Written by: Rachel Grier, Area Managing Director Asia Pacific for IDeaS.
In today’s ultra-competitive hospitality marketplace, any competitive edge can translate into a stronger bottom line, and it’s no secret that driving direct business and better revenue is one of the top priorities facing all hoteliers. Successful revenue management and direct business practices are vital in increasing profits for every organisation. Tried and true principles will help your organisation yield triumphant results, and avoid the pitfalls of inconsistent tactics which rapidly diminish revenue performance.
Capturing direct business through effective website design
Driving direct business and better revenue has always been a priority of all hoteliers. Today, a greater share of the budget is dedicated to attracting qualified traffic to the brand.com website than ever before, but what if the actual architecture and content on your website are preventing rather than enabling the booking process?
To realise the marketing funds spent on driving qualified traffic to your hotel website, it is essential that the website architecture delivers an enhanced customer experience with user-friendly features that enable easy navigation, ease of booking and as many payment options as possible. A hotel’s website must also be informative, multilingual and regionally customised - enabling customers to be assured of the credibility and service standards of the hotel. To further facilitate the booking process, hotel websites should include user-generated content from social media such as user ratings and reviews.
Optimising their website for viewing on-the-go with iPads, other tablet-sized devices and smartphone compatibility is an absolute must in order meet the expectations of tech-savvy travellers ready to embark on their next travel experience.
Hotel websites must also reflect accurate prices for different room classes – driven by revenue management technology and best practices – to maximise overall revenue for the organisation. Importantly for hoteliers across the APAC region, revenue management helps to ensure that all revenue opportunities are maximised from all booking channels, including a hotel's own website.
Automating hotel pricing through revenue management
One of the fundamentals of revenue management is offering the right price for the right customer at the right time, and establishing the right prices is an extremely critical challenge facing many hotels. Determining the proper pricing strategies to deliver maximum revenue optimisation is an overly complicated and time-consuming process, something that is virtually impossible in a manual environment. Consolidating the multiple, complex data points and predictive algorithms each and every day by market segment, and then forecasting by each segment for the next 365 days can only be achieved through automation and machine learning. Deploying modern technology to undertake these processes results in a revenue team focused on market position strategy and outcomes, rather than data compilation and consolidation.
Automation allows a revenue management system to send pricing and inventory decisions to other selling systems, such as property management, central reservations systems and channel managers. It binds together your revenue management strategy and deployment – and its integration reduces human errors and ensures consistency 24/7.
Forecasting for success
Forecasting hotel demand is a key cornerstone of the practice of revenue management and helps to ensure that revenue opportunities are maximised from any direct website traffic generated through a hotel's marketing activities. Understanding your hotel’s total demand in advance enables hotels to price based on the occupancy they will achieve, rather than incrementally adjusting their pricing as the hotel occupancy fills. This key shift in approach allows hotels to maximise their outcomes - driving optimal revenue optimisation through pricing, market segmentation and length of stay levers directed to specific geographies and buyer personas. The alignment of demand, revenue and marketing form the holy trinity of performance in successful hotels.
Hotels use forecasting to help accurately predict the time frames throughout the year that will bring them higher or lower than normal occupancy, demand and revenue. A good demand forecast assists with not only room rate decisions, but also staff allocation, marketing campaigns, property maintenance and hotel operations as well. Using data and analytics through accurate forecasting is also the best way for hotels to determine future strategies that drive successful changes in total revenue optimisation and outcomes.
A revenue management forecast is intended to estimate the expected future demand for a hotel so they can manage that demand to achieve the hotel’s ultimate revenue objectives. Accurate forecasts are critical in revenue management because they not only influence rate decisions and strategies, but they also impact any displacement evaluations for potential group business. Displacement scenarios allow hoteliers to determine if a piece of group business will end up displacing higher paying transient travellers and hurt their potential revenue performance.
Pricing advances hoteliers need to consider
In-depth understanding of the pricing strategies employed by competing properties in your location and the effect this can have on your forecasting and pricing is of course part and parcel of a hotel’s tactical strategies. Hotels should insist that their selected revenue management technology can incorporate competitor data into their demand and pricing at the room type level forecasts.
Pricing by room class level is an area of opportunity for a majority of hoteliers in Asia Pacific. Understanding the demand by each room class individually will enable hoteliers to make data-driven decisions on whether to oversell the base level rooms or to close these out and sell true to type (rather than forced upgrades at no charge.) By individually calculating demand by room class, the pricing difference between each room class can be elastic – and thus drive significant revenue uplift in periods where demand for higher room types such as suites or club rooms is high. The traditional approach of just adding a flat dollar amount onto the base room type rate often leaves significant revenue opportunities untouched.
This article features extracts from a comprehensive eBook that IDeaS and FASTBOOKING have jointly developed called “The Ultimate Guide to Drive Direct business and Better Revenue.” The eBook is available for download here: http://drive.ideas.com/lp=1278?source=TTG