The entire hospitality industry has been severely affected by the current COVID-19 pandemic. Within it, hotels around the world are experiencing unprecedented challenges, as the pandemic has called into question the existence of revenue management systems running on historical data.
Indeed, revenue management technologies have traditionally taken into account historical demand patterns such as booking lead times, collection of bookings by segments and seasonal stay patterns to assess the best possible room rates and current conditions. market have made this system obsolete.
An economic downturn can create pressure to cut rates, but history has shown that it makes sense to resist that pressure. In an industry where lower interest rates cannot sustainably support revenue recovery, an immediate impact could be felt.
It certainly doesn’t help us in the long run to regain ADRs to previous levels. Revenue managers face a huge crisis and find it difficult to understand and accurately forecast the future of their revenue streams to make appropriate business decisions and design effective revenue management strategies.
The volatility of consumer demand and prices linked to COVID underscores the need to find new ways to support revenue recovery. The following best practices are recommended for dealing with unforeseen market conditions.
To adjust rates appropriately in the recovery environment, hoteliers can expand competitor rate purchases. This usually involves comparing rates to those of five or six hotels with similar amenities in the same area. The higher chain scales could lower their rates to compete with lower chain hotels, making it imperative to look beyond standard rate stores. Therefore, we recommend that hotels maintain their pricing position in relation to the market. Developing research shows that in this economy discounts will not encourage customers to speed up their travel.
Maintenance of the ADR index
Holding rates doesn’t just mean leaving things the same. Rather, the hotel should focus on maintaining a healthy ADR rating. Thus, in markets where the downward pressure on prices is significant, hotels may have to follow suit. The challenge is deciding when to adjust fares, requiring a very delicate balance and good business sense.
Revenue management intelligence
With real-time information and actionable pricing performance, hotels can make faster, more informed revenue decisions. It will also provide access to competitive economic intelligence, personalized mapping of the type of venue, including events, seasonal calendars and key factors influencing market rates.
Hotel revenue management service
Hoteliers can subscribe to a hotel revenue management service to provide appropriate pricing during the pandemic. On average, hotels participating in a revenue management service were observed to outperform occupancy, ADR and RevPAR.
What good practices can hotels follow to increase their revenue?
While the arrival of COVID-19 has posed several hurdles for the hospitality industry, below are some practices hotels can instill in their operations to continue to strengthen their balance sheets while providing top-notch customer service.
â Manage inventory and rates proactively by reviewing rates daily and reviewing reservations that have been booked in the last 24 hours.
â Analyzed the reservation distance of customers, in addition to ensuring that the tariff plans are correctly configured and distributed to the right channels, thus guaranteeing price parity between these channels.
â To attract customers, look for opportunities to apply value-added pricing instead of lowering BAR rates. Offering room upgrades, F&B amenities can be considered more valuable to guests than a certain percentage off the base rate. Indeed, guests receive something tangible that enhances their overall stay experience.
â Beware of always being on sale. Instead, try to use flash sales by offering discounts for a very short time. These initiatives encourage consumers to book immediately rather than wait and book later.
â The current COVID market continues to experience very short booking windows, with bookings made less than 5 days prior to stay for all segments. This means that revenue managers will need to adopt a very short term term pricing methodology and must be prepared to adjust their pricing quickly, as demand patterns change. It also increases the importance of checking external demand data more frequently using available sources such as STR, Market Insight, and Google Analytics to quickly identify changes in consumer behavior.
Hoteliers need to rely on sophisticated, demand-driven revenue management systems, with the ability to collect and analyze real-time market demand metrics to accurately price their rooms during the COVID pandemic. 19 ongoing and beyond.
(Nikhil Sharma is Regional Director – Eurasia, Wyndham Hotels & Resorts.)
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Posted on: Wednesday September 22, 2021, 8:26 p.m. IST