Every hotel has a revenue management strategy. For some, revenue management systems—and there are numerous platforms to choose from—guide the pricing decisions based on various data points. For others, seasoned industry veterans use their years of experience to formulate their own systems of pricing principles.
There is no incorrect process of revenue management, but there is no doubt that it plays an integral role in the financial success of a hotel. In the latest Hotel Business Hot Topics session, “Reinvigorating Your Hotel’s Revenue Opportunities,” in partnership with IDeaS, industry leaders discussed revenue management strategies and how to harness the pricing power of your hotel.
Moderated by Glenn Haussman, founder/host, No Vacancy Live podcast, the panel included Federica Bresciani, director, revenue, Lefay Resorts; Klaus Kohlmayr, chief evangelist & development officer, IDeaS; and Cesar Wurm, VP, commercial, premium brands, IHG Hotels & Resorts.
In today’s environment, as guests seek more from a stay than just a night’s sleep, hotels have to figure out how to turn guests’ needs and wants into revenue opportunities. One way to do that is to compute the total lifetime value of the guest.
“I think it’s important that we take a holistic approach to ensure we are really taking advantage of all the data points that we have through our systems and our knowledge of our guests,” said Wurm. “We can look at the total lifetime value and the total experience of our guests to not only drive loyalty but also additional revenue.”
Bresciani, who had called revenue management “the heart of the organization,” agreed that hoteliers, “need to have a holistic approach to the business and our market,” adding, “It’s not enough to just sell the room. It’s not enough to sell the room plus a fantastic dinner. We need to market to those who are interested in all of our services. We need to have a price that includes everything in order for the guests to choose us because they have a lot to choose from.”
Kohlmayr put it simply, “The essence of revenue management is about understanding the willingness to pay, and how you make the right offers at the right price.”
He continued, “Federica made a point about revenue management being at the heart of the organization, and that’s where most of the data sits and that’s where people are starting to tap into the capabilities to look at lifetime value, profitability by channels and distribution costs—and layering all that into optimizing the revenue opportunities from all different revenue sources and at all different margin levels.”
Wurm pointed out that, not long ago, revenue management was only about the reservations, but that has changed.
“It’s very hard just to look at revenue management as a single discipline because it really combines the commercial aspect, sales and digital marketing and is becoming that one very powerful tool that has all the data we need and also has the ability to optimize not only where we start selling the room, but how to drive additional revenue through the booking process, pre-arrival and departure.”
Look for more coverage of this Hot Topics session in the July issue of Hotel Business.
Download the audio version from the No Vacancy podcast channel where you get your shows.