Optimizing Revenues from Your Hotel Guests
By Paul van Meerendonk Director of Advisory Services, IDeaS Revenue Solutions | June 23, 2013
Hoteliers spend a lot of time and money researching, marketing and trying to attract new guests to their hotel, all in order to boost revenue. While growing your customer base is critical to ongoing success, hoteliers should also make sure they are maximizing the money they make from existing guests.
The path to sustained profitability and growth in this current competitive climate has taken a turn for hoteliers around the world. While room revenue still makes up a healthy part of a hotel's total revenue and will always be a strong focus for revenue managers, retail, food and beverage, spas and entertainment are becoming increasingly important sources of income. Progressive hoteliers understand these factors play a big part in a hotel's ability to maximize and optimize revenue. To help ensure a hotel is making money from its current customers, it is vital hoteliers understand and qualify their guests so they can use the most targeted and effective strategies to maximize revenue through up-sells and promotions.
Optimizing revenue through ancillary services is still based on the core elements of revenue management, such as selling the right products to the right customers at the right time etc., based on accurate demand forecasting, pricing and an individual customer's preferences. Through using revenue management software, as well as effectively using staff across the hotel, from the front desk to the marketing department, it is possible to package and promote targeted offerings that expand beyond room rates and optimise revenue, as well as guest satisfaction and loyalty from existing customers. This emerging practice, which encompasses a holistic approach of maximizing total revenue from a guest, rather than just optimizing room revenue, is becoming known as total revenue management.
To effectively carry out total revenue management it is vital to have a heightened understanding of individual guest preferences. You need to understand what a guest wants – is it spa or drinks before dinner? It is also valuable to know what a guest's plans are during their stay and the reasons they are staying at your hotel in the first place. By understanding what each customer from any given market segment is likely to use, you can make better decisions about which customer should receive that last available room, who should be offered free or discount breakfast options or complimentary spa treatments for a limited time, etc. to drive demand in low periods and maximize revenue during a guest's stay.
While many hoteliers have good intentions of using market segmentation and total revenue management principals, once a guest enters the hotel these can often go out the window. Duplicate profiles and data accuracy errors can make it difficult to give guests exactly what they want or prefer, and more often than not blanket offers will be given for all guests. This is a common mistake and can lead to a number of issues, from giving away products when it's not actually necessary, or it can even put guests off your hotel, annoying them with offers and promotions that are of no interest to them.