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Rev Up your RevPAR In 4 Different Ways

By Jean Francois Mourier 
March 25, 2011

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.  Hotels’ occupancy and RevPAR, always key metrics for the industry, are in desperate need of revitalization. 
Lucky for you, we’ve 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 –the online channel.
Re-evaluate your Compset
The time-honored Smith Travel Research compset, once the only way to define a hotel’s competitors in a geographic area, has become outdated.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 property’s 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 hotel’s compset seems to be, as well as ranging ½ star up and down in quality rating, can help complete this exercise.
Hands Off!
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 doesn’t 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 doesn’t have to compromise on rates and occupancy.
The Power of Page Position
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 hotel’s position on these sites corresponds directly with occupancy and sales. Hoteliers must anticipate their competitors’ 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 doesn’t 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 hotel’s prospects for OTA-driven bookings.
Monitor & Control Inventory
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.
Get Online!
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.

And looking forward to the next article in the revenue management series from REVPAR GURU & Hotel-Online…
When Every Second Counts
Welcome to the future. Booking hotels online isn’t only a convenience these days, it’s becoming the norm. Because of this, the booking window has shrunk rapidly, to the point where it’s barely a sliver. As a matter of fact, Priceline conducted a survey on booking habits and found not only that nearly 60% of customers with mobile devices (smartphones, laptop computers, etc.) reserved their rooms when they were within 20 miles of their ultimate place of lodging. Further, 35% were inside of one mile. So the old-school way of booking far in advance now seems to be headed for the dustbin of history. How can a wise hotelier profit from this trend? We’ll tell you how to take command of the online space in the next article of the series which will be running on April 8, 2011 on Hotel-Online.

Jean Francois Mourier is CEO & Founder of RevPar Guru, a company that has developed an alternative type of revenue management and real-time pricing solution (combined with automated online distribution) to help hotels maximize occupancy and increase their profits. The company’s Yield Dynamic Price Engine, an integrated revenue management and pricing solution, adds unprecedented power and real-time adaptability to the pricing process, leaving managers more time to run their hotels. You may reach him through or by calling +1.786.478.3500. 

786-478- 3500


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Also See: Pricing Beyond the Comp Set And other new pricing strategies that really work / Jean Francois Mourier / March 2011

Schooled By Wall Street; Using stock market principles for optimum hotel revenue management / Jean Francois Mourier / February 2011

System Underload; Inefficiencies in RMS Systems are Costing the Industry Dearly / Jean Francois Mourier / February 2011

Revenue Management: Back to Basics: The Importance of Revenue Management Principles / Jean Francois Mourier / January 2011

Revenue Management: Profiting from the Industry’s Growth in 2011 / Jean Francois Mourier / January 2011

Home For the Holidays: Tending to Hotel Operations When Your Revenue Manager is on Vacation / Jean Francois Mourier / December 2010

The World of Revenue Management: Past, Present & Future; Looking back on hotel revenue management in 2010 and what the industry is expecting for 2011 / Jean Francois Mourier / December 2010

All Science, No Guesswork: The Benefits of Algorithms in Hotel Revenue Management / Jean Francois Mourier / November 2010

The Great Debate: Humans vs. Automated RMS: Their strengths, weaknesses and what responsibilities are best suited for each / Jean Francois Mourier / October 2010

Rate Parity vs. Rate Integrity—What is Rate Integrity? / Jean Francois Mourier / October 2010

A New Day For Timeshares; Using automated RM systems for running your timeshare company / Jean Francois Mourier / October 2010

Best Practices in Revenue Management, Part 3; Automation, Channel Management and Decision Making / Jean Francois Mourier / September 2010

Best Practices in Revenue Management, Part 2; Rate discipline, the leveraging of real-time information, and price prediction / Jean Francois Mourier / August 2010

Best Practices in Revenue Management, Part 1; General revenue management and strategic pricing / Jean Francois Mourier / July 2010

The Irresistibility of the Obvious; How a new trend in revenue management and metrics is missing the point / Jean Francois Mourier / July 2010

Pricing Beyond the Compset - And other new pricing strategies that really work / Jean Francois Mourier / June 2010

A Tale of Two Strategies; Contrasting boutique and chain hotel revenue management approaches / Jean Francois Mourier / June 2010

Historical Pricing Is History, Well, Not Exactly; Examining the Role Historical Pricing Should Be Playing in Hotels’ Pricing Strategies / Jean Francois Mourier / May 2010

Tipping Your Cap (Rate) - Why hotel owners need to pay attention to RevPAR / Jean Francois Mourier / April 2010

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