The hospitality industry has faced more than one challenge in recent years. After the pandemic came inflation and hotels are now pushed to rethink their revenue management practices while focusing on profitability and value delivered to each guest.
Our traditionally slow industry is waking up to a new reality where it needs to move at the speed of technology to accommodate evolving guest needs. What also surfaced is a need to adopt a total revenue management (TRevPAR) approach that incorporates multiple channels and involves a shift from tactical to a more strategic, long term view.
This means focusing more on untapped or underutilized sources of non-room revenue. These revenue sources, including F&B, golf courses, SPA, conference centers, events and activities, local offerings etc. are a proven way to boost revenue and profitability for the hotel. When packaged and presented well, they are also a way to improve the guest experience.
Your property’s revenues and success have never been so closely intertwined with the experience you deliver to your guests.
The main challenge with this approach? Integrating data from various multiple systems (e.g. PMS, POS, sales systems) in order to properly track and analyze data so that the property can attribute revenue to the correct source.
The expanding role of revenue management
The practice of total revenue management helps properties capture maximum value from every guest through smart up-sells and cross-sells, relevant offers during their stay, and incorporating as much of the available value added services as possible into the guest’s stay.
To achieve this, revenue management now acts as a connective tissue between operations, marketing, and sales, ensuring that the property is getting the most from all its assets. So, in addition to taking a leadership role in the hotel commercial strategy, revenue managers now also need to own technology decisions around infrastructure that supports the entire revenue management practice.
Technology is an enabler and data vital for making decisions that impact total hotel revenue.
Unless they can collect and analyze data from across a hotel ecosystem, revenue managers can’t understand total guest spend nor which channels drive the most revenue. For years, the lack of technology and integration between systems coupled with slow processes has been the biggest hurdle for successful total revenue management.
Revenue managers in some of the best hotels out there know this well and have taken the role of ‘agents of change’ so they can make a greater impact on hotel revenues and profit in the long term.
Going beyond the obvious
Total revenue management is all about taking a holistic approach to optimizing revenue from all available sources. The first thing that comes to mind? For most it’s room up-sells or different hotel amenities that are charged for. Selling stuff like bathrobes is often viewed as out of the box thinking. This is all great and an important part of the TRevPAR puzzle but it excludes something crucial – inspiring guests through experiential offerings and maximizing their enjoyment during stay – these are the things that lead to more spending.
So, how can a property ride the experiential travel wave and incorporate new revenue sources into their TRevPAR strategy?
Keep your guests at the heart of your revenue strategy and do the following:
- Leverage local partnerships to deliver inspirational content and offers to guests e.g. rare local finds, interesting tours, and authentic local experiences.
- Promote both on-property and local events to show the best of what your local area has to offer.
The ideal scenario is having a way to enable guests to browse inspirational and promotional content based on their context but also book events and local attractions and activities from one app, like LasoExperience. This would significantly increase total revenue per available guest but also help guests enjoy their stay more.
Taming the technology dragon
We’ve already mentioned that building and implementing successful TRevPAR strategies wouldn’t be possible without technology tools. Revenue managers need to be able to generate F&B reports and drive insights from POS data, among other things.
So, let’s look at what a typical revenue manager’s toolbox should include:
- PMS
- Revenue management system
- Rate shopping tool
- A 2-way channel manager
- A tool for tracking, reporting, and forecasting revenue from different sources.
Unfortunately, the technology and data at this level is still not readily available to most hotels. When marketing, sales, and revenue management collaborate, they work in different systems and it’s challenging for hotels to build integrations necessary for seamless flow of data that would inform and enable the total revenue management practice.
Takeaways
In order to succeed in total revenue management, hotels have to overcome fear of change, think creatively, and break down barriers to technology implementation and integration.This is the only way to gain agility, speed, and insights needed for strategic actions that result in competitive advantage for hotels. Breaking down departmental silos and aligning revenue management KPIs with sales and marketing is also a move that will impact the property’s revenue and profitability in the long term.
