Published November 27, 2023
When customers speak to us for the first time, they often have the same question: “how much extra income will I make if I use your outsourced revenue management services?”
To which the only fair answer is: “we don’t know”. It depends on so many things. However, we do have a rough rule of thumb.
We say that, by implementing best practices in RM we are delivering at least 10 to 40% incremental room revenue to hotels. Often hotels find this difficult to imagine. For a 50 rooms hotel this could be up to 400,000€ incremental room revenue per year!
LET'S SEE A MORE CONCRETE EXAMPLE: A BOUTIQUE HOTEL MANAGED BY MOREHOTELIER SINCE AUGUST 2020 COMPARED TO A SIMILAR HOTEL (THAT WE WILL SOON BE TAKEN UNDER MANAGEMENT)
What better way to actually quantify the results of our work!
Analyzing the data of two similar hotels (by number of rooms, both located in the pedestrian area of the center of Belgrade, 4 stars); the first has been managed by MoreHotelier since August 2020, the second not yet.
AND THE RESULTS?
In 2019, when both hotels were not managed by MoreHotelier, hotel 1 achieved 89% RevPAR (compared to hotel 2).
The situation clearly changed in 2021 and 2022, where thanks to the implementation of Revenue Management, hotel 1 managed to generate a RevPAR that was 37% and 35% higher respectively than that of hotel 2.
In the first months of 2023 we even reached a 57% gap, thanks to a 97% Year-to date occupancy.
The data is summarized in the tables below:
Added to this is the fact that in these 3 years we have significantly reduced distribution costs, due to a strategy that emphasized the direct sales channel (without the hotel almost exclusively depending on OTAs).
BELOW ARE SOME OF THE "STANDARD" PRACTICES AND TECHNIQUES IN REVENUE MANAGEMENT WHICH ARE APPLIED:
- Past performance analysis
- Creation new rates and sales / cxl policies
- New distribution channels
- Ad hoc promos (as demand was concentrated on weekends)
- Comp-set analysis
- “Best rate guarantee” DIRECT
- Individual quotations of all groups
- Yield Management by room type
To achieve these astonishing results, over the years we have had to evolve into a new generation of revenue managers who are “creating demand”, which I like to rename "Revenue Managers 3.0", implementing practices such as:
- Exploit USPs (location, parking, historical building) by creating SPECIAL OFFERS (i.e., with parking, with transfers…); both direct and on OTAs
- New Pictures (showing the USPs)
- New room types (focus on families)
- Website (update) + SEO
- Reviews Management
MIRACLE?
Absolutely not, simply Revenue Management.
We have seen similar results with all our clients (link), regardless of whether they are located in city, mountain, sea, spa destinations...
IS THAT ALL? NEXT STEPS
- Implement the new PMS integrated with the CM (2 ways)
- More detailed data (new segmentation)
- Continue to reduce cost of distribution (by finding less expensive ways of delivering business)
- Creation of new packages
Fabio Morandin
CEO MoreHotelier, Outsourced Revenue Management