Article by Giovanni Angelini
Influencing consumers to book hotels is the ultimate objective of any hotelier regardless of their role or position within the organization. In principle, everyone working in the hotel business has to be involved in continuous top-line growth.
Learning how customers shop for hotel accommodation, what drives them, what influences them, and how they make decisions is simply a must for hoteliers to learn, to be aware of, and to respond to.
Every hotelier and hotel operator, regardless of location, size, or product, is faced with rising operating costs, perishable inventory, and increased competition. There are no exceptions. Therefore, the only way for an organization or hotel to progress is through growth of revenue.
Identifying and understanding the market, the source of business, the demand, the seasonality, the needs-wants-expectations of customers, and the willingness to pay, are the basics for success. And do remember that your direct competitor/s may know the market better than you, and they may respond much faster than you. Also remember that consumer demands and expectations are continuing to change rapidly.
No single pricing strategy can guarantee success. This is why hoteliers need to foster and implement a strong revenue culture, and make effective use of the basics like data, demand prediction, dynamic pricing, search engine optimization, and incentives for direct bookings. They must also establish an efficient online travel agent strategy based on a win-win situation, and, of course, make the best use of modem technology and systems, such as mobile optimization. It’s a fact that online agents continue to challenge the hotel industry; you need to be smarter than them when it comes to direct bookings.
Putting the customer “at the center” and building strong consumer loyalty is the objective of most hotel organizations, but we also have to accept and respond to the growing trend whereby loyalty to specific brands or products is decreasing, and that all loyalty programmes must be agile and straightforward – especially when it comes to accumulating points and redeeming benefits.
With customers expecting to see clear value from loyalty programmes, and with their demands and preferences continuing to change rapidly, hotels need to re-imagine the notion of brand loyalty and make it a priority, especially when catering to the younger generations.
Hotels are becoming less differentiated, and consumer reviews and star ratings through social media platforms are, in many cases, becoming more important than brands. It’s very clear that hotels must find ways to stand out and be recognized by consumers for what they do well, and what they offer to enrich the customer journey. Keeping brands relevant among customers is of the utmost importance.
The objective of an efficient revenue management strategy with dynamic pricing is to maximize the revenue per available room, not just the occupancy or the rate.
Hotel revenue management involves forecasting demand by understanding the unique characteristics and buying/spending behaviors of prospective travel segments, then matching that demand by optimizing prices and inventory prior to confirming their bookings. To achieve this, a business needs to know the expectations of its customers – and remember that “marketing-advertising magic” will not always work.
Accurate forecasting is an essential part of maximizing revenue. As such, hotel leaders and executives must be able to identify and anticipate opportunities in different demand periods. The use of reliable statistics/numbers is vital to this process. Forecasting by day and by segment first, then by week and month is essential too. There is no other way to conduct an accurate forecast.
You’ll need to decide how many rooms you will allocate to each of your channels, by which date, and at what rate. To maximize revenue, you must balance the short-term, high-yield business with the long-term, low-yield business. Length of stay, day of the week stay, total revenue per room, total revenue per guest, lead time and others are all very important to consider before allocating your precious inventory.
Greater alignment between marketing-revenue-operation is essential. Success will never come from only one or two functions/disciplines. To stand out and achieve market leadership, you need the commitment, and most importantly, the accountability of all key functions in the hotel. Eliminate all internal barriers/silos in the knowledge that a happy, passionate, responsible, motivated, efficient and well-trained and empowered team is critical to the success of any hotel. Everyone in the organization must be coached and prepared to seek for and maximize every business opportunity.
What do hoteliers have to do to make sure their products and services stand out from the crowd? Clarity about competitive advantage and a full understanding of a product or service’s strengths and weaknesses, and how to manage them, will definitely guide proud hoteliers to focus on important topics. Guest profiling and personalized communication between hotels and guests has become an expectation and must be embraced by all in order to compete.
In an increasingly competitive environment, hotels must go beyond the tried and tested, and experiment with new features, take risks with new ideas, and anticipate what will be most attractive to their guests.
Websites and mobile platforms must be continuously updated with new information, and not approached as an annual project. We all know that customers have limited patience and will quickly leave old and inefficient websites. If you don’t offer an optimized online experience, you’re likely to lose their custom to a faster, sleeker platform.
We live in a society used to getting almost all the information we need on demand, 24 hours a day, through mobile technology. And when staying at hotels, many of us prefer to use our smartphones than call a concierge or receptionist. Digital interactivity is here to stay, and it will dominate the in-house guest experience over the coming years. Guest profiling and personalized communication will only continue to increase.
Never make commitments or promises that you cannot meet. All brand promises must be delivered, especially when it comes to providing value – a priority for all brands, and the basic expectation of all customers.
Remember that this industry is extremely price-sensitive. Travelers must be able to distinguish the differences between your offerings and those from your competitors. You should clearly provide better solutions, especially for experience-focused travelers.
In this industry, you have to be aware of regional and global economic anxieties and what is causing them. You must also be cautious about what lies around the corner, and always be prepared to respond before it is too late.
It’s nothing new that during an economic slowdown, travelers will practice more discretion in spending on trips. It’s also nothing new that in this situation, cutting rates to fill rooms is definitely not the best way to respond.
Creativity In implementing value-added propositions and/or attractive packages during uncertain times is essential. Clarity on competitive advantage and going after available opportunities (or creating them) is simply a must.
Here are a few important questions about revenue management – which can also serve as a useful checklist of Do’s and Don’ts – which hoteliers must continuously ask themselves:
- Who is dictating the pricing strategy at your hotel? The market? The competitive set? The budget? Or…
- How transparent is your pricing?
- Is a low-paying customer better than an empty room, even in peak high season?
- Memorable experiences or material goods? Where do you stand?
- Volume of business from repeat customers – who are they, and how to increase it?
- Is your website simple to use, or are you frustrating your guests? How does it compare with your competitors?
- What are your exclusive offers/packages? How competitive are they?
- What is the response time to new business leads? Within one hour, or within two days?
Finally, we can summarize with this motivating and practical industry quote:
“The concept of selling the right hotel room, to the right customer, at the right moment, for the right price, via the right channel…is clear guidance and essential for any hotel.”