Revenue management is an important aspect of running any accommodation business.For many it can be hard to know where to start. Others may find it difficult to find the time to put together let alone carry out a robust strategy for the year and beyond, in advance. So, why should accommodation owners care about revenue management, and what can accommodation owners do to improve their revenue management and therefore profitability? Jody Sharratt, Founder of Rooms Online explains…
Why is revenue management important for accommodation owners?Accommodation operators have a finite revenue earning potential, and once a room is sold, or the property is full for the night, they’ve reached the maximum for that day. Simply increasing rates because it’s traditionally a high season or lowering them because it’s a low season isn’t necessarily going to ensure you’re maximising the potential revenue. Accommodation providers need to look at what’s happening in town, look at forward bookings, think about what traditionally happens at the particular time of year and make a strategic plan.
- Consider booking trends and use historical data to make sound decisions
- Invest time to plan ahead and continually monitor your room inventory
- Leverage your most successful booking channels
What are some common mistakes you see with accommodation owners and their revenue management?Accommodation providers tend to stick to what they’ve always done when it comes to rate setting, and this is generally whatever the previous owners of the property have done, or what competitors are doing. Often they’ll only look a few weeks ahead, but they should be looking months into the future and planning, things happen quickly and you want the best rate at the right time, every time.
A savvy revenue manager will challenge this scenario as follows;
- Is the goal to fill to 100% occupancy, or get the best possible overall room revenue and ultimately make more money?
- Have they maximised the opportunity and achieved the best possible average daily rate, or did they perhaps fill too easily?