Revenue Management: top 3 SMALL things that can produce BIG wins for your property
By Jason Webb
Marketing & Revenue Company
As with all things revenue management related, it’s all in the details and small things that’ll get you that extra 5 or 10% increase in revenue each month. A lot of properties and for that matter, revenue managers, don’t always get it right and concentrate solely on forecasting which leaves the property not fulfilling its true revenue potential.
Gone are the days of just sitting in a cubicle far away from the action, answering emails and requests without actually setting foot at the property. So I propose the following question: “How do you fully embrace the myriad of revenue opportunities available to each property sitting miles away disconnected from reality?” The answer is, you don’t!
The key to any revenue increase is working closely with each property, starting with the front office staff who are asked questions daily both on the telephone and in person from your number one source, the customer.
Your reservations team who are replying to numerous emails weekly are also a wealth of information that you won’t get from a cubicle glaring down from afar. And lets not forget the managers and supervisors onsite who are your eyes and ears to all things customer related, both good or bad.
Here are the Top 3  “Small Things”  that I believe you should be doing to maximise revenue opportunities:

  • Lead-In Room Type Online

Each online supplier, whether it’s your direct website or an OTA, will always lead with your cheapest rate and lead-in room type (which should be the same room).  If your lead-in room type is sold out or not showing, you are not putting your best foot forward in terms of attracting the greatest number of potential guests.  And we all know that guests chase price and value above everything else 95% of the time.
Consider the following scenario: Three properties in your area (which could be in your competitive set) are all showing rates lower than yours.  What do you do? Most revenue managers would start discounting without looking at why they are not competitive. Jump right in and correct me if I’m wrong but its common practice – I’ve seen it with my own eyes.
With the onset of automated systems reducing staff numbers (and more importantly to remove mistakes) the most basic of revenue opportunities are getting missed. Each property has at their disposal the easiest and most effective value-add and revenue increasing tool at their fingertips – the room upgrade! By upgrading guests booked in your lead-in room type you are guaranteed to keep your best foot out in the marketplace longer (along with your best available rates) and if your upgrade program is working correctly, your repeat, corporate and special guests are treated to an upgrade with more word of mouth marketing than you could ever conjure up.  A win win for everyone.

  • Walk-In Offers & Procedures

Without sounding like a broken record, here we are back at the front desk again, working our magic to get a walk-in guest to actually book and stay with us. In an ideal world, these would be relatively straightforward, exchange pleasantries and put your highest rack rate out there in the hope a potential guest bites and you’ve made the easiest money for the day.
Unfortunately, those days are gone and we need to be more flexible in our approach to capturing this all important market segment.  I know quite a few folks that never make reservations and just wing it on a daily basis, they make an art form out of bargaining for their stay.  There is something to be learnt here – what if we had various “Walk-in” offers and guidelines to match each one that would enable the front office staff to work with the guest instead of taking them for everything they have in their wallet?  Sounds bizarre and I can hear people saying:
“Are you crazy? Get as much money out of them as you can, who cares?” 
This operationally centred approach is killing your ability to capture revenue in the easiest of ways.  The answer is quite simple – they are standing right in front of you, the floor is yours to put your best foot forward and offer them the best deal they are going to get BEFORE they do what so many of us have witnessed… (and for those who wouldn’t have seen it before in your cubicle, miles away from the action) the customer in front of you  pulls out their iPad and has open – “Your rate is lower online she says?”
I can hear the words resinating around the reception area – the negative impact is far more reaching than always leading with a better deal than is currently online.  Would you rather they go out to the car park and then come back in with a better deal (which I have seen happen) while handing commission over to an agent at 15% or more? Or worse, lose the customer to your competitors?  Having a strategic walk-in rate structure and guide will reduce lost revenue and fill more beds over time.  Always remember this crucial element, an empty bed can no longer produce revenue, same goes for the moment a plane takes off.  Don’t be one of those properties who puts operational outcomes before customers, you’ll come off second best.

  • Advance Bookings (9 to 12 months)

I can hear people saying this is a no brainer. This is an easy one to get right?  But are you sure you are getting it right?  Question for you: do you have advance purchase rates set up?  And if so, are they based on the industry average (days from booking) are or they set based on your properties booking lead times?  There are so many revenue managers that can’t answer this simple question, but it’s crucial to revenue growth. I am 99% sure that all revenue managers and GM’s have it set up the same, following the status quo and do what they’ve always done.
When a client comes to me and the words:
“I’ve always done it that way”
“Isn’t that how it’s done in this industry? That’s what Google says?”
….I cringe and look for the door, actually I run for the door. Have you ever noticed how airlines are always having sales promotions and when you look up the sale, the dates are for next year sometime, or at some random time of the year?  There’s a reason for that and one that we should all be using to base our revenue management practices on.  The airlines know in advance what their high and low periods are, they are similar each year, taking into account special events that may change things but like hospitality, we too can predict seasonality in our properties. So with that said, why is the hospitality industry, especial hotels and resorts not following this simple yet very effective tool in revenue optimisation?
Currently the industry is designed the other way around and anything out of the ordinary is done with caution.  Well, I am here to tell you it works for properties as well as it works for airlines.  This hidden little gem is a HUGE advantage to have over your competitors because believe it or not, there is a latent demand for pre-booked stays well in advance of 9 to12 months.  If you change your planning slightly and set things up in advance to cover this time frame, and I don’t mean just the usual 3 plus months in advance, I am talking about 9 to 12 months in advance, you can release sales promotions on your direct website during low occupancy months or for months that the booking pace is slow with your main aim of getting heads on beds well in advance of the usual reactive sales promotions that the industry seems to thrive on.
By using this simple tool you could get 15 to 25% of your base occupancy well in advance of 6 months.  By restricting your rate levels (only releasing a handful of rooms at this special rate) to certain levels of occupancy you are effectively ahead of the game and you don’t have to rely on the same industry tactics that everyone else is using in a rush to fill beds.  Together with your new lead-in room strategy combined with upgrades, you are well on your way to increasing revenue without too much hassle at all.