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?”.
Published July 17, 2020
Revenue management is extremely important within the hotel industry, because it allows owners to optimize the way they do business, in order to improve financial results. However, it also requires specific skills and knowledge, which means that it can be more effective to outsource revenue management to a third party that specializes in this area.
But when customers speak to us for the first time, they often have the same question. It is along the lines of “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 revenue management and proven techniques we are delivering at least 10 to 25% incremental room revenue to hotels. Often hotels find this difficult to imagine. For a 50 room hotel this could be up to 250,000€ per year.
As statistical types, we know that anecdotes are great, but data is better. So we decided to make 3 case studies of our hotels... and do you know what we found? Our results were even better than the rule-of thumb.
CASE STUDY 1
Luxury Hotel, Belgrade
We repositioned this luxury 4-star hotel in Belgrade, focusing on increasing direct sales (Best rate guarantee, Packages, Loyalty program, Hotel website optimization, etc.) and yielding by single room type.
As a result, over the 6 months after the takeover, the hotel achieved 107% of the revenue Vs. same period previous year (84% was the index on the 6 months before the takeover).
CASE STUDY 2
As a combination of the increase of RevPAR (25%) and the reduction of travel agency commission and intermediary cost (-21%), this 4-star aparthotel in Belgrade achieved an increase of Net RevPAR by 35% (over the 12 months after takeover, Vs. same period previous year).
CASE STUDY 3
Thermal Spa Hotel, Serbia
We repositioned this 4-star hotel located in a health resort, focusing on increasing high rated individual bookings (targeting families above all).
As a result, over the 7 months after the takeover the hotel achieved on average 131% of the budgeted room revenue (Vs. 53% on the 3 months before the takeover).
The Final Word
Implementing best practices in Revenue Management strategies, and training the onsite teams in industry to work methodically works in any market. It is all about a structured approach and analyzing data.
I hope our team will be able to assist more hotels in the near future with turning their financial performance around!
CEO at MoreHotelier, Outsourced Revenue Management