Thinking Through Revenue Management to Achieve Value
By Robert O'Halloran Professor & Director, Hospitality Management, East Carolina University | October 2023
Revenue management has a bad reputation in some ways because it focuses on room rates.
A new hotel to some is just another place some travelers cannot afford to stay.
That is said tongue and cheek but in the current hotel landscape, the efforts by lodging decision makers have been on room rates. There is continuing discussion of revenue management by experts, newcomers and working hoteliers. Lodging operators need to ask themselves the main goal of revenue management for their hotels. Once the goals have been established, operators should consider the tools and education needed to utilize and optimize revenue management methods and techniques to provide value for guests and profitability.
Hotels continue to look for ways to drive efficiency, boost profitability and adapt to the challenges ahead. The focus is on variable demand tied to market crises, short term booking windows, which are focused on guest spend and dynamic optimization embracing rate flexibility. To keep up with competition in the industry, hotel operators need to always search for ways to grow hotel revenue while also offering competitive hotel room rates.
It is noted that competitive and reasonable rates and limited fees are often what guests are looking for in a hotel. In addition to room rates, the fees that now accompany rising room rates have also made some guests consider other hotel options. For example, on a driving trip this past summer we stayed at a major brand hotel in the greater Boston area. I will note we had stayed there before and enjoyed our experience. This time we booked the room online, checking the brand rates as well and were satisfied we found a reasonable rate with the expectation of a high-quality experience.
Unfortunately, when checking in we found that there was also a parking fee (not previously known). . I will also note that this was a new fee compared with our previous experience at this property. There was no new parking structure or parking protocol, just a new daily fee. Checking in was long and difficult due to limited staff. Getting in the room, we found it "fairly clean" versus clean and that we did not have any internet connection. The room was dark and dingy, and, in this guest's, opinion needed to be updated. Calls to the front desk to follow up did nothing to help. The front desk noted, "our internet is down." This was problematic for us as we needed to do some business while on the road. There was never any notice of restoring the internet and or mention of what would be done to make up for it.