Today, independent hotels have access to more tools boosting revenue than ever!
However, a certain amount of know-how is needed to truly leverage revenue opportunities (such as distribution channels, social media) for independent hotels. Continue reading for 10 tips and best practices for independent hotels to bolster revenue management.
10. Price Rooms Higher than Competition
According to a 10-year study of over 4,000 hotels throughout Europe titled "Competitive hotel pricing in Europe: An Exploration of strategic positioning", ADR drives RevPAR: not occupancy.
The study found that hoteliers who maintained average rates higher than competition generated higher revenue per available room. This is in direct contrast to the longstanding belief that lowering rates creates more demand and increased RevPAR.
The conclusions are also confirmed for hotels in the United States. In 2013, the Cornell University School of Hotel Administration already found that revenue performance is strongest for hotels that are priced higher than the competition.
9. Price Rooms Consistently
In the United States, in order to grow RevPAR over the long term, it's important to price rooms competitively based on demand without frequent day-to-day or mid-day adjustments. The 2013 study from Cornell University advocates for building a firm strategic pricing model and stick to it.
European guests are not as sensitive to frequent rate variations as their American counterparts so hoteliers can be more flexible regarding rate amendments.
8. Focus on Value
Pricing your hotel rooms higher than the competition alone won’t translate into increased revenues. In addition, you must justify this higher price with the superior quality of service, design, location, and several other factors. Simply put, you must offer your customers a superior value.
Choosing the right technological tools to support your hotel plays an important part here, as it save time and hassle and allows staff to spend most of their day delighting guests, not facing computers or dealing with paper sheets.
Another way to do this is by offering value-added benefits, such as discounts or free offers for spa or activities, free parking, etc.
7. Manage Social Media
In order to sustain higher rates than the competition and earn better revenues, you must have impeccable ratings and high presence throughout all relevant social media channels.
While everyone instantly thinks of Twitter and Facebook as the dominant social media outlets, independent hotels must effectively manage other outlets, especially Foursquare, TripAdvisor, YouTube, as well as blogs and local websites.
6. Build Relationships
Even in our current Internet era and its overwhelming amount of digital technology, relationships are still vital for independent hotels.
Obviously, guests experience should be the #1 focus for hotels, and tying strong links and relationships with guests creates a growing network of potential customers and repeat guests. Word of mouth and positive reviews are a low cost/high return method to fill in your hotel.
That being said, building strong relationships with your service providers and partners such as channel manager, PMS, revenue manager, visitors centers, local shops, etc… is also crucial. As some of these actors work regularly with hotels, they can provide you with useful tips and advice toward creating the most effective revenue management strategy. Most of them can also help you drive traffic to your website or guide guests to your doorstep.
5. Choose the Ideal Distribution Channels
In optimizing revenue management for independent hotels, you have to choose the ideal e-distribution channels. Some of the most important factors that must be considered are:
- Cost and spread of the distribution channel
- How easy the channel is to manage. Does it integrate with your current PMS?
- The types of marketing exposure the channel provides
- The target market of the distribution channel
Specifically, seamless integration with your PMS should not be overlooked. A powerful integration allows for pooled inventory across all channels, direct (website, walk in, repeat guests) or indirect, with real-time data. You can sell all your rooms online at once, without risks of overbookings or errors. In addition, two ways connectivity allows integrated reservations, meaning the bookings are automatically entered into your PMS, eliminating duplicated tasks.
4. Start at Home
The most important and strongest revenue channel for independent hotels, with returning guests, should be your own website. Search Engine Optimization (SEO) and online advertising can seem overwhelming and complex at first, but you can always get help from experts.
Make sure the hotel's website has optimum exposure through a healthy mix of SEO, content marketing, and paid advertising. It actually starts with a strong positioning, which will both differentiate your offer from the competition and answer your potential guests’ needs and expectations. Another key element is to enable guests to book their stay online with an easy and intuitive booking engine (like ours).
3. Understand Customer Personas
Since the recession, it's very likely customer personas (=detailed representations of the different segments of your target audience) and target markets have changed. Most importantly, these customers have changed the way they book their vacations and holidays.
It's important for independent hotel managers to stay up to date with these changes and modify the hotel strategy to truly penetrate the market and cater to changing customer needs, wants, and preferences.. Effective ways to do so is to analyze your booking engine’s analytics, follow the industry news and studies and question your guests while they’re at your property or using quick surveys.
2. Stay In the Loop
Since the technology ecosystem for hotels is evolving more than ever, it's essential to stay current. Whether it's attending events, conferences, seminars, training, exchanging with industry experts and hotel managers, stay up to date with the changes and try to always use the best practices. Regarding software, many hoteliers have little knowledge of the tools out there to help them. Stand out of the crowd and you’ll benefit from a serious competitive advantage.
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1. Plan Ahead
Booking patterns are subject to change dramatically in the coming years. While revenue management relies heavily on previous performance, it's important to plan ahead to determine how seasonal and economic changes will affect the hotel industry.
An example is the growing interest in last minute deals. In a few clicks, consumers can check last minute availability and rates in different places and book their stay for the next day. This has changed the way people, and mostly millennials, plan their vacations. Independent hotels should respond to these changes with differentiated and targeted rates and packages to attract those shoppers.
Sharing economy, digital guest engagement, or the search for more healthy, organic and wellness oriented stays are current and future trends you can leverage.