Sunday, June 16, 2024

5 tips to improve your Revenue Management Strategy using 360˚ Revenue Management

Recent performance reports indicate that the UK hotel market is experiencing and forecasting growth; but are we ready and able to respond to this positive change outlook after several years of challenging trading?

Revenue management strategy must look at the business from every angle – from the outside in (your potential customers, competitors & market demand) and from the inside out (your performance, systems, resources & stakeholders); this is 360˚ revenue management. Thinking about where our revenues come from and starting with the customer; this first set of 5 tips focuses on your strategy from the “outside in”:

1. Know your market

Understanding your demand drivers and who your competition are will impact some, if not all, elements of your revenue management strategy.

Go back to basics to really understand where your business comes from looking at aspects: from transport links to location demographics, local development to the major players in the corporate market, event demand to seasonality and from MICE business to tour operators; this list goes on.

With this information you have the basis to understand your demand patterns, your target market segments and will be able identify commercial opportunities and challenges that should be addressed in your strategy.

2 …and your competition

You probably already have a competitor set or sets that you benchmark against; in many cases critical pricing and strategy decisions are based on how your hotel performance compares to these hotels and so, periodically, it’s good to take the opportunity to question “is it still the right fit?”.

Your key competitors may not be entirely obvious. They could be out of your immediate locale (particularly for large event hotels or resorts), may be different for different seasons and could also vary mid-week vs weekend.  Don’t assume, for example, that a good mid-scale hotel can be ignored by a 4 star (or vice versa): for some types of business they will compete. Be open to having several competitor sets.

In addition to using the standard metrics of: brand strength, house count, facilities, star rating etc.; stress test the validity of your competitor set by thinking and booking like a customer.

3. Think & book like a customer

You may have strong and rational pricing but if your customers can’t find you, can’t book you, can’t understand what is on offer and can’t make a comparison then you are far less likely to convert potential customers.

77% of hotel guests consult TripAdvisor before booking

There are plenty of tools that will provide you with rate shopping but this does not truly give you the customer perspective. A recent report, conducted by PhoCusWright on behalf of TripAdvisor, found “77% of hotel guests…consult TripAdvisor before booking” and the Google guide to mobile hotel bookings states that “people are using mobile phones throughout every step of the travel cycle from beginning to end”. Therefore understanding how our revenue management strategy is “seen” and “bought” from the outside-in is critical.

It can be achieved simply with both online and mobile research:

  • Random search by location for various days & dates – how are you described and ranked?
    • What hotels are ranked below and above – why?
  • Search on 2 or 3 major OTA sites – how are you ranked, how do compare in price and in pricing product (BAR rates, Advance Purchase, Packages etc.), are your terms and conditions clear?
  • Make several bookings at your hotel and at other hotels that appear in search – how easy is the booking journey; who is best / worst?
  • Assess your social media presence by comparing key metrics: Trip Advisor Score & Ranking, OTA ranking, Twitter participation (followers, tweets, last tweet, comments & responses), Facebook Likes and engagement etc.

The key here is are you visible and bookable; on the strength of online search is a customer more or less likely to book your hotel? Be honest about your results and adjust your strategy accordingly.

4. Know your product and make the most of it

Maybe you have a great product and perhaps all your competitors do too; how do you stack up?

  • Create a grid of all key drivers for your target markets e.g. for corporate this may be: free water in bedrooms, parking included, free WiFi; for leisure something different. Research (from a customer perspective – online) how you are positioned vs your competition.
  • Does your offer stack up and is it visible to your customers?
  • Room types & descriptions are important; for example, there is little point in “including” a key driver (breakfast, business lounge etc.) if you don’t tell your customers until they are 95% of the way through the booking process

Don’t kid yourself, if you have to re-position your offer to add a key driver that will make you more competitive / attractive, then do the cost benefit analysis (or ask yourself, “can you afford not to?”).

5. Teamwork

Having an effective 360˚ approach means working in a collaborative way with all areas of the business and particularly with sales, marketing, distribution and e-commerce. Strategically addressing opportunities and challenges, making changes to products and pricing, including value-adds etc. requires a joined up approach to ensure the right message reaches the customer.

What works well is to establish, up front, how your hotel or business will make decisions to drive the revenue strategy forward; then when any strategic or tactical changes are needed you already know the right people to gather round the table.

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