let’s take it easy, I am sure many would be happy with 5% more sales.
Good luck and please never again say that revenue management cannot be applied to a hotel.