Most hotels don’t have the luxury to employ a revenue management specialist. The task of increasing revenue and maximising yield often lies with the marketing manager. So what are the basics this person should be covering off?
Through STAAH I interact with a number of independent accommodation providers. Often the owners or employees of a property wear multiple hats. I am not surprised anymore when I see the owner acting as the marketing, sales and revenue manager – that’s a lot to take on! Lucky then that they have STAAH’s powerful insights and support to make a success of it. Here are some suggestions I often offer to accommodation providers looking for revenue management tips.
First, let’s understand, what is yield?
Check out the three scenarios below. Which is a better outcome for this 100-room property?
| Scenario | Hotel 1 | Hotel 2 | Hotel 3 |
| Total Rooms to Sell | 100 | 100 | 100 |
| Occupancy (Occ) | 100% | 50% | 80% |
| Average Daily Rate
(ADR) |
$100 | $220 | $175 |
| Total Revenue | $10,000 | $11,000 | $14,000 |
| Revenue per Room (RevPAR) | $100 | $110 | $140 |
| Comments | Sells too cheap and focuses on Occupancy | Rate is too high and does not understand demand | Understands the market and gets higher yield |
You guessed right. Scenario 3 is the best outcome for the hotel. Yield is getting the best outcome from all the activities that you do to market the hotel.
Now for some guidelines and tips for achieving this scenario.
Know Your Property’s Market Segments
Market segment is the market mix of your hotel, and it is worthwhile for a marketing manager to spend time and understanding this. As long as the hotel reception and reservation staff input this data accurately in your Property Management System, this is not complicated to understand.
Typically a property can categorise business into Corporate – Direct, Leisure – Direct, OTAs and GDS for Individuals or FITs; and Corporate (conference, corporate, meetings and incentive) and Leisure (tour groups) for Group Bookings.
Know Your Lead Time or Pace of Bookings
Each market segment has a lead time to book, easily seen on your channel manager reports. Leisure groups usually book few months in advance. FIT’s few weeks in advance, some even last minute. Understanding this pace of bookings will help in planning your marketing strategy to fill the holes.
Filling up your property in advance can land you like scenario one and low yield. Understanding your demand pattern and holding rooms for your Individual FIT’s who have a shorter lead time, but are willing to pay higher rates, should be part of your strategy.
Analyse Your Past Data
Data is king and spending time to understand this will help in all your marketing efforts. Your channel manager and PMS should give you reports that include Total Room Nights, Total Revenue, Average Rate, Total No of Bookings, Lead Time and Promo Code. This is the data that informs your spend and focus.
Remember that all the months in the year mostly follow a pattern. This June will resemble this year unless there is some major activity in your area. Have an annual calendar to target your low season and have an aggressive strategy for high demand dates. Using a promo code on your booking engine will help track conversion and success of your promotion. Planning your calendar will help avoid any knee-jerk marketing reactions, which is the case for many accommodation providers.
Target Promotions Based on Demand
Lowering the rate is not always the best option – case in point, scenario one. It is advisable to have a planned rate calendar for low and high seasons. These will then inform your promotions. Some suggested promotions are Advance Saver (save X% on early bookings), Stay 3 Pay 2, Free Breakfast, Minimum Night Stay, Early Check-in or Late Check-out deals, Romance Package and Dinner Package.
Do not clog your booking engine with too many options to confuse your guest. Make it simple to spot the deal and book.
Test and Measure
Sorry to be the bearer of bad news! All your promotions are not always going to be successful. But even failure brings immense learning. The trick to successful marketing and revenue management, in the long run, is an analysis of every promotion. What worked? What didn’t? Let these learnings guide the marketing plan for the next annual calendar.
Make social platforms a big part of your marketing strategy. It is ok to roll out a promotion just to get more likes on Facebook – I see many properties doing this. It is a great idea because the next time you run a promotion, you will have a ready audience who’ve liked your page. But like everything digital, success lies in constantly testing, measuring and evolving.
Written by Edwin Saldanha, STAAH’s head of marketing and a passionate hospitality professional with over 25 years of experience in hotel marketing and revenue management.