Total Revenue Management for Limited-Service Hotels

By Lily Mockerman Founder, Total Customized Revenue Management | October 14, 2018

Two major challenges come to mind when it comes to maximizing revenues for limited-service hotels.  The first challenge is that some revenue managers may feel that they don't have the same opportunities to maximize multiple revenue streams as in a hotel that offers F&B, Spa or Golf. While full-service hotels can rely on these additional services to enhance overall revenue, the perception is that this is generally unavailable to limited-service properties.  They might be able to boost revenue with some limited amenities, but often those are offered gratis.

The next perceived challenge is that most limited-service hotels are operating with limited personnel. Most staff are responsible for several areas and may be called on to fulfill multiple roles as well as act as Revenue Manager. This overcommitment makes it impossible for this person to accurately analyze current revenue situations, gather data and develop a comp set, let alone create valid strategies for maximizing the limited avenues of revenue.

The Real Challenge and The Solution

Overarching these challenges, however, is both the greater challenge and the solution. The main roadblock to successful limited-service hotel revenue management is approaching it with a limited-service mindset. It's very easy in a smaller, less dynamic hotel to become a pricing manager versus a full revenue management and profit optimization guru. However, more than just selling to the right person at the right price at the right time, Total Revenue Management refers to optimizing the monetization of every part of a hotel's available space, functionality, assets and products, working within the concept of time-perishable inventory. This is not constrained by the limitations of certain revenue streams that may or may not be present. Instead, it speaks to maximizing what is available within the hotel's available space, functionality, assets and products.

Implementing Optimization

Hoteliers need to keep cost at the forefront of their efforts.  What is the most economical avenue to generate the most hotel bookings? What is going to produce the best result for the least amount of output?  Most people jump straight to the rate in order to produce the most room nights. While the rate is a vital piece of driving bookings and profits, examining the channels that produce bookings will help direct efforts. Channel reports will tell you if your bookings are coming from your own website, OTA's, GDS, or directly through property.  Each channel has a different cost and figuring out the cost can help the hotel increase bookings while making the most profit.

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