The most important part of revenue management is doing it right by anticipating changes in demand and the market conditions and adjusting accordingly. the hotel factory outlines strategies that help create consistency and awareness throughout the levels and channels of the company.

Nowadays, Revenue Management is a compulsory subject in the hotel industry. Hotels need to study in depth their pricing strategy for the next season, and anticipate as soon as possible to face changes in demand and market conditions. It’s not about selling, it’s about doing it right. To accomplish this, the company must know its environment, evaluate the competition and the destination to be able to sell the product adequately, to the right client and sales channel.  

Dynamic rates have allowed hotels to improve considerably their RevPAR, enhance demand during low season periods and increase their generation-of-income account. For that purpose, we should keep in mind in our commercialization strategy that rooms are a perishable inventory, that income is highly linked to the distribution inventory mix and the control that the hotel has over it. Technology can be a great ally for this control while analyzing historic, actual and future data, making the commercialization processes easier and smoother, generating future knowledge and helping during the decision-making.

To undertake a new Revenue Management strategy, various points need to be taken into account:

• Be aware of the “forecasting”. Using historic data to estimate and analyze the quantity of future business of our establishments, parting from variables such as income per available room (RevPAR), average daily rate (ADR), gross operating profit per available room (GOPPAR) and the occupation rate. It’s also important to analyze the demand peaks in the destination and important events for the next season.

• Analysis of the competition. It’s fundamental to identify the competitive set of the hotel, being aware of the differences identified between the rates of our own hotel and rates of those in our competitive set. Also take into account the average rate of those hotels of the same category, in addition to their availability and online positioning.

• To establish a channel distribution strategy accordingly with the positioning of the product and its market environment, hotel units should be sold in the most cost-effective way possible. That should be done through a suitable distribution channel, with the best pricing and commissions structure. Regarding tour operation, the moment of establishing the terms and FIT rates of the next season’s contract is very important in order to maximize control over inventory.

• Pricing. Based on the establishment of rate structures relying on the markets conditions and the positioning of the hotel, thus the rooms features, types of pension, booking conditions, minimum stay, occupancy, booking anticipation and length of stay need to be taken into account.

• Quotas. Updating the booking and sales quotas depending on the market and changes in environment and continuously adjusting demand forecasts and booking and sales limitations.

• Establish market segmentation strategies for each type of customer, for example business class or individual clients. This strategy must be carried out in coordination with the sales and marketing department.

• Evaluation, monetization and analysis of the obtained outcomes.

These strategies help hoteliers during their daily management in multiple ways. It allows them to establish a consistent pricing strategy on all levels, control the distribution through all channels, conduct forecasts of the demand, to understand the needs and booking patterns of the different types of clients and to be more aware of the market and its surrounding environment. The greater the degree of implantation of Revenue Management culture is, the greater the perception among the ones responsible that this philosophy actually increases benefits and market and product knowledge.