Whether you're in the initial stages of developing a hotel revenue management strategy for your property or are looking to improve your revenue analysis skills, you can benefit from implementing the same principles, products, and practices that industry experts use.
In this post, we take a deep dive into hotel revenue management: What it is, how it works, and the vital role it plays in a hotel’s overall success. In addition, we discuss the software, tools, and other exciting products hotel revenue directors all over the world are using to reinvent their revenue management strategy and increase hotel profits.
Uncover successful hotel revenue management tips, strategies, resources, and tools
What is hotel revenue management?
The term hotel revenue management refers to a variety of principles and practices that help hospitality industry professionals predict what customers are going to do in the future. While specific goals may vary from one property to the next, some of the primary objectives of hotel revenue management are to optimise prices to match travel demand, compete with your comp set, and increase hotel profits and performance year-over-year.
By using performance data and other hotel analytics, revenue managers make rate decisions, determine distribution strategies, and work to increase the amount of revenue the property generates — all without hindering guest satisfaction.
Why do hotel revenue managers use Cvent?
Hotel revenue managers often rely on a variety of different tools, resources, reports, systems, and software for comprehensive management. Cvent provides a variety of products, resources, and innovative systems to help:
- Drive more direct bookings
- Capture higher rates
- Optimise pricing
- Improve year-over-year profits
- Outperform competitors
- Analyse hotel performance
- Track demand for improved forecasting
- Win more RFP business
- Improve your market mix
- And so much more
Whether you're a new revenue manager looking to grow your skillset or an experienced hotel professional looking for new ways to get an edge on the competition, you can benefit from Cvent’s extensive collection of hotel revenue management products.
What happens if hotel revenue is not managed properly?
Failing to effectively manage hotel revenue can negatively affect every aspect of hotel performance. Revenue managers and directors who do not diligently track, analyse, and utilise revenue reporting could:
- Push business to competing hotels
- Harm the hotel’s reputation
- Hurt guest loyalty
- Lead to missed rate opportunities
Additionally, many sales and revenue directors earn a portion of their salary from meeting revenue goals, and missing those goals could have a significant impact on their annual earnings.
Strategies for better hotel revenue management
Implement revenue management strategies that are in line with your hotel’s revenue goals and budget. See which strategies work best in your market and adjust as needed.
1. Start with an honest inventory.
Creating a successful revenue management strategy should start by taking a hard look at the way the hotel’s revenue is being managed right now. Before making any major changes, ask the following questions to help assess your hotel’s current position:
- What is your current hotel revenue management strategy?
- What are your revenue management goals or objectives?
- Is your revenue management style proactive or reactive?
- What is your MICE pricing strategy?
- Are you knowledgeable about area events and attractions?
- Do you know what your demand generators are?
- Do you keep a close eye on competitor pricing?
- Do you know what your market mix is? Is it balanced?
- Are your leads and proposals turning into actual business?
- Can you identify the cause of demand changes or rate anomalies at your hotel?
Once you have a firm and fair understanding of your revenue strengths and weaknesses, you will be able to identify the areas most in need of improvement. From there, you can create a tailored hotel revenue management strategy that works for your property specifically. As new strategies are implemented, revenue directors can rely on comprehensive Business Intelligence tools to measure, track, and analyse changes.
2. Simplify hotel revenue management using an integrated CRM.
Many hoteliers struggle with revenue management as it requires checking, double-checking, and entering data in numerous locations. One of the easiest ways to improve your hotel’s revenue management is to integrate data from multiple systems and manage it all in one location.
Cvent offers a Sales & Catering CRM for small hotels. The CRM allows revenue directors to easily transfer data from older systems through a seamless integration process. From a single software, hoteliers are able to see leads coming in, quickly respond to RFPs, execute events, send contracts, and even distribute BEOs.
Track hotel and sales performance across multiple properties with custom reports, manage better business relationships using integrated contracting tools, and connect with over 280,000 other properties already listed on Cvent’s Supplier Network, a powerful venue sourcing platform.
