Hoteliers, Design Your Revenue Management Strategy in Pre-Opening Stage
The rapid stride at which new hotels are coming up is making many experts in the industry think whether these hotels are amply prepared for the challenges that might surface in this process and most importantly if they are ready with their revenue management strategy before they actually get live into business.
The biggest threat comes from established hotels, in addition to the well-resourced global hotel chains and groups. Just creating a beautiful building, nicely decorated rooms and a well-trained staff force is not enough to delight your potential guests and ensure business keeps running.
Many new and pre-opening hotels struggle to reach their optimum revenue potential because of lack of knowledge of in-depth pricing strategies to address unpredictable market demand and a poor understanding of hotel pre-opening groundwork.
It is essentially important that hotels follow a planned and standardized approach to pre-opening phase to ensure consistent and effective results from day one.
Implementation and integration of revenue management technologies with the hotel’s IT infrastructure and platforms are one of the important tasks at the pre-opening stage itself that management teams at many hotels miss.
Developing market segment revenue & sales strategies, comprehensive competitor evaluation, pricing research, and forward forecasting of market demand patterns are a few of the very important aspects from the revenue management perspective.
Let us classify the process as follows:
Strategic analysis – A thorough analysis that includes a study of the macro & micro market and overall economic factors that could affect the hotel’s performance.
Competitor analysis – including competitor offering, pricing, and inventory positioning.
Pricing configuration – based on market conditions, hotel positioning and competition pricing.
Distribution strategy – on third party channel/OTAs, strategies according to inventory positioning, i.e. hotel descriptions, room type descriptions etc. market environment through all channels. The process of signing a contract with OTAs can easily take up to three months or more. You are not only dependent on your own internal staff, but also on the speed of online travel agencies to load new properties into their systems. Thus, plan accordingly.
Market segmentation strategies – and action plans with a specific focus on business with long lead times like wholesale/group bookings etc. You should engage your sales and marketing department in this process.
Reservations – Make sure you have reservations staff well trained and ready to go three months prior to the opening. Entering market with a new hotel pressure is high enough to start generating revenue and thus you cannot miss a single booking.
It is advisable that all such planning and implementation of any technology solutions should be undertaken at least 6-12 months prior to the hotel’s soft opening. Hotel staff should ensure that all tools and operational systems are in place and that all pricing and other processes that they track like – key competitor performance data, daily competitor performance and pricing data, are all functioning accurately.
Not only this, hoteliers should keep in mind that it is very vital to re-evaluate and assess the original assumptions and strategies developed during pre-opening, as pre-opening plans and post-opening realities are often different.
Hotel management staff needs to be flexible in their methodology in the initial phase of the opening so that they can adjust their plans & strategies and respond promptly to consequences and progressing market conditions.
Apart from these, there are few other important things to concentrate on before the launch, which will ensure revenue starts rolling in early:
Launch a website – Set up a website much before the launch of the hotel. Your website should be live at the pre-opening stage, giving out details of the hotel’s facilities and the launch date, which could initiate some excitement amongst the traveling community and industry about a new property opening soon. Also, post blog and updates on your hotel website to have a continuous engagement with prospect guest even before opening.
Focus on SEO – Hotels get a large share of their bookings online. You would definitely want the name of your hotel to appear on top of these search vehicles, whenever a traveler is looking for a hotel. Having a strong presence on the internet thus is important. Therefore, create relevant content that could significantly affect the SEO. It is a gradual process, involving a good deal of patience and precision, and if started well in advance, probably a year, can drive more and more online bookings and generate a higher ROI. Else, you would only need miracles to make this happen overnight.
Implement the latest Technology solutions – In the current scenario, it is not possible to compete in the market without implementing the correct technology solutions for your hotel for all aspects of running a hotel. For Revenue Management, hosts of solutions are available for Rate Shopping, Online Channel Distribution, Revenue Optimizing, and Online Reputation Management, etc. You will also need a PMS, web booking engine, CRS, GDS, reservation delivery, etc. Hotels must do a due diligence while selecting a tool for them. All technology solutions need to be selected, purchased and installed between three and six months prior to the hotel’s opening.
Build a strong leadership team and train your staff – Recruit professionals with the right skill set and a proven track record, who are capable enough to deploy the best technologies to maximize revenues, and stay at the forefront to drive the launch of the hotel. All staff members should be provided sufficient guidance and training during the hotel’s crucial soft opening period. Continued staff support and additional training will ensure that staff members are able to meet their defined strategic goals and handle any unexpected situations with ease.
Following all these techniques will allow hotels to prepare their staff and get overall management buy-in for the hotel’s approach to overall revenue management strategy. This will help warrant that your revenue management solutions are working most effectively.