When you think of it, how many business decisions does your property make every week, every day, every hour – even right now, as you’re reading this blog post?
Those decisions can range from tactical rate decisions to a revenue management strategy to front-line operational decisions that need to be taken immediately because you have an unhappy guest venting their anger at the front desk staff.
Being able to take timely and well-informed business decisions is what could make the difference between a good and a bad year.
As an industry, hospitality gathers an alarming amount of data from guests - from their hotel stay, to comments on social media, to how they booked, their behaviour online, etc.
But, there has been a tendency for the industry to be perceived as laggards when it comes to recognising the value of data and knowing how to apply the intelligence gathered to make effective decisions.
Historically, decision making based on data analytics has been slow and costly. Hotel staff are already multi-tasking, so taking on the extra responsibility to store, prepare and analyse data is a challenge.
Today, particularly because of technology and the growth of online channels, there is added pressure on hotel operators to keep pace with the latest rate changes and not “leave money on the table” with unsold hotel rooms.
For many hotels, it is common to experience low demand periods or run into an off-peak season.
So, it can be very tempting to think that dropping prices will sell more hotel room nights and increase revenue when you need it most. While it may sell a few more room nights, a discounting strategy rarely generates sufficient sales to offset the reduced revenue or counter the reaction of other hotels in your competitor set.
So how can a hotel solve the ongoing revenue management challenges?
There is no doubt that pricing has always been used by operators to drive both occupancy and RevPAR. But, in today’s hospitality market with so much price transparency and buyer research, there is an even greater focus on having the right rate in place and making sure your inventory is available across the right channels.
To see a return on your efforts, it’s important to leverage technology and provide your visitors with an outstanding user experience, such as offering a direct online booking engine, integrated into your website.
Whether you’re an owner, operator or a small chain of hotels, to survive these difficult times you need an approach to pricing that ensures you leverage the right room rate for the level of demand and have a system in place that provides insights on your occupancy and booking levels.
So, an important question to ask yourself is how can I improve the way that I manage my hotel’s revenue without having the time or money to invest in extra resources or an expensive revenue management system?
First of all, a strategic approach to your pricing should be an integral part of how you execute revenue management at your property. Don’t over rely on what happened in the past, times change and so does demand. So, make sure you research what your competitors are up to, and stay up to date with changes in market conditions that may need an immediate response.
And secondly, shifting more of your room nights away from OTAs (online travel agents) to get guests to book directly with you, for example on your website.
The classic booking path for guests tends to start with a search on an OTA website for a particular destination and shortlist a selection of hotels. If after an unsatisfactory user experience on your website, it is often enough to send the visitor back to the OTA site to complete their booking.
Now is a good time for hotel operators to be proactive when it comes to a direct booking strategy. This will increase the potential to earn higher revenue and reduce the cost of doing business. Any reduction in OTA commission goes directly to your bottom line as profit.
So why invest in booking technology?
A growing OTA market share means higher commissions
One of the biggest threats to hoteliers is their over reliance on the OTAs as a business channel. The OTAs continue to grow their share of travel bookings from huge investments in keywords, re-marketing and a focus on improving the user experience through the OTA website.
Embrace and leverage technology
Happybooking is first and foremost a property management system (PMS). That means they help you with the admin and automate tedious tasks freeing up time for you to focus on a positive customer experience.
On average Happybooking customers can get back up to 10 hours per week – think what you could do with that extra time!
One of the most effective ways to stimulate direct bookings is to provide a great stay experience that then opens up a dialogue between you and the guest. If a guest has booked through an OTA it is a great opportunity to flag that up and try to convert them to book direct the next time they stay.
Hotels should try to adapt their approach to social media and focus on spreading the word about the positive benefits of booking direct. A guest who has had a great guest experience is a good prospect to leave a positive online review, and a hot prospect to book again.
With the cost of a typical OTA’s commission around 15% and 20% to get a direct booking costs far less, and even when combined with other marketing activities it is still far more cost effective.
A chance to lower the risk of cancellation
Cancellation rates for OTAs average about 40%, whereas cancellation rates vary from hotel to hotel, but are far less than 40%. OTAs actively encourage guests to make a booking early in the booking process. It is in the OTAs interest to let the customer think that they have their best interests at heart – so they highlight even other hotels in the area who may have a better deal.
Giving the majority of your room inventory to one channel may help in the short term but it will make it difficult for you to manage the business going forward on your own terms.
Happybooking have always focused on creating a user-friendly booking system to help property owners improve their revenue performance.
Our guest blogger is John Kennedy. John is a hospitality consultant, dedicated to helping increase revenue through marketing, revenue management and efficient operations. www.kennedyandersson.com
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