Today, most expert articles are full of advice on best practices that hoteliers can use to improve the financial success of their property. But as useful as those tips can be, it can often be even more helpful to learn what NOT to do, especially when it comes to a complicated, ever-evolving field like revenue management.
So, as promised, here are five of the worst practices revenue management (so please DO NOT do them!).
Worst Practice #1 – Assume Your Customers Know About & Only Evaluate Pricing Within Your Compset
When most revenue managers analyze the rates of their competition, they typically only compare their rates with the small number of hotels in their compset. This is a mistake, because when potential guests search online to find a hotel for their upcoming trip, they don’t consider compsets. They search through all of the hotels within a certain star rating (or two!) within a destination. If revenue managers don’t think like their customers, they will lose the booking to another property – and another revenue manager – who can.
Worst Practice #2 – Use Stagnant Rates
As you probably all know from reading my previous articles, I am a HUGE advocate for dynamic rates. Why? Because in today’s highly competitive and ever-changing marketplace, updating your prices in the online channel once a day is not nearly often enough. By consistently updating your rates in real-time, as factors within the market change, your property will be able to secure as many bookings as possible, at the highest rate possible. Dynamic rates are the ONLY way to fully capitalize on the revenue-earning opportunity offered by the online channel.
Worst Practice #3 – Don’t Replenish your Inventory Online
Just like with rates, which need to be updated constantly, it is important that revenue managers are replenishing their online inventory immediately when it runs out. Especially during busy season, when an entire block of rooms could be booked in hours or even minutes, if you’re not replenishing your inventory on a regular basis, you’re losing valuable revenue.
Alternatively, get a sophisticated RMS that can integrate with your PMS and update your inventory across all of the channels, automatically and in real-time – without your revenue manager lifting a finger.
Worst Practice #4 – Make Your Already Complicated Job, Even More Complicated
I’m sure that you’ve heard the phrase K.I.S.S., which stands for Keep It Simple, Silly. As a revenue manager, because your job has so many very important responsibilities – many of which are hugely time-consuming – it’s important that you follow this rule of thumb. If you’ve ever heard the term ‘unconstrained demand’, then you know what I’m talking about!
Your goal each day should be to minimize the busy work that can come along with the job – endless reporting, meetings, etc. – so that you can focus on the activities that earn your property money. A good rule of thumb is to aim to spend 80% of your time on the functions that directly impact revenues and only 20% of your time on admin tasks.
Worst Practice #5 – Be Very Afraid of Technology
Revenue management systems were designed as a tool to help revenue managers be more effective and productive in their jobs, NOT replace them altogether. Revenue managers should be taking advantage of technology to manage the never-ending data analysis and automatic updating of rates and inventory in the online channel. Only by using sophisticated technology, will a revenue manager be able to be as efficient as possible, and therefore earn as much money as possible from each booking.
By Jean Francois Mourier, CEO of REVPAR GURU