Four Opportunities for Hotel Owners

Four Opportunities for

Hotel Owners

Article previously published via Tnooz

© Copyright Integrated Decisions and Systems, Inc. (IDeaS – A SAS COMPANY)

Technology has become an influential player in the

development and refinement of hotel business

strategies.

And while the practice of revenue management may

sometimes find itself branded as “micro-level” from an

owner’s perspective, it provides many opportunities to

increase asset performance and value.


Here are four opportunities that revenue

management brings to the table for today’s hotel

owners


Going Beyond the Guestroom

Over the past few years, the practice of revenue

management has evolved beyond simple and

tactical approaches for managing guestrooms and

pricing alone.

As revenue management and its technology has

continued on this evolutionary blaze, the opportunity

for a holistic revenue management approach has

emerged from yesterday’s ashes.

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The effects of a robust revenue management culture

are found permeating into different hotel

departments, from marketing to sales to operational

teams. Today’s revenue managers are beginning to

evaluate total revenue contributions. This includes the

management and pricing of meeting and event

spaces, group business and ancillary revenues.

Revenue managers are also evaluating costs to help

the hotel focus clearly on profits – not just revenue.

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While hotel owners don’t need to be heavily involved

in day-to-day operations, there is a huge opportunity

for them to communicate overall hotel revenue goals

to senior management. This kind of open

communication can directly influence the strategic

role of the revenue manager.

Consider this scenario: The hotel in question is a new asset and

the owner is interested in making a quick return on the

investment – intent on selling the hotel after a couple of

successful years. Communicating this plan allows the hotel team

to focus their strategy around achieving that objective.

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The Operational Opportunity

Hotel owners have a huge operational opportunity to

understand how accurate revenue management

forecasts can not only positively influence their

property’s profits but also help in the planning of

staffing levels and inventory.

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Accurately anticipating demand allows the hotel to

allocate staff across departments in response to low

and high periods of demand. This helps optimize

wage costs and also increases guest satisfaction since

departments are staffed to handle the flow of guest

traffic.

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Detailed forecasts also help anticipate expected

demand in restaurants and spas – so the levels of

perishable inventory (such as fresh food) can be

accurately ordered, with waste minimized.

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It’s All Business. It’s Just Not Always Good

Business

Rather than only focusing on occupancy levels, the

hotel’s average daily rate (ADR) and revenue per

available room (RevPAR) are good financial indicators

of hotel health and have a direct flow through to

bottom-line performance.

To help improve a hotel’s RevPAR or ADR, the right

customers need to be attracted at the right price.

Revenue management technology can provide

analysis in identifying the highest valued customers.

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It’s All Business. It’s Just Not Always Good

Business

Hotels can be tempted to sell out their rooms to lower

rated business, but they end up losing out on higher

rated business that would have stayed more nights

and made them more money. This is a complexity of

revenue management that owners may find difficult

to appreciate because it may seem

counterproductive to turn down any kind of business.

Trusting forecasts and market pricing will demonstrate

over time that turning down the wrong business can

lead to significant increases in revenue.

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Does Timing Really Matter?

Investing in revenue management technologies from

an early planning stage - even before a property

opens its doors for business – is important. When

effective revenue management is established in the

early stages of a hotel’s lifecycle, it informs everyone

about the hotel’s direction and how it’s going to get

there.

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The investment stage is the ideal place to introduce

revenue management since it can be capitalized to

its fullest through feasibility studies, revenue projections

and the resulting flow-through. It can further be used

to set strategies and establish a long-term action plan.

However, any time in the lifecycle is a good time to

start taking advantage of revenue management.

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There’s a huge opportunity for hotel owners to take an

active interest in the principles of revenue

management and its effective implementation at

their hotels. These four opportunities will help owners

begin maximizing their returns and increase the

lifetime value of their hotels.

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Four Opportunities for Hotel Owners