Hotel Revenue Management After COVID: Beyond Pricing
Albert BarraAugust 4, 2022 · 4 min read
The industry has been pushed to new limits and has responded with courage and creativity. We have also seen changes in revenue management and technology adoption, with many brands accelerating their uptake of technology in preparation for a return to more normal trading conditions.
A significant part of the revenue discipline focuses on pricing. Revenue management is about selling the right product to the right guest, at the right price, at the right time. In the current climate, are we focusing too much on the right price and not enough on the product, the guest and the timing?
Historically, hotels have struggled with limited access to data, which has hampered their ability to truly assess demand. Revenue teams have been tied to rigid pricing models and an over-reliance on constrained forecasting. Revenue Managers had virtually only pricing to test the waters and gauge price response as an indicator of demand. As a result, in zero-demand situations, price wars could easily develop.
The industry has accumulated enormous technology debt. This systematic underinvestment has had a detrimental impact on the industry and, in particular, on revenue management.
However, access to better data enables us to assess hotel demand, embrace revenue strategy and adopt a multichannel approach driven by open pricing, giving Revenue Managers greater flexibility to adapt to different demand levels across different segments.
Over the past 18 months, even in markets severely affected by COVID, we have seen winners and losers. The performance gap between hotels within destinations has widened. There are, of course, many reasons for this:
2021 was a turning point, when we caught up with techniques and technology, but customers also became more digitally savvy. We need to think beyond pricing and consider the value proposition of our properties.
For 2022 and beyond, Revenue teams need to embrace a total, multichannel revenue management approach focused on profitability.
Hotels have been forced to think beyond pricing and rethink their value proposition to ensure that customers felt comfortable travelling, were willing to pay and felt they were getting value for the money they were spending.
Commercial teams have refocused on the fundamentals of sales and marketing, where price is important but only one element of the formula. Here, collaboration between Sales and Marketing and Revenue Management has been more important than ever. We are seeing the disciplines of digital marketing and revenue management finally converge, which, incidentally, is long overdue.
Digitalisation has accelerated because of COVID, both among hotels and their customers. Hospitality has become commoditised, but we must also constantly consider the guest experience.
We need to continue working to create both perceived and real value for customers. This is what will give us a competitive advantage. Among many things, we need to consider:
- Location
- Product
- Market Mix
- etc.
2021 was a turning point, when we caught up with techniques and technology, but customers also became more digitally savvy. We need to think beyond pricing and consider the value proposition of our properties.
For 2022 and beyond, Revenue teams need to embrace a total, multichannel revenue management approach focused on profitability.
Hotels have been forced to think beyond pricing and rethink their value proposition to ensure that customers felt comfortable travelling, were willing to pay and felt they were getting value for the money they were spending.
Commercial teams have refocused on the fundamentals of sales and marketing, where price is important but only one element of the formula. Here, collaboration between Sales and Marketing and Revenue Management has been more important than ever. We are seeing the disciplines of digital marketing and revenue management finally converge, which, incidentally, is long overdue.
Digitalisation has accelerated because of COVID, both among hotels and their customers. Hospitality has become commoditised, but we must also constantly consider the guest experience.
We need to continue working to create both perceived and real value for customers. This is what will give us a competitive advantage. Among many things, we need to consider:
- Brand differentiation
- Clarity and strength of the value proposition
- The type of experience guests will have at your property
- Direct business vs OTAs
- Corporate programmes
- Dynamic pricing for corporate programmes
- Sustainability
- Mobile booking experience
- Other revenue streams