For many reasons, 2016 brought with it some anticipated, and some less so, developments that required revenue managers to review their revenue management strategy. Brexit, the rise of the sharing economy, and the growth of mobile technology were just some of the factors that impacted pricing decisions to a lesser or greater extent. And this trend of ongoing disruption looks set to continue into 2017. With this in mind, we look at some practices the savvy revenue manager should look to employ to mitigate risk in a world of increasing disruption.
Focus on growth, but consider costs
While Book Direct has long been the holy grail of the revenue manager, championed as the most cost effective way to generate bookings, is it as cost effective as you believe it to be? Failure to recognise all costs involved in securing that booking on your website – booking engine commissions, the digital marketing costs of getting the booker to your website, and cost of maintaining your website – need to be recognised and accounted for to prevent a false economy.
Integration of Food and Beverage into the revenue function
Ensure Food and Revenue and costs are built into the revenue management function. Some channels, while they generate a high ADR, do not generate large F&B Spends. And while that conference booking, may not present the average rate you hoped for, the resulting spend on F&B, may more than compensate for a low ADR. It’s imperative to recognise the total revenue to the business a booking generates to make informed revenue management decisions.
Build the right toolkit
Systems don’t come without a cost – but operating without the support of a robust integrated toolkit, can prove to be far costlier in the long run. Investment in a PMS and an integrated booking engine and channel manager to support your revenue management operation will negate the requirement for manual intervention, reducing labour costs and minimise the chances of potentially costly errors. Real time updates also mean that you are constantly able to optimise your available inventory and make informed pricing decisions.
Become economically aware
External factors impacting our business are unavoidable. Some are transparent, some less so. Become economically aware. Follow trends in the pound, track the impact of Brexit, monitor potential interest rate rises and understand, and plan for, how this impacts your existing markets, what opportunities these present, and recognise and account for the overall impact on your cost base.
Avoid knee-jerk pricing reactions
Maintain your long-term pricing strategy. Studies show that the underlying pricing strategy of a hotel is far more impactful when revenue managers have the courage to stick to it and see it through, often bucking short term tactical trends.
There is only so much pricing can do in isolation
The most sophisticated and well executed revenue management strategy can only achieve so much. Do not overlook the importance of investment in revenue management systems, your digital marketing toolkit and CRM to ensure your winning revenue management strategy is optimised for full effect.
Recognise the growth of the sharing economy
The sharing economy is here to stay and should not be ignored. Hoteliers need to understand not just their competitive set but the sharing economy stock around them. Understand your customer and seek out and market your point of differentiation. Focus on the service provision and highlight the ‘personal and local’ experience effectively.
And finally, get out and network!
Lots of people are willing to share their experiences and results. In an ever-changing world, with sometimes no precedent, it’s more important than ever to engage, network, listen, be open to ideas and share!
To hear more about how you can be prepared for 2017, join us for ‘Seize Opportunity in Disruption’, a lively and educational one day conference for general managers and revenue managers, on Tuesday 21st February, 2017 at the Park Plaza Riverbank, London, SE1 7TJ.
Join industry leaders from Expedia, Booking.com, Duetto, IDeaS, Voyat, Infor EzRMS and Starwood Hotels among others to find out how you can turn disruption to your advantage. Click here http://bit.ly/2hAsL7T to find out more or contact Michelle Casey on firstname.lastname@example.org or on 07718650349 for more information.