Revenue management: Unlocking financial success
Chris de Closey, Director of Switch Hotel Solutions explores the intricacies of revenue management
In the accommodation industry, the key to success lies in effective revenue management.
With evolving customer preferences, technological advancements, and the rise of online travel agencies (OTAs), revenue management has become a complex yet crucial aspect for accommodation providers.
Read this and more in the new summer print edition of AccomNews. Read it HERE
In this feature, we will embark on a journey to explore the intricacies of revenue management and uncover strategies that can pave the way for financial success in this dynamic sector.
To delve deeper, we reached out to Chris de Closey, Director of Switch Hotel Solutions, for his valuable insight.
Here’s what he had to say:
Revenue management is simply reviewing your data and analysing the trends to maximise your occupancy and revenue for your property.
What is there to consider when setting room rates and managing revenue effectively?
Several key factors play a pivotal role. These include market forces, demand patterns, competitor sets, seasonal trends, target occupancies, and past performance.
How have revenue management strategies adapted in response to changing market conditions, such as the COVID-19 pandemic?
Many revenue managers, operators, and consultants are now much more fluid in terms of their revenue strategies. The strategies are changing faster and are more data-driven than in previous years. Operators are quicker to adjust their strategies and are willing to test and learn different approaches.
What are some common challenges operators face when optimising their revenue management?
Time and knowledge emerge as common challenges for operators. Smaller-scale operators often wear multiple hats in their business, limiting their ability to dedicate sufficient time to mastering revenue management. However, there are many resources available, such as consultants, pricing software, and online training, to bridge the knowledge gap.
Can you share a practical example of successful revenue management strategies that led to increased profitability?
Certainly. One of our clients took over an older building on the Gold Coast. The outgoing owner didn’t take an analytical approach to revenue, pricing at the lowest rates, which attracted a specific customer base. By implementing various revenue strategies, we were able to more than double the Average Daily Rate while maintaining the same occupancy levels. We adjusted pricing during peak periods, ensuring competitiveness without heavy discounts, ultimately benefiting both the business and unit owners.
What role does data analytics play in hotel revenue management?
A crucial role! It involves analysing various data points, monitoring competitor pricing, and understanding property trends. Data helps in decision-making and identifying opportunities for improvement.
How do accommodations balance the distribution of their rooms through various channels, including online travel agencies (OTAs), direct bookings, and partnerships?
Balancing distribution is vital. Smaller-scale operations relying on a single channel may face risks, while larger ones should develop unique strategies for each channel. Analysing property data and collaborating with suppliers like Booking.com, Expedia, STR, Luxury Escapes or TripAdeal can inform distribution strategies.
What are the key techniques for dynamic pricing based on real-time market conditions?
Dynamic pricing involves adjusting rates based on occupancy and competitor pricing. Monitoring market movements and keeping up with competitor rates is crucial. Don’t hesitate to charge higher rates when market forces allow.
What is the role of artificial intelligence in uncovering new revenue opportunities and enhancing pricing strategies?
This is a very interesting space. AI tools in revenue management are developing daily and there are so many tools out there for operators to utilise.
AI is helping to take some of the guesswork out of revenue management and pricing strategies, however having the human element to understand the role it plays helps to ensure that you are placed appropriately for the best outcome possible – which is making more money.
What are the best ways to improve and update revenue management skills?
Continuous training, both formal and informal, is essential and you can also utilise online resources, including YouTube tutorials.
Another tip is to attend industry conferences it’s a great way to learn from experts and connect with the best in the business.
Chris de Closey is a speaker at Strive To Thrive in Melbourne from March 20- 21 – Get your tickets HERE
Mandy has over 17 years of accommodation and tourism industry writing experience and is Editor of AccomNews & Resort News, Publisher of SchoolNews & Director of Multimedia Pty Ltd. She is a retired registered nurse with a 25-year NHS career that followed a few unforgettable years in hotel housekeeping.
