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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Social Media: Getting Personal

There Social media platforms have revolutionized the hotel industry. Popular sites such as Facebook, Twitter, Pinterest, Instagram, Snapchat, YouTube and Tumblr now account for 2.3 billion active users, and this phenomenon has forever transformed how businesses interact with consumers. Given that social media allows for two-way communication between businesses and consumers, the emphasis of any marketing strategy must be to positively and personally engage the customer, and there are innumerable ways to accomplish that goal. One popular strategy is to encourage hotel guests to create their own personal content - typically videos and photos -which can be shared via their personal social media networks, reaching a sizeable audience. In addition, geo-locational tags and brand hashtags can be embedded in such posts which allow them to be found via metadata searches, substantially enlarging their scope. Influencer marketing is another prevalent social media strategy. Some hotels are paying popular social media stars and bloggers to endorse their brand on social media platforms. These kinds of endorsements generally elicit a strong response because the influencers are perceived as being trustworthy by their followers, and because an influencer's followers are likely to share similar psychographic and demographic traits. Travel review sites have also become vitally important in reputation management. Travelers consistently use social media to express pleasure or frustration about their guest experiences, so it is essential that every review be attended to personally. Assuming the responsibility to address and correct customer service concerns quickly is a way to mitigate complaints and to build brand loyalty. Plus, whether reviews are favorable or unfavorable, they are a vital source of information to managers about a hotel's operational performance.  The February Hotel Business Review will document what some hotels are doing to effectively incorporate social media strategies into their businesses.