Big problems are not always needed to lose profitability.
Often it is small decisions repeated over months that end up significantly affecting results.
These are seven common mistakes in Revenue Management.
1. Always keeping the same prices
Using practically identical rates for weeks or months means ignoring changes in demand.
A Saturday with a major concert should not be managed in the same way as a Tuesday in low season.
Prices need to adapt.
2. Lowering rates as soon as bookings fall short
Having less occupancy than expected causes concern.
But lowering prices without first analysing the cause can needlessly reduce revenue.
First we must understand what is happening.
Then we make the decision.
3. Raising prices only when the hotel is almost full
If we wait until we reach 90% occupancy to raise rates, we have probably sold too many rooms at the previous price.
Pick-up analysis makes it possible to detect demand much earlier.
4. Comparing yourself with any nearby hotel
A competitor must have sufficiently similar characteristics.
Comparing ourselves with hotels aimed at different customers can lead us to set the wrong rates.
5. Ignoring the events calendar
Conferences, concerts, sporting competitions, weddings, trade fairs and public holidays can completely change demand.
Detecting them in advance makes it possible to prepare the strategy before the market reacts.
6. Analysing only occupancy
High occupancy can hide rates that are too low.
That is why we must also analyse:
- ADR;
- RevPAR;
- revenue;
- distribution cost;
- pick-up;
- production by channel.
The more complete our view, the better our decisions will be.
7. Reviewing the strategy too rarely
The hotel market changes constantly.
Competitors can change rates several times in a single day.
New bookings, cancellations or unexpected changes in demand can appear.
Reviewing the strategy only once a month can mean many opportunities disappear before we manage to detect them.
Revenue Management is a continuous process
There is no perfect rate that we can set and forget.
The strategy must be reviewed continuously according to the behaviour of the market and of the property itself.
And that is precisely where one of the main advantages of Revenue Management lies:
turning information into decisions.
At Almaris Hospitality we analyse prices, demand, competition, distribution and booking pace to help independent hotels make better-founded, more profitable decisions.
Because often improving results does not require selling many more rooms.
It requires selling better the ones we already have.