2014 will be an interesting year for the hotel industry. Especially for destinations like Vienna or Berlin, where once again lots of hotels will open up and therefore the vast offer of accommodation continues to rise. For many hotels the decisive sales criterion is solely the price – the decreasing one.
That’s why it gets more and more important to implement an effective Revenue Management department within hotel operations in order to achieve set goals and above all increase hotels’ profitability.
The following selected revenue management tips and trends should help you with the first steps:
1. Best Price Guarantee/Rate Parity
Finally, a court has taken a closer look at this topic in Germany (no final jurisdiction in Austria yet) and has – rightly – given hoteliers the decision over the booking portals Best Price Guarantee. From 01.03.2014, agreements in this regard are no longer binding. Hoteliers once again have the right to offer a more favourable price on their own website than online booking portals.
The commission (in some cases from 15% to 20%) as pure brokerage is higher than alternative sales channels, but also includes rates like Marketing and Sales – and often even on a mature, technical and professional level. Hoteliers, who don’t cover these services in their operations, thus realise additional value. It’s now on the hoteliers to develop a strategy – despite these possibilities, especially with regard to the largely important price parity of distribution channels – where OTAs are included as a marketing tool.
2. Metasearch websites
For quite a while now so-called metasearch websites – sites which compare booking portals as well as direct suppliers with one another – have been establishing themselves on the Internet.
In recent months, many companies have been addressed to conclude socalled “Business listings” on these websites. MRP hotels recommends analysing these offers properly and calculating the Return on Investment.
A banner advertisement on metasearch websites is in several cases the immediate trigger for the guests’ interest in a hotel. The search on the metasearch platform, depending on the guests’ experience, serves solely to identify the “cheapest” offer, thus making ads on these sites ineffective. However, if an experienced hotelier encounters an experienced guest, he can encourage him to book directly on his website through a banner, proper pricing and possible additional services. Therefore, the banner is a possible incentive to visit the hotel website. The search for the cheapest price, however, leads in 95% of cases back to the metasearch website.
The available Sales & Marketing budget can be used equally effectively for the hotel’s own website – especially for PPC (Pay Per Click) or DRM (Display Remarketing) campaigns. The primary objective is to encourage visitors to the hotel website to book directly and thus increase the Conversion Rate.
3. Revenue Management
As mentioned previously, Revenue Management is a significant part of management for all types of hotels – mostly equal to Sales. In general, the Revenue Manager reports directly to the Hotel Manager. Among other things, a Revenue Manager should be able to answer the following questions without hesitation:
What’s the current Market Share and RGI (Revenue Generated Index)? What are the respective shares of the booking channels? Which actions are planned to strengthen their own distribution channel (Web/Hotel directly)? How does the current business on the books compare with the same period last year?
Based on our experience with several clients, MRP hotels sees the upside-potential of professional Revenue Management with an increase of the RevPar by seven percentage points.