The COVID-19 pandemic has brought a tremendous amount of uncertainty to the travel industry, including the revenue performance discipline, with many accommodations resting their success – and in some cases survival – in their revenue managers’ ability to effectively anticipate market trends. While this is a challenge unlike any other, it presents the opportunity for revenue managers to demonstrate the value you provide to the broader travel industry.
Locally in Australia revenue management is a high focus for accommodation partners. In fact, the nation is the top country in APAC utilising the Rev+ platform. Close to two in five of our lodging partners engage with the revenue management tool.
With 2021 underway, many questions remain unclear, such as when travel restrictions will ease, when demand will return, and how to effectively price inventory when traditional revenue management approaches are no longer reliable. However, the more informed you are, the more you can make confident decisions. Without the right resources and access to data, forecasting revenue and predicting peak travel demand is difficult to pinpoint. One proven solution to better evaluate market conditions and make data driven decisions is through revenue performance technology, something 85 percent1 of lodging properties still do not use.
Having a revenue performance solution in place allows accommodation operators to make more informed decisions and ultimately drive true revenue growth. There are many solutions available in the market including Expedia Group’s Rev+, that have helped drive clarity and data-driven decision making. In tandem with revenue performance technology, post-COVID-19 recovery will depend on operators’ abilities to identify and adapt to new trends. As you continue to evolve your revenue performance strategy this year, here are a few key recommendations to consider:
- Think forward, not backward: Historical data has become less reliable when forecasting future trends or patterns in the current travel environment. It is now more important for accommodation operators to utilise forward looking demand data as a guide to better understand where the market is heading and how to take the right pricing actions.
- Re-evaluate the competition and traveller motivation: With traveller shopping behaviours and motivations shifting, properties are doing more to inspire customer confidence and offer flexibility. And with more competition for demand, your competitive set is likely providing more assurances to customers. It is important to regularly compare your rates and the flexibility of your policies against similar competitor offerings.
- Explore dynamic pricing tactics: Dynamic prices, even in times of low demand, can help you capture bookings and generate necessary revenue for rebound. Current low demand conditions
have made it difficult to sell higher priced inventory, so consider new pricing categories for all your room and accommodation types and assess how traveller demand responds from there. Also, consider providing better deals for increased length of stays to help control turnover cost.
- Collaborate with your network: Look to your local tourism authority for access to additional data across your market. This data can help identify your capture rate by comparing your conversion rate against the market average. Tourism organisations and local businesses may also be interested in collaborating on marketing opportunities and deals to promote your property and drive demand.
1 Expedia Group data, October 2019
- Experiment with new approaches: COVID-19 has eliminated many of the levers and incomes revenue managers can normally test. Though most of these options are no longer available, don’t be afraid to test out new pricing approaches, especially if your old pricing models are ineffective. With travellers becoming more price sensitive, look to add more value to your products to help protect your ADR (average daily rate).
- Focus on evolutionary metrics over long term forecasts: The recovery of travel demand has progressed differently across the globe, and this will continue. Regulations, restrictions and traveller confidence varies by destination, adding complexity and uncertainty to forecast models. Instead of long-term forecasting, pay attention to how demand in your market is evolving. Track which dates travellers are searching for, which dates travellers have booked into, and from what source markets. Leverage these insights to make more informed price decisions now and better anticipate what’s ahead.
On Australian soil, those adapting to this approach and utilising tools such as Rev+ has proven to be a great success. For example, Expedia Group partner Tina Andreanis, an administrator at Hotel Bondi & Maze Backpackers in Sydney, attested to Rev+ as a great tool for rate comparison – particularly during recent times when it was more important than ever to have a perspective on the market, stating that the tool has helped her hotel review the current conditions and act.
In 2020 Expedia Group continued to evolve its revenue performance technology, creating more value for partners by implementing new features on Rev+. Powered by Expedia Group’s proprietary search data from all Expedia Group sites, we launched Market Recovery Insights to help partners understand how travellers are searching for their markets and how their respective markets are recovering from the impact of COVID-19. Leveraging purpose-built data science models, accommodation partners can also view current market occupancy metrics to better understand how their market is performing on a daily basis on future dates.
Additionally, Expedia Group expanded access to its revenue performance insights through a new application program interface (API). Rev+ Insights API externalises the insights from Rev+ to connectivity provider platforms like property management systems and central reservations systems, creating operational efficiencies and improving decision-making for accommodation partners that use these platforms to manage their day-to-day operations.
Optimising revenue performance is critical to ensuring the longevity of your property. With the right solutions and tactics, revenue managers can help mitigate loss, drive demand and position their properties for success post-crisis.
To learn more on building a successful revenue performance strategy, visit the Life at Expedia Group blog and access a series of online instructional videos to help you succeed.