Running a hotel optimally and efficiently is something akin to being a savvy trader on Wall Street. Hotels have inventory that changes on a daily basis with rates that are heavily dependent on outside factors that sometimes can’t be seen or even predicted. But many times they can. Like the smartest traders on Wall Street, savvy Revenue Managers are able to always see the bigger picture and utilize a wealth of tools at their disposal in order to maximize profit. Here are 3 key things that smart Revenue Managers do differently to maximize profitability.
They Don’t Compare Apples to Oranges
The hospitality industry is a competitive business in which hotels are constantly seeking to offer pricing and amenities that competes with nearby hotels that are viewed (generally by the hoteliers themselves) as being their direct competition. Average revenue managers will seek to compete with hotels having the same star rating as themselves, but savvy Revenue Managers will aim for great customer feedback rather than merely staying competitive with other hotels as the same star level/ price point as themselves.
What savvy Revenue Managers understand is that customer feedback generally counts for far more in the end than a star rating. A 3-Star hotel that has excellent feedback can generate more business – and more profit – than a hotel with a 4-star rating, but has poor customer feedback. Rather than constantly looking at what other hotels are doing in an attempt to stay competitive with them, astute Revenue Managers will constantly seek feedback from their target demographic to provide the services their customers want, rather than spending on amenities that will give them a higher star rating. Amenities that raise the price point on inventory without giving guests what they actually want is self-defeating.
They Carefully Cultivate and Manage Customer Feedback and Their Online Presence
Because of the prolificness of online booking sites, managing a hotel’s online presence and reputation can feel like a losing battle. Smart Revenue Managers, however, realize that with the growing tide of rooms being booked online by 3rd party sites, managing online feedback is of utmost importance. When one guest has a poor experience, it might be just a fluke, but when two or more guests have the same complaint, smart Revenue Managers will do some investigation. But in order to do that, they have to have staff dedicated to keeping their eye on what is happening online in the first place. Good Revenue Managers will never allow two or more guests to have the same complaint.
They Keep an Eye on The Big Picture and their Finger on the Pulse of Random and Even Global Events That Can Have a Profound Effect on Market Conditions
Average Revenue Managers understand the “seasonal tides” but savvy Revenue Managers understand the far greater variables that can affect demand. Sudden steep discounts offered by airlines or even changing currencies can all create sudden demand in what is historically a lull season in any market. Recent concerns over the safety of women in India saw a sudden 25% drop in tourism while destinations like Indonesia, Malaysia, and Thailand saw a sudden increase, without a change in hotel rates to reflect the increased demand. In 2010-11, the Yen depreciated by 8% against Chinese currencies but appreciated by 13% against the US Dollar. This led to a sudden surge in vacation bookings to Vegas accompanied by a corresponding drop in bookings to Macau.
Being a great Revenue Manager involves far more than just keeping things running smoothly and within a specified budget. Good Revenue Managers will maintain a stable income stream, but great Revenue Managers will increase profitability, sometimes by a significant margin.