News for the Hospitality Executive
Rev Up your RevPAR In 4 Different Ways
By Jean Francois Mourier, October 2009
There are few things more important to hoteliers right now than finding ways to increase bookings. This is evident everywhere, from large chains advertising across-the-board rate discounts to boutique properties launching aggressive advertising campaigns designed to put heads in beds. Hotelsí occupancy and RevPAR, always key metrics for the industry, are in desperate need of revitalization.
Lucky for you, weíve compiled a short list of four highly effective tactics that can help hotels increase both RevPAR and occupancy through the fastest-growing (and most important) sales channel currently available to them Ėthe online channel.
Re-evaluate your Compset
The time-honored Smith Travel Research compset, once the only way to
define a hotelís competitors in a geographic area, has become outdated.
Online Travel Agencies (OTAs) have changed the way consumers shop for hotels,
so it stands to reason that the definitions of a propertyís competitors
should change as well. Smart travelers will compare price and star ratings
to obtain a quick assessment of what they can get for their money within
their location, regardless of location. Hoteliers should do the same.
By being objective and realistic, looking outside the traditional or STR-dictated
compset, widening the vicinity or sub-region of the hotel, comparing guest
reviews, and generally expanding the amount of hotels considered competitors,
a hotelier can get a more realistic sense of what their compset actually
is. Soliciting an outside objective opinion of what the hotelís compset
seems to be, as well as ranging ½ star up and down in quality rating,
can help complete this exercise.
Manually manipulating hotels rates and yield is, by definition, limited.
The world of electronic sales moves too quickly for sales teams and revenue
managers to optimally match rates to supply and demand fluctuations.
Human operators lack the capability to yield at night or during weekends
when it matters most. One of the worst things a hotel can do
in an era of transparent pricing is to keep rates the same, so hotels need
to take the appropriate steps to yield rates in a way that doesnít leave
money on the table. The booking window is shrinking even more as consumers
turn to mobile bookings, so automation becomes the ultimate yield-empowering
tool. Automated revenue management systems can integrate distribution
simultaneously with rate decisions so a hotel doesnít have to compromise
on rates and occupancy.
Just as with search engine optimization (SEO), the order in which a
hotel appears on the pages of an OTA is critical to bookings. Whether
a hotel is listed at the top of the first page, or in the middle, or at
the top of page 2 can mean the difference between successful occupancies
and disappointing vacancies. Today, travelers use OTAs as hotel search
engines- using it the way that they would use Google to see what hotel
options exist in a particular destination- so a hotelís position on these
sites corresponds directly with occupancy and sales. Hoteliers must anticipate
their competitorsí rapid rate changes to ensure the property does not fall
off page 3 or 4, which, to online consumers, might as well mean that the
property doesnít exist. To gain maximum market share, hoteliers should
calculate optimal pricing positioning by star rating, guest reviews and
location. A multiple-page positioning approach can benefit a hotelís
prospects for OTA-driven bookings.
Hotels routinely allocate rooms to their OTA channels, but what happens if that allocation falls short of demand? What if those rooms run out on nights or weekends, when the revenue management staff is off the clock? A good hotel will take a page from big box retailers and keep their inventory out on the shelves (or available to the public through OTAs) instead of in the back storage room.
Hoteliers should allocate resources in their budgets for real-time dynamic
rate optimization with automatic room inventory control. These powerful
tools will ensure proper room inventories on all electronic channels day
and night giving the hotel a proactive attitude versus a reactive stance.
Continuously monitoring the pace of bookings and having automated GDS and
OTA allocation updates can help maximize online bookings.
While these strategies cannot always guarantee profitability for hotels, they can certainly help increase bookings on that most important of sales channels: online. It is through successful electronic sales that many hotels can reach positive RevPAR and high occupancy rates.
These four strategies will most certainly rev up your RevPar, and represent a solid starting point for a comprehensive revenue management strategy that will take your property through the end of this recession and into a more profitable and long-term recovery.
|Also See:||Six Reasons Your Revenue Management System Isnít Working / Jean Francois Mourier / July 2009|