Right Revenue: Top 3 Tips For Hotel Revenue Managers

Presented by: Adrienne Hanna

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On our first monthly webinar, we had the pleasure of welcoming Adrienne Hanna of Right Revenue as one of our keynote speakers. Right Revenue offer advanced hospitality analytics designed to help hotels make dynamic price decisions & grow revenue with smart technology, useful data and consultative mentoring.

Adrienne talked about her ethos when it comes to discounting your hotel’s rates (DON’T DO IT!) and how hotels who successfully manage their rates can ensure their bottom line stays healthy. Read her top three tips for hotel revenue management below and download the slides she ran through during the webinar using the button at the foot of the page.

1 Understand your costs

In a time when profit is more critical than ever, we need to start from the bottom-up when setting a new rate strategy.  By that I mean, understand your costs fully and be honest.  How much does it actually cost to have a room occupied (CPOR)?  Are you including both fixed and variable assets?  If you are including your team salaries (such as Reception), then assign a percentage to the costs that need to be attributed to rooms.  Then be honest about your COCA (cost of customer acquisition).  Include your PPC campaigns, commissions, meta budgets.  Include your sales activity and advertising - even as a percentage.  If you have a cost to bring a guest to your hotel then it's a cost of having them stay.  Then make sure that you take your topline rate (eg £80) and remove VAT, breakfast, your COCA and your CPOR.  Make sure you are left with profit and not just breakeven.  It is also great to understand your average spend per segment.  You may have a low rate for a leisure two-night break but the incremental spend may well make it worthwhile.  Understand your business by putting on your commercial hat - you may never want to take it off :)

2 The power is all yours - when it comes to the OTA's

We have this unique time to level the playing field with the OTA's.  We know that International travel is not coming back for a while and the Staycation market 'knows' you and is much more likely to book direct.  You need to take a double-edge strategy.  First of all, make sure that the guests you have KNOW that they are getting the best rate if they book direct; make sure they have an exceptional stay that they want to talk about; make sure that your hotel wows them so much that THEY want to return or stay within your group portfolio; communicate and communicate some more - now is the time to make sure that your guests see that they are rewarded for loyalty and that you will give them exclusive deals or little extras if they come back and finally, design great packages which they can only get if they book direct with you.  Then manage the OTA's.  You DO NOT have to give them rate parity.  You DO NOT have to give them all your room types.  You DO NOT have to push your packages on their sites.  You DO NOT have to enter their preferred programs but what you DO have is a voice.  Come together and ask for a fair deal.  The OTA's are great at marketing our property and we need to remember that but they also don't make commission unless our guests book with them and mindsets are changing.  If you ever had the time to enter a fair relationship, it is now.

3 Data is king

If you take 4 rate types, 5 room types, over 6 market segments on 5 distribution channels and manage a rate strategy over even one year, that is a whole lot of number crunching!  Give your teams the technology, support or mentoring to do their job properly and get out of the spreadsheet mentality and start being a strategist!  You do that by understanding not 'big data' but 'useful data' so chose the metrics that are important to you and analyse the life out of them! Remember also that we need to understand new metrics as our guest's buying behaviour has changed.  Lead times, length of stay, market segmentation, cancellation flexibility, new feeder markets - all potentially new data streams we need to analyse.  Support your team with great technology to help them do their job and allow them to put that commercial hat on!