3. Become an expert in your market.
A profitable hotel revenue management strategy factors in seasonal changes and demand fluctuations. Identify the major demand generators in your area and analyse travel patterns in your market. Determine your hotel’s peak, off-peak, and shoulder seasons to help maximise rates and fill future need dates.
Create a calendar of special events, restrict blackout dates, and sign up for Google Alerts. Stay up-to-speed on area events, community projects, and what the businesses in your area are doing. Strive to know more about your market than revenue managers at competing hotels.
4. Use future forecasting data to establish your budget.
While unexpected hiccups can throw a wrench in the most thorough hotel budgets, proper budgeting and forecasting can help prevent revenue managers from depleting their financial reserves too early or too often. With CSN Business Intelligence, hoteliers and revenue managers can view historical data, analyse hotel performance, assess the competition, and identify revenue opportunities that will have an impact on budgeting decisions.
When establishing a budget, gather data that tracks how your hotel performed over different seasons, during special events, holidays, and other notable dates. Identify the strategies used in years past, and how well the hotel performed as a result of those strategies. Identify which strategies worked best, which could be improved, and which should be eliminated; use detailed analysis to inform your next budget.
5. Keep a close eye on the competition.
Use Cvent's MICE Competitive Set Dashboard to see how your hotel is performing against comparable properties in the area. The dashboard empowers revenue managers to make better financial decisions by providing a “big picture” view of hotel performance, as well as the ability to dig into more specific data comparisons. Look at your overall success compared to the comp set or go deeper.
The MICE Competitive Set Dashboard updates in real-time as RFPs come through. As a result, you will always know where your hotel ranks in the moment, as well as how it performs year-over year. By regularly reviewing the dashboard, revenue managers are able to consistently adjust their RFP strategy to better outperform the competition.
6. Increase repeat bookings using guest segmentation.
Many hotel professionals characterise distinct groups of travelers by their reason for travel in a process called “guest segmentation.” Travellers may be segmented by a variety of travel types, including:
- Leisure travel
- Corporate travel
- Corporate negotiated travel
- MICE travel
- Event attendees
- SMERF: Social, military, education, religious, and fraternal travel
Analyse the travel habits displayed by different segments to better understand your customers. Review stay patterns, room type preferences, and purchase habits to get an idea of what sets your transient travellers apart from your leisure guests, or your weekday mix from your weekend mix.
By developing a deep understanding of different market segments, hotels can tailor exclusive offers and promotions. Create promotions that appeal to specific audiences and run more personalised marketing campaigns to entice past guests to return. In fact, 48% of customers who identify as loyal expect personalised experiences from businesses they interact with.
Confirm which segments are bringing in the most business and which are underperforming. Pinpoint the market segments that need targeting and use The Hotel Market Segmentation Workbook to develop a plan of action.
7. Convert more leads with more efficient RFP management.
Stop wasting time writing lengthy proposals for leads that end up being a bad fit for your business. Score leads to evaluate and prioritise the RFPs that best fit your hotel’s availability, size, or revenue goals. Set up auto-turndowns for groups or events that your hotel cannot accommodate with CSN Productivity Tools.
Revenue managers can route and track escalating leads, automate select RFP responses for speedy proposals, analyse competitive rate data, and create custom proposals that outshine the comp set. Market to hard-to-reach planners by telling your hotel’s story and adding personalized touches to your proposals.
8. Widen your audience reach.
Over 280,000 venues are listed on the Cvent Supplier Network (CSN), which now includes map-based searches, enhanced mobile-friendly technology, and new venue profile options for your listing. With a fresh, visually-captivating layout, hotels can appeal to more planners by marketing their property through CSN Advertising. Planners are able to request menus, floor plan options, and other helpful content from hotels with event space.
Bookmark this guide to find the hotel revenue management tools you need when you need them!
Now you know all about the tools and resources that can help you build a profitable hotel revenue management strategy. Next, work to improve hotel occupancy with these proven strategies.