Revenue Management

Adriana Partner Manager

Revenue management for the leisure sector

Lately, in the hotel industry, it often happens to hear talking about “dynamic pricing” and “revenue management”. Revenue management gives hoteliers the possibility to improve their revenues through higher occupancy rates and higher prices. Fixed seasonal prices will be not longer offered, but instead variable room prices determined on the basis of supply and demand. The aim is to differentiate prices, which means to react to customers´willingness to pay and to differentiate by target group.

Hoteliers are more and more dealing with dynamic prices, but some are still sceptical. Fixed prices would have advantages for most hoteliers or it is rather an habit (which is hard to give up), still we hear so often the statement "we have always done this way". Of course, changes need effort and bring initial difficulties and you have to deal with new things. However, we believe that a little bit of courage and investment in new technologies will pay off. This trend, driven by growing online sales, is now unstoppable. Dynamic prices appeared on the market 15 years ago already.

In the leisure industry, hoteliers are asking themselves if the revenue management, which has been applied by city and chain hotels, can also be applied by them. This presumes that the price is a top criteria for the booking. And here comes the main difference between city and holiday hotels. Although the price is important, in the leisure sector the product and the associated benefits for the specific target group are the main factors for the booking.

Experience has shown that there is no flat-rate revenue management strategy for every hotel, but that it must be tailored to the type of business, guest segment, booking behaviour and technical requirements. A city hotel with a high percentage of contract customers will need a different strategy and steps for implementation than a Garni hotel or a holiday hotel with a high percentage of regular guests.  Especially for small and medium-sized holiday hotels, the lever of revenue management is big, because every small price decision has a strong influence.

Small individual hotels usually have fewer resources and often do not have their own revenue manager. This leaves the revenue strategy to the managing director, sales and marketing manager or booking manager, who are already burdened with other obligations and responsibilities. Therefore the pricing often remains in the everyday life and of course it is more convenient to set fixed prices, since one only has to deal with them once at the beginning of the year. A software-supported solution, which clearly prepares relevant key indicators and generates price recommendations on the basis of these parameters, simplifies this process.

Our conclusion: Revenue Management is suitable for every kind of hotel. A supporting technology is essential for optimal success and at the same time to save resources and time. Through online sales, a multitude of useful data is available. People are booking more and more at shorter notice, and the duration of stays is becoming shorter, which means that the business in holiday destinations is getting closer to that in the city. Whether regular guests or one-time guests, the consumer is already used to price fluctuations in many other areas, such as flight or train tickets, gastronomy or other leisure activities. So don't be afraid of revenue management!

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