When looking for a strategy to increase revenue, Revenue Management provides a profit management system in order to maximize turnover and generate employment regardless of the time of year.
To calculate the best practice to implement, several easily circumventable rocks that emerge when operating in the hotel sector should not be underestimated.
Mode of action
The goal of hoteliers is to find the scope to operate on, then identify the gaps on which action can be taken to achieve the objectives set.
It is normal, therefore, to exclude the possibility of increasing the numerical capacity of the rooms of a hotel if these are all occupied to satisfy a customer and producing greater results; the latter will be achieved through strategies applied on other angles of attack. There are, therefore, conditions on which action can be taken to incentivize revenue.
Starting from the target audience, a distinction can be made between business and traveler customers.
The former has travel, minimalist needs, normally translated into a short stay, therefore a limited stay due to work commitments and which generally do not include a weekend.
The second will be interested in staying longer than the business host, aiming to use more services made available by the Hotelier and including the weekend in his reservation.
At the time of booking, the highlighted customer categories will evaluate two different pricing solutions.
According to their needs (stay, booking period, occupancy of accommodation in the Hotel in a period), the result can be compared by determining the average selling price and if associated with an adequate strategy, it will lead to a maximization of revenue.
This detail includes a variable demand over time that leads to price fluctuations to be revalued according to the season and above all to the supply available in the period and the reference markets to which we will turn.
Maintaining the goal of increasing revenues, it is also necessary to deal with the market, and its variables, with which the reference niche prefers to interface.
Over time you find the biggest unknown on which to develop the best tactics, and consequently, changes in the industry can lead to a choice of price increase or reduction.
In the presence of a market that does not change the face of price fluctuations, it is suggested to raise prices.
In opposite circumstances (market undergoing changes), it is permissible and therefore advisable to act with falling price changes to an appropriate extent, thereby increasing sales, provided that this transaction can ensure a balance for reducing revenue.
Another corner on which the accommodation facility can act is the average permanence of a customer. The latter, of course, will have a higher stay during a holiday stay and not a business trip, so finding a compromise with this data will pave the way and benefit the profits of the Hotel.
Another element that influences the reference markets is represented by the range of action of the Hotelier; according to how it is proposed to the future consumer, through online or offline travel agencies, it can act in favor of its ROI.
Upsell e Upgrade
The last point not to be underestimated is the proposals for upgrades to cover, for example, a misjudgment in the employment capacity of the period, proposing this strategy to the business host who has fixed spending capabilities and for whom the purchase of the product must lead the customer/company to identify a lower purchase opportunity than in different circumstances, which will increase revenue on the supplier’s side.
Stand out from the competition
The customer normally does not have to be induced to face a purchase or waiver decision; rather, the same must be accompanied to choosing the best purchase solution among those proposed.
Therefore, the choice that must be made will be between the offer proposed by Hotelier X and that of the competition.
Map of values
Identifying a value map represents a competitive advantage not to be underestimated, to interpret the product’s positioning in the customer’s mind concerning competitors to develop the best price strategy.
This map allows identifying how the customer perceives the encounter between price and advantages of the supplier’s offer over the competition; acting on the information obtained, you have the opportunity to discover the element of uniqueness that represents the product offered and that induces the customer to prefer it over others,
working on the elevation of the value perceived by the same.
Revenue Management, in conclusion, can only guarantee the achievement of results if it meets all the conditions reported above to maximize the angles on which to act and create the best circumstances to generate profits.