Knowing the revenue management essentials for your B&B is difficult at the best of times and it’s only becoming more complex.
Each year the hotel and travel industry uncovers many new influences and suggests new strategies accommodation providers can use. Owners and operators have a lot to deal with to stay on top of revenue management including:
The growth of OTAs
The fight for direct bookings
Freshly defined traveler groups and booking behaviour
The rise of mobile
Domination of social media
Viability of traditional advertising and offline booking
All these factors and more contribute to make a strong revenue management strategy difficult for small hotels or B&Bs. To simplify this, managers need to take a methodical approach to revenue production. You can do this by focusing on the historical formula for revenue management which you can see laid out in the following article.
Here are our tips for your 2017 revenue management essentials:
Sell The Right Product
Obviously your product will predominantly be the rooms of your property but there are important questions to ask yourself. How many rooms do you have to sell? Is it enough? What type of rooms do you offer and is there an adequate range? Is it appropriate for your property to sell meeting or function spaces? Do you have amenities to sell and if so, how will you do it?
The decisions you make here can, and most likely will, have a big impact on the health of your yearly revenue. Being comfortable in the strength of your product is the first step to a successful revenue management plan.
Sell To The Right People
Once you’re confident you have the right product mix you need to clearly define and distinguish the audience you want to target. Is your property set-up to appeal more to individuals or groups? Will they be primarily business or leisure travelers?
You need to make a firm choice on what best suits your small hotel or B&B. If the configuration of your property is at odds with the market segment you’re targeting, you won’t see the positive revenue results you hope for.
Sell At The Right Time For The Right Price
How do you ensure the best return for your business in regards to the occupancy of your hotel? Smart decisions need to be made about when you adjust your rates and what your target audience can afford.
In times of high demand, it’s likely your property will reach full occupancy but if you take advantage of this by raising your prices, it could jeopardize this probability. If you keep your prices the same and your hotel fills up, your competitors will immediately benefit because they hold all the power in a high-demand period.
In low-demand periods you need to think of alternative ways to maximize occupancy and keep revenue coming in. This is a time when you may offer packages or discounts to incentivize people who wouldn’t normally take a trip or those already traveling to stay longer.
Accurate forecasting is important if you want to get your rates right and stay on terms with your competitors.
Sell Through the Right Channels
Determining the best distribution strategy is perhaps the most important aspect of the whole process. Relying solely on direct bookings won’t be sustainable so you need to connect to online travel agents to supplement your revenue.
In most cases, the stream from OTAs will end up being your most dominant source of bookings. But how many channels does a small property need to connect to? Most can get away with three or four but even then you’ll probably also need the services of a channel manager.
The rise of mobile bookings has changed the face of booking behaviour but it doesn’t mean the process is more complicated. You simply have to change your angle of attack to prioritise travelers who book on smartphones and other online methods. Close attention should also be paid to social media and the bookings you can garner through that medium.
Ultimately, revenue management comes back to understanding the customer, the state of the industry, and the identity of your own business. Most businesses make life easier for themselves by investing in the latest smart hotel technology to provide them accurate data and seamless distribution pathways.