Hotel revenue management in tough times
Tuesday, 10 Nov, 2009
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TravelMole Guest Comment by Cheryl Hawskworth, IDeaS revenue management solutions & services sales manager, UK & Ireland
The onset of the economic recession shook many industries to their core, and leisure and travel, airlines and hotels were no exception.
Attendees to this year’s World Travel Market will be hoping to gain some industry insight into economic predictions for the global market in 2010 at WTM Vision – The Global Economic Forum.
For the hotel industry key performance metrics, including occupancy rates, Average Daily Rates (ADR) and Revenue Per Available Room (revPAR), all figure into numerous global hotel reports showing that the industry figures went from one of the best years to one of the worst.
Unstable booking patterns and demand volumes made it difficult for hoteliers to understand how they should be reacting.
Rather than simply looking at downward rate adjustments or locking in low yielding corporate contracts, hotel owners need to take the opportunity to set out a long term strategy, working out a range of different case scenarios and the appropriate activities for each.
Strategic and structured thinking is the secret to success, and no rash decisions should be made especially if they may not be in the hotel’s long term interest.
To remain recession-proof, it is important for hotel owners to fully understand what is happening to their accounts. If volume is dropping, it may be due to the account moving across to competitors, or to overall lower demand in the market.
Hoteliers should evaluate carefully if it is more appropriate to offer rate reductions (for very specific time periods) or to offer “value adds” instead.
Hoteliers should also try to make the most out of the people they are working with and harness strong relationships with the sales team and distribution channel partners. Sales people can be the hoteliers’ best allies: working together with them to realise a concise account plan highlighting which segments to target, for which time periods and at what price is the best way to ensure all sales activities are properly focused and targeted.
Distribution channel partners can also provide great support. Hoteliers should monitor their performance more closely in order to fully understand any available opportunities. They should then implement strategies which will help them drive volume, e.g. offer increased room inventory only in return for preferred placement, and ensure they maintain control over their inventory by avoiding fixed allotment and pricing conditions.
To emerge and thrive from the recession ahead of their competitors, hoteliers need to be thinking about other differentiators.
Away from pricing, hoteliers should maximise all chances to sell on value, highlighting the brand, service and value-add opportunities they have at their disposal.
Phil Davies
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